# US expat taxes in Australia



## sugaree28 (Jun 19, 2021)

Hello. I'm an American with Australian PR living in Melbourne area for almost 9 years. I need to find someone that understands American and Australian tax codes to do my U.S. taxes as well as provide some financial advice as I am married to an Australian. Help!


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## Moulard (Feb 3, 2017)

To keep your thread together in one piece, In the Australian forum you expanded on this by saying...



sugaree28 said:


> Thanks so much for that. Yes, most of my issues are on the U.S. side. I will post in the expat tax forum as I'm really looking to have a person that can file my taxes as well as provide some basic financial advice on tax implications of mortgages, selling and reducing, superannuation an inheritance. Thanks for your helpful response!


If you haven't been filing for nine years (and I am just guessing here) then there are some here (Hi Nononymous) that would argue that you should proceed as you are doing and simply stay below the radar and simply continue to not file.

If you do want to become compliant then the Offshore Streamlined Compliance Procedures are the way to go... 





Streamlined Filing Compliance Procedures | Internal Revenue Service


IRS streamlined filing compliance procedures are for taxpayers who mistakenly failed to report foreign financial assets or pay taxes on those assets.




www.irs.gov





As I said in your other post, you are more likely to get a recommendation of someone in Oz on that thread that this one...

But as to general advice on the broader tax implications of the points you mention.... going through your list... in reverse order... here is some broad advice on how each item is generally taxed in the US...

*Inheritances*
Assuming you are not an executor of the estate (which could bring other reporting and tax requirements) A foreign bequest from a deceased estate is not in itself taxable. But, if the amount or value of the distribution is over $100,000 USD it is reportable to the IRS

*Superannuation*
This is trickier... and will depend on whether you have an employer fund, industry fund, master trust or self managed super fund.
Apart from a single FOIA release a few years back, there has been no formal guidance from the IRS by way of regulations or rulings on how to treat super.
If you have an employer or industry fund, then the generally accepted approach is to treat it as an Employees' Trust. In which case you would report employer contributions as income in the year it was paid into the fund, and then on reaching your preservation age and receiving distributions, the growth component of the distribution would be taxed.
This would apply so long as employer contributions exceeded personal contributions.

If you have a SMSF, then it is considered a grantor trust and the income of the trust would be considered personal income - with both contributions and growth taxed. 
SMSFs are rather toxic for US persons for this and a bunch of other reasons.

Master Trusts probably sit somewhere in between and may vary depending on the Trust Deed, whether it was an employer's default fund and a whole bunch of other factors... however i would probably just treat it as an Employee's Trust.

*selling and reducing*
Not sure what you mean here.. 
On the selling side, ultimately it will depend on what you are selling, where it is located... as the taxing rights are driven by sourcing rules.
If you are talking about selling real property, then capital gains tax comes into play..
Assuming the property is in Australia, then Australia has the primary right to tax it. 
The big issue from the US perspective is CGT on the sale of your primary residence which is entirely CGT exempt in Australia. 
While the first $250k USD (if filing separately) is exempt from US CGT, the superheated Australian property market means that depending on how long you have owned the property, you could very well owe US tax on the sale.

*Mortgages*
Technically, because the US requires all transactions to be treated as if they occurred in USD, every mortgage payment is a foreign currency transaction, and you can potentially have phantom gains due to currency fluctuations. Borrow 1000 AUD at 800 USD ; repay 1000 AUD at 600 USD... congratulations... in the eyes of the IRS you have made $200 USD and they would like their cut thank you very much..

In practice, I suspect most overseas taxpayers ignore this entirely, but any individual gain of more that $200 is taxable.

For ordinary mortgage payments over the life of the loan, you are less likely to hit the $200 threshhold, but if you ever sell the property and use the proceeds to pay of the mortgage, this can be the case where it is really easy to exceed that amount.

Hope this helps answer some of your questions.. happy to expand if you have followup questions


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## sugaree28 (Jun 19, 2021)

Moulard said:


> To keep your thread together in one piece, In the Australian forum you expanded on this by saying...
> 
> 
> 
> ...


That is actually very helpful. Gives me a lot to consider. Thank you!


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## VinOz (Jan 3, 2022)

For those Aussies who have had to set up a pty ltd and open a company bank account in Australia, how do your US clients remit consulting fees that you invoice in usd to your Australian business bank account what? Does anyone use transfer wise and if so how does it work in the scenario above?


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