If you are a US citizen living in Australia, have you considered your tax obligations in the USA?


Taxing of non-resident US Citizens

The United States taxes non-resident citizens and holders of a Green Card who are also living outside the US on their worldwide income, regardless of where it is earned or where they live.

The problem is not small in Australia. Details of $184 billion held in about 862,339 Australian bank accounts by US citizens living in Australia were provided to the United States' Internal Revenue Service in 2016.

Superannuation tax issues

The Tax Treaty between the US and Australia fails to address the double taxation of Australian superannuation funds. In particular, Neither Article 18 or Article 19 of the Tax Treaty provides any direction to the IRS to treat superannuation as either foreign pension funds entitled to reciprocal tax treatment in the United States or as state-sponsored privatised foreign social security which would be exempt from US tax.

Some income earned is excluded and a US citizen will be entitled to tax credits for tax paid in Australia. Each person's circumstances may be different, so it is best to check whether any exclusions or tax credits apply.

What can you do?

Dual citizens should consider renouncing their US citizenship. Citizens may however find that their renunciation is refused because they have tax due and payable to the IRS.

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