Do I need to file a US federal and state tax return?
In general, if your income for the calendar year does not exceed the standard deduction plus one exemption and you are not a dependant of another tax payer, you may not have to file a tax a tax return. However, if you have paid estimated tax payments, had withholding on US sourced income, or want to claim a refundable credit, you will want to file a tax return to claim a refund.
What if I have US back tax returns to file with the IRS?
If you are one or two years behind you can simply file returns and pay any tax owing to catch up.
If you are three or more years behind you may be eligible for the Streamlined Foreign Offshore Procedures. Contact our office to discuss
I am below the US Foreign Earned Income Exclusion amount – do I still need to file a tax return?
Most likely yes. The foreign earned income exclusion is a reduction of your taxable income when calculating how much tax you owe. It does not reduce your income when determining your tax bracket. Sound confusing? Give our office a call to discuss.
How do I get a US Individual Tax Identification Number?
If you are a non-US person who is required or wishes to file a US tax return, you will need an Individual Tax Identification Number (ITIN). A completed Form W-7 is needed to apply for an ITIN.
How long do I have to file a US tax return?
A US federal personal tax return Form 1040 is due the 15th day of the fourth month after the end of the calendar year. If you reside overseas you are allowed an automatic two-month extension until June 15. If you can’t meet the June 15 deadline you can file form 4868 to request an extension until October 15. However, your Form 4868 must be filed prior to June 15.
How long do I have to pay US taxes owing?
Generally, taxes must be paid by the April tax deadline. If your tax return filing due date is extended your payment due date is NOT extended. You could end up owing interest and penalties for late filing and late payment.
What’s an FBAR?
The Foreign Bank and Financial Accounts Report (FBAR) is used to report a US persons financial interest and signatory authority over non-US accounts including bank accounts, brokerage accounts, mutual fund, trust, or other types of foreign financial accounts.
The FBAR filing deadline is now April 15 with an automatic 6-month extension to October 15.
The FBAR is a reporting form only, you are not taxed on FBAR amounts.
Severe penalties may apply for not filing this form.
What is FATCA?
The Foreign Account Tax Compliance Act (FATCA) is intended to promote transparency among cross border transactions by implementing an automatic exchange of information in relation to US taxpayers who have transactions with non-US financial institutions. Information exchange between the US and Australia is increasing exponentially. Form 8938, Statement of Foreign Financial Assets, may be required if you meet the reporting thresholds.
I am a US citizen and I own a controlling interest in an Australian company. Do I need to report this to the IRS?
Yes. Form 5471 is used to report your stake in a non-US company. The deadline for this form is the same as your personal tax return Form 1040 deadline. The base penalty for not filing this form starts at US$10,000.
Form 5471 is not a tax return, it is a reporting requirement that forms part of your tax return Form 1040.
I am a US citizen and I received a distribution from our Australian family trust. Do I need to report this to the IRS?
Yes. If you receive a distribution from a foreign trust, loan assets to a foreign trust, or are the owner of foreign trust assets you may have to file both Form 3520-A and Form 3520. These are reporting forms only and are separate from your US tax return. Severe penalties may apply for not filing these forms.
Is my home in Australia up for capital gains in the US?
Yes. If your portion of the capital gain on your Australian residence is greater than US$500,000 (for married filing joint) or US$250,000 (married filing separate) than you may have to pay capital gains tax on the sale of your primary residence. Under Australian tax law, your primary residence may be exempt from capital gains tax, but if you are a US citizen, green card holder, or satisfy the substantial presence, the sale of your primary residence is up for US capital gains tax.
If I want to expatriate from the US, what is the process?
Loss of Nationality is a serious and irrevocable act. U.S. citizens considering renouncing or relinquishing their U.S. nationality should carefully review and understand the consequences and ramifications of doing so. Please refer to the Department of State’s website for advice about Possible Loss of U.S. Nationality.
Before beginning the process, we strongly recommend discussing your situation with a US tax attorney. While this is not a necessary step, it may ensure a seamless renunciation process.
If you have decided that renunciation is the right course of action for your personal situation, please refer to the following web page to begin the process https://au.usembassy.gov/u-s-citizen-services/citizenship-services/renunciation-of-u-s-citizenship/
Current fees payable to the US government for renunciation are US$2,350
How can we help you?
We can put you in touch with a US tax attorney, prepare a draft and final form 8854, prepare Form 1040NR Dual Status Return and 1040 Dual Status Statement in year of expatriation, prepare ongoing Forms 1040NR as needed.