Australia is one of the most popular destinations for US expats, offering a high quality of life, a strong economy, and endless opportunities for travel and exploration. While the relocation may feel like a fresh start, one thing you don’t leave behind is your US tax obligation.
As a US citizen or Green Card holder, you must file US taxes even while living abroad. Add the Australian tax system to the mix, and things can get complicated quickly. This guide breaks down what you need to know about US expat tax in Australia, the biggest challenges, and how to stay compliant while enjoying life in the land down under.
Life in Australia as a US Expat
Many Americans move to Australia for career opportunities, education, or lifestyle reasons. Cities like Sydney, Melbourne, and Brisbane attract thousands of expats each year.
Benefits include:
- High quality of living: Modern, clean cities, quality healthcare, and a strong focus on work-life balance
- Robust job market: Opportunities in healthcare, mining, technology, and education
- Cultural immersion: A welcoming, multicultural society with large expat communities
- Travel convenience: Affordable flights to Asia and the Pacific make travel easy
But with these benefits come financial and tax challenges.
Do US Expats in Australia Still Have to File US Taxes?
Yes. The US is one of the few countries that taxes based on citizenship, not residency. That means if you’re a US expat living in Australia, you must file an annual federal tax return with the IRS reporting your worldwide income.
Even if you pay tax in Australia, the IRS still requires you to file. In addition, there are extra reporting obligations for foreign accounts and investments.
Key US Tax Filing Requirements for Expats in Australia
Here are the main reporting obligations you need to know:
1. Federal Tax Return (Form 1040)
- Required if your income is above the filing threshold ($13,850 for single filers in 2025).
- Covers wages, business income, rental income, and pensions.
2. Foreign Earned Income Exclusion (FEIE – Form 2555)
- Excludes up to $126,500 (2025 limit)of foreign-earned income.
- To qualify, you must meet either:
- Physical Presence Test: 330 days abroad, or
- Bona Fide Residence Test: Establishing Australia as your residence.
3. Foreign Tax Credit (FTC – Form 1116)
- Lets you use taxes paid in Australia to offset US liability.
- Particularly useful since Australian tax rates are often higher than US rates.
4. FBAR (FinCEN Form 114)
- Required if your total foreign bank account balances exceed $10,000 USDat any point in the year.
5. FATCA (Form 8938)
- Applies if your foreign assets exceed certain thresholds (e.g., $200,000for single filers abroad).
Australian Tax Residency Rules
Your liability in Australia depends on your residency status as determined by the Australian Tax Office (ATO). You may be considered an Australian tax resident if:
- You live and work in Australia long-term
- You rent or own a home in Australia
- Your spouse or family is based there
- Your ties to the US are limited
If you qualify as an Australian tax resident, you’ll be taxed on your worldwide income, similar to US law.
How the US–Australia Tax Treaty Helps
The US–Australia tax treaty is designed to prevent double taxation. It sets out:
- Which country has taxing rightsover specific types of income (e.g., pensions or dividends)
- Access to foreign tax credits, so you don’t pay twice
- A savings clause, which allows the US to continue taxing citizens regardless of treaty provisions
While the treaty doesn’t remove the need to file with the IRS, it ensures that tax credits and exemptions are available.
Superannuation and US Tax
Australia’s superannuation system (retirement savings) can be complicated for US expats.
- Employer contributions are not always deductiblein the US
- Investment growth inside super accounts may be taxable by the IRS
- Distributions may be taxed differently in the US than by the ATO
Because the IRS doesn’t clearly define superannuation, professional tax advice is recommended.
Avoiding Double Taxation
Expats typically avoid double taxation using one or more of the following tools:
| Tool | Purpose | Form |
| FEIE | Exclude up to $126,500 of foreign-earned income | Form 2555 |
| FTC | Offset US tax with Australian tax paid | Form 1116 |
| Tax Treaty | Assign taxing rights on specific income | Form 8833 (sometimes required) |
Most expats use both FEIE and FTC together for maximum benefit.
US Expats Filing Deadlines in Australia
- US Federal Tax Return (Form 1040): June 15 (automatic extension for expats)
- FBAR (FinCEN 114): April 15 (automatic extension to October 15)
- Form 4868 Extension: Extends filing to October 15; possible extension to December 15 with a written request
- Australian Tax Return: Due October 31, with extensions if filed by a registered tax agent
Common Mistakes US Expats Make
- Thinking paying Australian taxes removes the need to file in the US
- Forgetting to report superannuation accounts
- Missing FBAR or FATCA reportingrequirements
- Ignoring US taxation of Australian mutual funds (PFIC rules)
- Using DIY tax software that doesn’t account for expat complexities
FAQs: US Expat Tax Australia
Do I need to file both US and Australian taxes?
Yes. US citizens must file with the IRS, and Australian residents must file with the ATO. Credits and treaty provisions prevent double taxation.
What if I never filed US taxes while living in Australia?
You may qualify for the Streamlined Foreign Offshore Procedures, which let expats catch up without penalties.
Does traveling affect my US tax eligibility?
Yes. To claim FEIE, you must pass strict presence or residency tests. Frequent returns to the US may affect eligibility.
Is superannuation taxable in the US?
It depends. The IRS may treat contributions, growth, and withdrawals differently from the ATO.
Do I need to report Australian bank accounts?
Yes. If your foreign accounts total over $10,000 at any point, you must file an FBAR.
