Living in Australia as an American?
Your tax situation just got complicated.
Here's the thing: The US doesn't care where you live. If you're a citizen, you're filing a tax return. Period.
You'll be dealing with two governments. Two tax systems. Two currencies. And two completely different deadlines.
Most Americans moving to Australia don't realize how expat taxes work until it's too late.
But it doesn't have to be this way.
This guide walks you through everything you need to know. Step by step. No jargon. Just practical advice from someone who's helped hundreds of expats navigate this exact situation.
Step 1. Understand your tax residency in Australia
Before you do anything else?
You need to know where Australia thinks you live.
Your tax residency status determines whether Australia taxes your worldwide income or just your Australian earnings. Big difference.
The four tests Australia uses
Australia doesn't mess around. They have four different ways to decide if you're a resident:
Pass any one of these tests?
Congratulations. You're a tax resident. Australia now wants to know about every dollar you earn, anywhere in the world.
This is your starting point for everything else.
Step 2. Know which US forms you'll need
Even if you owe the IRS nothing, you probably still have to file.
Zero obligation doesn't equal zero paperwork.
The forms every expat should know
Miss the FBAR?
The penalties are brutal. We're talking thousands of dollars for what might seem like a simple oversight.
Step 3. Master your deadlines
Two countries. Two calendars.
And they don't line up.
When everything's due
Here's the annoying part:
You'll need income info from two different Australian tax years just to complete one US return.
Welcome to expat life.
Step 4. Get your documents together
Organization isn't optional here.
Being sloppy with your paperwork? That's how expats end up overpaying or facing audits.
What you need to collect
Income documents:
- Pay stubs from Australian employers
- Bank interest statements
- Investment income records
- Rental property documents (if applicable)
- US tax forms (W-2s, 1099s)
Account records:
- Quarterly bank statements for every local and foreign account
- Year's maximum balances for each foreign account
- Australian superannuation reports and contribution statements
Tax records:
- Previous year's tax returns (invaluable for carryovers like unused foreign tax credits)
- Self-employment or rental property expense receipts
Staying organized year-round will help streamline your tax prep and boost your compliance confidence.
Step 5. Don't pay taxes twice
The good news?
You probably won't have to pay full taxes to both countries.
Two main tools to prevent double taxation
Foreign Earned Income Exclusion (FEIE):
- Excludes $130,000 (2025) or $132,900 (2026) per person
- Only works if you pass the residency test
- Like having a big chunk of income become invisible to the IRS
Foreign Tax Credit (FTC):
- Dollar-for-dollar credit for taxes paid to Australia
- Better for high earners
- Claimed on Form 1116
Think of it like this: Australia taxes you first. Then the US looks at what's left and says, "Okay, we'll just take whatever Australia didn't."
Most expats in Australia end up owing little to nothing to the IRS. But you still have to file to prove it.
Step 6. Deal with superannuation
Australia's retirement system is called superannuation.
The IRS... doesn't quite know what to do with it.
Superannuation rates
From a US perspective, your super fund gets treated like a foreign trust. Which means? More reporting requirements.
Social security coordination
There's an agreement between the US and Australia so you don't pay into both systems:
- Working for a US company, under 5 years: Pay into US Social Security
- Longer than 5 years, or Australian employer: Pay into Australian system
Track everything. Save every statement. Future you will need these records.
Step 7. Comply with Foreign Account Reporting (FBAR & FATCA)
This is where expats get into trouble.
FBAR requirements (FinCEN Form 114)
Got more than $10,000 total across all foreign accounts at any point during the year?
File an FBAR.
This includes:
- Your checking account
- Savings accounts
- That brokerage account
- Even your superannuation
- Joint accounts (even if you barely use them)
Deadline: April 15, but you get an automatic extension to October 15.
FATCA requirements (Form 8938)
These thresholds are higher:
This one goes with your tax return.
The penalties for missing these?
Let's just say the IRS takes this very seriously.
Step 8. Optimize deductions and credits for expats
Time to reduce that tax bill.
Foreign Earned Income Exclusion:
- 2025: $130,000
- 2026: $132,900
- The single biggest tax break for expats
Foreign Housing Exclusion:
- Covers rent, utilities, insurance
- Especially valuable in Sydney or Melbourne
- Can be thousands of dollars in savings
Foreign Tax Credit:
- Perfect if you earn over the FEIE limit
- Takes what you paid Australia and credits it against US taxes
Don't forget:
- Child tax credits
- Education credits
- Business expenses (if self-employed)
Most Americans in Australia?
They eliminate their entire US tax bill by using these correctly.
Step 9. Get professional help
I'm going to be blunt here.
Trying to DIY this might cost you more in mistakes than a professional would charge.
A qualified CPA or tax agent versed in the US law can identify missed deductions, review your treaty benefits, manage multiple filings, and represent you in case of IRS audits.
What a good expat CPA does
- Catches deductions you'd miss
- Makes sure you're using the tax treaty correctly
- Handles multiple filings
- Represents you if the IRS comes knocking
Behind on past returns?
There are streamlined procedures specifically for expats who need to catch up. No penalties if you do it right.
Get an annual review done. Especially when you:
- Change jobs
- Buy property
- Have a baby
- Start a business
Conclusion
Look, expat taxes are complicated.
But they don't have to be overwhelming.
Keep good records. Know your deadlines. Use every credit and exclusion you qualify for. And work with someone who actually understands expat tax law.
Do this right?
You'll stay compliant, avoid penalties, and probably pay less than you thought.
For personalized help navigating the US-Australia tax maze, check out Taxes for Expats. They specialize in exactly this situation.
Now go enjoy that Australian sunshine. Your taxes are handled.