Moving back to Australia - should I become a US citizen?

[Miss Natalie 0]

So after living in the US for 5 years, my USC husband and I are planning to move back to Australia later this year.

I have started my application for citizenship but am starting to question if it's something I should really do. I can technically have a dual citizenship with both AU and USA, though in the eyes of the US, I am only a USC, which is fine except for the tax requirements from this.

I know the pros of becoming a USC are having a US passport and having the freedom to travel back and forth between the countries and work etc without dealing with visas and USCIS. But honestly, I don't intend to return to the USA permanently or live here again, so while it's a perk, I could easily still travel here on a WVP to visit the inlaws in future (once I forfeit my LPR).

Others pros are the right to vote (which is nice but not a huge priority for me, especially once I live in AU), and if my USC dies, I wouldn't be hit with a big estate tax bill (if we were in the US, not sure about property in AU)

The BIG con for me is the ongoing tax requirement I'll have with the US after I become a USC. The US requires all citizens to file taxes on their world wide income, even if hubs and I make only an Australian income, we need to file a US tax return each year.

Apparently, both countries have tax treaties and credits that prevent you from paying double taxes (on a certain amount, anything over that amount we'll be required to pay taxes on), but I'm not sure this is something I want to take on as a lifelong requirement. Sure, my husband will have to do it as a USC, and technically I am required to do it as a LPR, but I would then have to option to forfeit my LPR and no longer have any requirement to the US (hubs would not have to include me in his file if I was not longer a resident)

I want to know how other Aussies feel about this? or if anyone is in the same boat as me.

It feels like a shame to lose all that time, effort and money put into the residency visa, but I'm also not thrilled about having an ongoing tax obligation (even if we never actually owe anything) while trying to live on the other side of the world.

[charlottelizabeth 11]

For us, all the money and time spent on getting the K1 visa, and then the LPR status, ROC, etc.. Isn't worth abandoning. I actually worried for the same reasons as you until I learned of the tax treaty between AU & the US. Since your hubby is a USC, you will always have that aspect in your life anyway.. There's no getting away from that. So, in my opinion I think the benefits of US citizenship outweigh the cons of living abroad as a USC.. That's just my opinion though and unlike you we will likely be back and forth between the two countries for many years to come. Good luck on your move!

[CF41051 3]

You might want to check on the requirements for having to pay US income taxes. Yes, you will have to file no matter how much you're making. However, you will only have to pay taxes if you make above $100k USD, give or take a little (not sure if this amount increases for married couples). So I wouldn't let this be a major factor in your decision if you're under the threshold.

[Miss Natalie 0]

You might want to check on the requirements for having to pay US income taxes. Yes, you will have to file no matter how much you're making. However, you will only have to pay taxes if you make above $100k USD, give or take a little (not sure if this amount increases for married couples). So I wouldn't let this be a major factor in your decision if you're under the threshold.

Yes you're right, the taxes are only required over $100k. We are trying to establish if this is combined income or not (that's the big question!)

I am reluctant to abandon my status here, as it did take so much effort and time. But I am curious to see what other people think of the situation (I keep going back and forth in my mind)

[Sukie 1,439]

Yes you're right, the taxes are only required over $100k. We are trying to establish if this is combined income or not (that's the big question!)

I am reluctant to abandon my status here, as it did take so much effort and time. But I am curious to see what other people think of the situation (I keep going back and forth in my mind)

Miss Natalie, whatever you decide, pay the very best money you can for a tax accountant who understands both US and Australian taxes!

Yes, there is a tax treaty that says you cannot be double-taxed, but beware of being too naive about this statement.

Case in point: If you sell your primary home in Australia, you are not charged with capital gains taxes in Australia. BUT, you ARE taxed in the US. My spouse is not taxed in Australia on the first $18,000 of her income. But the US adds her whole income into the pot. Yes, she gets a break on the tax she paid ABOVE the $18,000, but not that "freebie" from Oz.

And, any superannuation fund you set up will be taxed on the growth each year, and the income, when you begin to withdraw it, is tax-free in Oz, but NOT in the US.

Also, if your spouse has family in the US - and you might need to get back to the US for a longer-term stay, trying to go back under the Visa Waiver Program can be hairy if you go too often.

It's good that you are asking questions. I'm not sure that abandoning your LPR/US Citizenship is going to help you that much on your taxes - but do find a really competent accountant!

Sukie in NY

[CF41051 3]

Yes you're right, the taxes are only required over $100k. We are trying to establish if this is combined income or not (that's the big question!)

I am reluctant to abandon my status here, as it did take so much effort and time. But I am curious to see what other people think of the situation (I keep going back and forth in my mind)

The poster that said to speak with a good tax accountant is giving you good advice. There's a lot of complexity. Here's a link to the IRS where you can at least start your research. It looks like if both spouse's meet the qualifications then you can add the exemptions: http://www.irs.gov/Businesses/Foreign-Earned-Income-Exclusion-1

Here's another link: http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion

Good luck!

[Miss Natalie 0]

I've spoken to a tax specialist in Sydney, who was very helpful.

I'm still changing my mind every 5 minutes though!(my head and my heart say different things on this one)

Hypothetically, if i decided to forfeit my Green Card, how would i go about that, and would it prevent me from visiting the US later on a VWP?

[Safety Chick 5]

wow - didn't think there was exactly someone in the same situation as myself.

I'm in the same boat - need to decide if I want to become a US citizen since we are moving back to Australia soon. the Tax implications are scaring me a lot.

We decided that first we will need to talk to an expert Tax accountant that deals with US expats that are Australian residents....superannuation and capital gains tax is the one that most scare us. I found a document yesterday that there is a new agreement between US and Australia about the superannuation...to me it seems we don't need to report it on the FBAR since they are exempt.... but not sure what to make out of it. here is the link to it https://www.kpmg.com/AU/en/IssuesAndInsights/ArticlesPublications/fatca/Documents/fatca-update-superannuation-may-2014.pdf

And just like you - I'm changing my mind every 5 minutes.....

[SherryandDaniel 4]

We are not planning on returning to Oz anytime soon, but we have spoken hypothetically what we might do. It's a hairy situation. Here's a Forbes article on the matter: http://www.forbes.com/sites/robertwood/2015/02/11/thousands-renounce-u-s-citizenship-hitting-new-record-not-just-over-taxes/

[Miss Natalie 0]

We are not planning on returning to Oz anytime soon, but we have spoken hypothetically what we might do. It's a hairy situation. Here's a Forbes article on the matter: http://www.forbes.com/sites/robertwood/2015/02/11/thousands-renounce-u-s-citizenship-hitting-new-record-not-just-over-taxes/

Hi SherryandDaniel

Yes, it sure is some BS huh?

I've read that article and several others along the same lines. Apparently it is not easy to renounce citizenship once you have it either...

It would be cheaper to give up my LPR and apply for a CR1 visa in the future if we ever returned permanently to the US ( this is unlikely), than to become a USC and try to renounce later if I decided to I didn't want to be a USC anymore.

What a mess!