Shortcut Navigation:

Question for the Money Doctors

Question submitted on Jan 9, 2013.

Question

Hi I am dual U.S, Australian citizen who was born and raised in Australia. I now work in Australia and submit tax returns within Australia. Do I need to worry about U.S.A tax implications as I have never filed a tax return in the U.S. I am considering in the future coming and working in the U.S and am concerned to avoid any issues.

thanks for your help!

Regards,

Matt Nelson

Answer

Hi Matt,

Yes, you need to worry about the US tax implications, as US citizens are taxed on their worldwide income, regardless of where they live or earn their income. Included in the income tax filing requirement is Form 8938, Statement of Specified Foreign (non-US) Financial Assets. In addition to the income tax, US citizens may be required to file Form TD 90-22.1 if they own a foreign account worth over $10,000 during the tax year.

IRS Publication 54 is always a good reference tool for US citizens working abroad. The publication discusses special tax rules for U.S. citizens who work abroad or who have income earned in foreign countries.

IRS Publication 54 discusses several tax provisions applicable to US citizens working abroad, such as:

  • Foreign earned income exclusion
  • Foreign housing exclusion and deduction
  • Foreign moving expenses
  • Foreign tax credit
  • Tax treaty benefits

That being said, please note that the income tax rules applicable to expatriates are very complex and that you would be well served by contacting a CPA/PFS who will be able to help you analyze the tax rules and whether or not you are eligible for treaty benefits. Please visit www.findacpapfs.org to find a CPA/PFS near you.

For additional information visit http://www.360financialliteracy.org/


For additional information visit http://www.360financialliteracy.org/