If you're a US citizen or resident alien, moving to New Zealand doesn't end your US tax filing. The IRS says people in your position generally follow the same filing rules as at home and are taxed on worldwide income. Sorting out a few things before you leave makes your first year of filing from overseas far easier.
How to do it
- Confirm whether this applies to you. It does if you're a US citizen, or a resident alien for US tax purposes. If you're neither, your obligations depend on the IRS's residency rules, so check those rather than assuming.
- Find a preparer who files for Americans abroad before you go. The foreign earned income exclusion and the foreign tax credit are only available by filing a return, and choosing between them is worth getting right in year one.
- Note the deadline. Living overseas gives you an automatic 2-month extension, so a calendar-year return is due June 15. Interest on unpaid tax still runs from April 15, and Form 4868 extends the filing date to October 15.
- Plan for the FBAR. Once you open New Zealand accounts, track their balances. If your foreign financial accounts add up to more than $10,000 at any time in the calendar year, you file FinCEN Form 114 through the BSA E-Filing System, even if they earn no taxable income.
- Ask about Form 8938, a separate report some taxpayers attach to their return for specified foreign financial assets.
- Keep records for two tax years. New Zealand's tax year runs from 1 April to 31 March, while the US year follows the calendar, so record income and account balances month by month.
- Check your state. Find out from your state's tax agency what it needs from you to stop being treated as a resident there.
- Leave retirement accounts alone until you've had advice. How a 401(k) or IRA withdrawal or rollover is taxed depends on both countries' rules.
Common mistakes
- Assuming that paying New Zealand tax means you don't need to file in the US.
- Forgetting the FBAR because the New Zealand accounts didn't earn anything taxable.
- Cashing out a US retirement account in a hurry before leaving.
See IRS: US citizens and resident aliens abroad and FinCEN: report foreign bank and financial accounts. This is general information, not tax advice.
Frequently asked questions
- When is my US return due if I live in New Zealand?
- If you live overseas, you get an automatic 2-month extension, so a calendar-year return is due June 15. Interest on any unpaid tax still runs from April 15.
- Does a New Zealand account that earns no interest still count for the FBAR?
- Yes. The FBAR depends on the combined value of your foreign financial accounts, more than $10,000 at any time in the year, not on whether they earn taxable income.