So i think i really need proffesional advice but thought i'd see what you guys think.
So i have dual citizenship (US and Australian) I have been living in the US the last 14 years.
I'm moving back to Australia but my US company wants me to do contract work for them.
I would like for them to pay me US dollars in my US account, and I can just transfer money as needed. They prefer to wire US dollars right into my Australian bank account.
I'm afraid if they do that- I will have to file with the IRS in the US, and also report my income in Australia- thus get double taxed- and hopefully try to get 1 of them back.
Any thoughts on this?
If I reside in Australia as a resident, i'm required to report any foregin income anyways. But if i was getting paid into my US account, I could still report $0 income in australia.
It's complicated- any help would be appreciated.
Hi there,
My partner is in a similar situation, we have just returned to NZ after a year living in Denmark, and my software developing partner is going to contract for the danish company he was working for. We have talked this over with an accountant, and it turns out that some countries have reciprocal tax arrangements, in which case you can be only taxed once. Maybe worth asking an accountant in one of your countries?
The way we are doing it, is that the danish company is buying a service from a NZ company. So we don't charge GST because it is an exported service, and we pay NZ taxes.
Good luck, hope you get it sorted
You need to see a very good tax lawyer before you sign to anything. US law - especially State law - is very good at demanding it's pound of flesh even if you haven't been anywhere near the state for years
There is some sort of exemption for US passport holders who work overseas for the federal income tax. Your state income tax will be different.
It seems to me that it doesn't matter whether the money is sent to a US account or an Australian account, you will still have to file US income tax and report your Australian income and your US based income.
There was another post recently on this matter. I think it included a link to the relevant portion of the US tax code. You might try looking for it.
Ruth
I used to be a US tax accountant so I know something about this issue.
Taxes are assessed on where the work is done. So if you work in Australia, you owe Australian income tax. Where the funds are paid into is irrelevant. It can be paid into the US, Pakistan or Liechtenstein; it's income and it is taxed in the country where the work is done.
There is a difference between being a resident of country and being a tax resident. Tax residency determines where you file your taxes. There are accepted rules for this, usually the country where you spend 183 or more days. Your legal or immigration residency has nothing to do with tax residency.
The most important thing US citizens and greencard holders should know is that you are required to file a US federal income tax return every year, no matter where you live. On top of that, since you are working in Australia, you have Australian source income and thus should need to file an Australian income tax return.
There is an earned income exclusion clause which enables you to exclude from your US income, your AGI, income sourced in other countries. The trap to watch out for is that while most state income tax is based on the federal AGI, others do not and deny you the use of the earned income exclusion, thus taxing you twice.
Alexander is right. You will need to file both US and Australian returns.
It's very likely that, at least at the federal level, you will owe $0 in taxes for the US. You still need to file though or you can get in trouble later (in reality, I think that its unlikely that you get in trouble if your pay is relatively small - regardless, why take that chance, it's not so hard to file a return).
Also note that even if you worked for an Australian company in Australia, you have to file a US return. The US is one of the few countries that require its citizens to file for out-of-country income when a non resident. It's a bit Big Brother-ish but, even if you owe zero in taxes, Uncle Sam wants to knwo how much you earned.
Thanks for your help guys.
I should probably post this on the australian board, but my next battle is to figure out the GST. I think i'm required to pass along 10%. I will tell my company it's up to them to research how they can try get it back.
oh vey- sometimes it's just easier to be a backpacker. No worries!
I earn US dollars and get it sent to my International Personal Banking Citibank Singapore account and withdraw from it using an ATM card.
I think that after you use up your exemption, you can offset taxes paid in OZ against taxes owed in the US. But you really need to see a tax professional in OZ that works with American returns.
alexander - What happens if I am traveling around and earning money on the internet, and getting paid into my US paypal account? Do I owe taxes in Malaysia if I write a little travel blurb for someone in OZ who sends my pay to the US. I know I owe US taxes, but what about Malaysia? I earned it there, as in I did the work there.
I'd form an offshore entity (corporation, LLC, etc., formed somewhere outside of the US, and perhaps outside of Australia) and have your former employer hire that entity, and not you individually, to do the work. This means that instead of being an employee on the payroll of your client or an individual independent contractor, your client has engaged your firm to pay for your firm's services.
Working as an individual, whether as an employee or as an independent contractors, ensures that you will get the worst US tax treatment possible. Both you and your US client would be better off with this sort of arrangement.
trusted partner
