US Expat Taxes for Americans Living in Australia

Filing expat taxes for Americans in Australia are actually not that complicated. MyExpatTaxes CEO, Nathalie Goldstein, held a webinar for Americans living ‘down under,’ showcasing the most important tax changes of 2024. Plus, we shared how to claim Stimulus checks abroad.

If you couldn’t attend the webinar, you’re in luck. We’re going to be sharing that information with you! Here are the essential facts Americans in Australia need to know about reporting their US taxes:

Filing Requirements and US Tax Deadlines

As an American abroad, you only need to file US taxes if you reach the tax filing requirement for 2023:

Filing Status:	Worldwide gross income amount:
Single	$13,850
Married Filing Jointly	$27,700
Married Filing Separately	$5
Head of Household	$20,800
Qualifying Widower	$27,700
Self-employed	$400

Did you notice something there? Yes! Americans who are married filing separately will need to file a US tax return even if their total worldwide income for the year is just $5!

Filing your US tax return is due on June 15 – the automatic, 2-month filing extension for expats. However, you may need to file for the October 15 deadline due to Australia having a different tax year. Please see our ”Different Tax Years” section below.

Additionally, if you have or have had $10,000 or more total from all of your foreign financial accounts at any one time in 2023, you’ll need to file an FBAR. This form is due on October 15. However, if you file expat taxes with MyExpatTaxes, you can have this filled out smoothly and electronically before this deadline.

Different Tax Years Between the US and Australia

When you report income as a US citizen in Australia, you cannot use the same tax year in Australia as in the US. Both countries have different tax years. Therefore, for filing a US tax return as an expat, you’ll need to calculate your worldwide income according to the US tax year. This tax year is January 1 – December 31.

Due to this, we recommend using monthly payslips so you know how much income you receive every month. That way, you can translate what you earned from the Australian tax year to the US tax year.

If that’s not possible, the second-best option is to have an Australian tax statement for two parts of the year. One is for the first half and the second for the second half. Then, you can use percentage-based allocation.

If you decide to wait for your second Australian income statement to come in later in the year, you’ll need to file a US extension file by the October 15 deadline. Why? Because of the timing delay. 

You need to report your worldwide income and file a US tax return by June 15 every year as an American living abroad in Australia. However, if you are waiting for your second Australia income statement, that may come after the US expat filing deadline. Therefore, filing for a free MyExpatTaxes extension may be the best option.

Superannuation Reporting is Important

Superannuation is a company pension plan. Funds for an employee by the company are deposited in a ‘super’ account and grow until you withdraw or retire.

A new revenue was released last year that will most likely exempt your superannuation from being required to be reported on Form 3520/A. This only applies if the IRS considers superannuation as a tax-favored foreign retirement trust.

However, you’ll still need to report your superannuation on your FBAR and FATCA, forms if you’re filing Form 8938, Statement of Specified Foreign Financial Assets because you meet the filing reporting requirements. If you have $200,000 in all non-US financial accounts, you may need to file 8938, and your superannuation info needs to go there.

Plus, you may need to look into the structure if there are many foreign pulled funds, like mutual funds, etc. This is because you may be required to file a passive foreign investment company report form, Form 8621. This form is complex, and if you meet the reporting requirements, you will need to file it.

However, our Tax Professionals can support you with this. We charge less than half of the other tax companies, yet we provide premium support and reduce labor-intensive work with software.

Additional Child Tax Credit for American Families in Australia

American families living in Australia should know the benefits they can receive through the Additional Child Tax Credit.

Australia has a higher income tax rate than the US, so Americans abroad in Australia can use the Foreign Tax Credit approach instead of the Foreign Earned Income Exclusion. They can then receive up to $1,600 per qualified child per year.

A qualifying child must depend on you, under 17 years old, with a valid Social Security Number.

We have met families who made up for lost years of tax filing through our Streamlined Procedure and were surprised to receive up to $1,600 of refunds every year when they claim the child tax credit.

Use the Foreign Tax Credit to Prevent Double Taxation

To avoid being double taxed, Americans in Australia can use the Foreign Tax Credit. Whatever amount of taxes owed that you paid in Australia can be applied to your US tax return as an expat, so you won’t have to pay taxes twice. 

Let’s say you have $3,000 of US tax owed on your US Tax Return but paid AUD 4,000 worth of tax in Australia. You can use income tax in Australia to net against what the US is taxing. 

$3,000 of US taxes owed (minus) – $3,000 of a foreign tax credit of foreign income taxes paid to Australia. This will give you a $0 tax amount owed and allows you to claim the Additional Child Tax Credit if you’re children quality (see Child Tax Credit section above for qualification details).

Plus, you can go through the MyExpatTaxes software and see for yourself – without having to pay – if you are eligible for a refund and don’t have to pay an additional tax dollar to the IRS. 

Additionally, you can back claim refunds for up to three years through our software if you figure out you are owed from the IRS. Walking through our software and filing for a tax return and refund can be as fast as 15 minutes.

Selling Your Home in Australia

Some tax implications are to be aware of whether you are selling your home in the US or Australia as a US citizen abroad.

As expats in Australia, you can claim Section 121 Exclusion and exclude up to $250,000 of profit from US taxation if you are filing taxes separately (e.g., due to a spouse being a Non-US citizen). But if filing jointly with another US citizen, you can exclude up to $500,000.

As long as you are qualified for the Section 121 Exclusion and lived in your primary house for two out of five years or owned the house for two out of five years, you can exclude up to $250,000 on your US tax return.

Let’s say you make a $200,000 profit from selling your home in the US to move to Australia. Subtract $250,000 from $200,000 (if filing separately) to get a net profit of 0 you need to report on your US tax return. If you apply for this extension properly, you won’t need to pay any income taxes from selling your home. The MyExpatTaxes software can do this for you!

Otherwise, if the profit of selling the house comes to $300,000, then $50,000 will be taxable by the IRS. You need to make sure all your tax documents are on a cost basis. The house purchase price includes the cost of renovations, home improvements, etc., so your profit number goes down. Unless you make a significant profit on your home, it is unlikely you will owe US tax from selling your home.

Expat Taxes for Americans in Australia Made Simple

There’s a lot of information to know when filing your US expat taxes in Australia. However, our best-selling expat tax software makes it easy to do the reporting for an affordable price. For further tax questions about Australia, drop us a message, and we’ll answer!