Question for the Money Doctors
Question submitted on Aug 1, 2012.
QuestionI was offered a job in Alice Springs Australia for 130,000 a year. Could you tell me roughly what my Australia income taxes and my US income Taxes would be? I am trying to figure out if it is worth giving up a government job in the US to work and live in Australia for at least 4 years in order to save enough money for a down payment for a house in the US. Thank you in advance and I appreciate your answer.
Generally, the first $92,900 of foreign earned income is excludible from US tax. It is also possible to exclude or deduct certain foreign housing costs. There are residence and presence tests that must be met. For any income not excluded, a portion of taxes paid to the foreign government may be used towards a foreign tax credit.
The rules relating to foreign earned income are complex. You can obtain Publication 54 from the IRS which describes these rules in detail, but it is recommended that you consult with a tax professional to determine what your potential taxes would be. You can visit www.findacpapfs.com to find a CPA/PFS in your area.
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