Working remotely from the US/Tax question

[AshleyLCBaker 7]

Hi everyone! I apologize if I've put this in the wrong forum. so please feel free to move it if need be.

My husband recently received his CR-1 visa and we'll be moving to the States after Christmas. He's a software developer and his company here in Australia would like him to do some work remotely for a few months after we move, so he can assist in finishing a particular project.

We were just wondering how tax would be handled in this situation. Would the US want to tax him because he'll be a permanent resident and he's living there? Or will he just be taxed through Australia, since it's an Australian company? Or, God forbid, will both want to tax him? I know a lot of people here know a lot more about international tax law than I do and I thought maybe even someone has been through a similar experience. If anyone has any advice on this, I'd really appreciate it!

[Sukie 1,497]

Hi everyone! I apologize if I've put this in the wrong forum. so please feel free to move it if need be.

My husband recently received his CR-1 visa and we'll be moving to the States after Christmas. He's a software developer and his company here in Australia would like him to do some work remotely for a few months after we move, so he can assist in finishing a particular project.

We were just wondering how tax would be handled in this situation. Would the US want to tax him because he'll be a permanent resident and he's living there? Or will he just be taxed through Australia, since it's an Australian company? Or, God forbid, will both want to tax him? I know a lot of people here know a lot more about international tax law than I do and I thought maybe even someone has been through a similar experience. If anyone has any advice on this, I'd really appreciate it!

Ashley, as a permanent resident of the United States, your husband will be taxed on ANY money he makes ANYWHERE in the world.

Here's how it works. If your husband is considered a tax resident of Australia, he'll pay the Australian taxes he owes (what it is now - the first $18,000 is not taxed?), and he will have to include any US income (such as US interest income). On his US tax return he will be credited with any tax he's paid in Australia (both on the Aussie portion and the US portion) - so there really isn't any double-payment. But...it is a pain in the backside, as Australia's tax year ends on June 30, and the US tax year ends on December 31.

Ask me how I know? I'm a permanent resident of Australia and a US citizen.

He'll need to keep monthly income records since he'll have two different tax years. And he'll have to declare all bank accounts anywhere in the world.

If your husband is NOT considered an Australian tax resident, then he'll pay taxes only on his Australian income (no US income considered), but he pays tax from $0 - not $18,000. (This is what I have to do. I have a permanent residency visa, but since most of my income comes from the US, I am not considered a TAX resident.)

Quite honestly, unless he makes a LOT of money, his tax rate in Australia will be higher than the tax rate in the US - so hopefully the Australian tax credit will help him out.

Congrats on your CR-1 visa. We are still waiting waiting waiting...

Sukie

[AshleyLCBaker 7]

Ok, thanks so much! I don't really get taxes, tbh. I'm now both a US and Australian citizen and didn't even know I needed to file in the US until we started this process! I haven't made enough money for it to matter, though.

I think it's looking like he won't be considered an Australian tax resident after we leave, so maybe that'll make things simpler? Ugh, I don't know. Taxes are annoying. Anyway, thanks again for your very helpful answer and good luck with your wait! Hopefully it'll go quickly!

[Sukie 1,497]

Ok, thanks so much! I don't really get taxes, tbh. I'm now both a US and Australian citizen and didn't even know I needed to file in the US until we started this process! I haven't made enough money for it to matter, though.

I think it's looking like he won't be considered an Australian tax resident after we leave, so maybe that'll make things simpler? Ugh, I don't know. Taxes are annoying. Anyway, thanks again for your very helpful answer and good luck with your wait! Hopefully it'll go quickly!

Ashley,

If you sell all your possessions in Australia, and really sever ties, then your husband will have a good chance of not being considered a tax resident. However, if he is being paid by an Australian firm in Australian dollars to an Australian bank account, you might have a little harder time convincing the ATO that he is not a resident.

You may wish to get some tax help for Australian tax year 2013-2014. Depending on when he's physically in the US, you might want to consult a US tax person for 2013 and/or 2014.

The last thing any new immigrant (and/or newlywed) needs is to run afoul of tax authorities!!!

Thanks for the good wishes.

Sukie

[aaron2020 11,651]

There are many qualified accountants who can handle a bi-national tax issue.

Do not go to H&R Block or similar outfit. They get 5 months of training.

Go to a CPA, EA, etc. Someone with an actual education on tax matters.

[TBoneTX 47,047]

*** Thread moved from CR-1 Process forum to the Working & Traveling forum -- topic involves matters after arrival. ***

[CaizLurol 36]

An accountant explained to me that world wide income over $96,000 USD / year is taxable. You still have to report it regardless of what it is but if the person makes less than $96,000 USD / year, then they do not have to pay taxes on it.

Again, this is what I was told by an accountant. You can verify this by asking one, too. Don't go only with what other people tell you on these message boards!

[slvrfx576 15]

There are many qualified accountants who can handle a bi-national tax issue.

Do not go to H&R Block or similar outfit. They get 5 months of training.

Go to a CPA, EA, etc. Someone with an actual education on tax matters.

Not true ! You can go to H&R Block ( I don't know about similar outfits)....my local HRB office has 2 CPA's and 2 EA's on staff. You just need to request one.

Yes, they have rookies with only 5 months training but they are relegated to preparing basic, easy returns.

[Hollyday 122]

Just found a great link pretty much on this subject (here), it also goes over the subject of dual status of the taxpayer.

[slvrfx576 15]

Hi everyone! I apologize if I've put this in the wrong forum. so please feel free to move it if need be.

My husband recently received his CR-1 visa and we'll be moving to the States after Christmas. He's a software developer and his company here in Australia would like him to do some work remotely for a few months after we move, so he can assist in finishing a particular project.

We were just wondering how tax would be handled in this situation. Would the US want to tax him because he'll be a permanent resident and he's living there? Or will he just be taxed through Australia, since it's an Australian company? Or, God forbid, will both want to tax him? I know a lot of people here know a lot more about international tax law than I do and I thought maybe even someone has been through a similar experience. If anyone has any advice on this, I'd really app

No, you won't pay double taxes.

As already pointed out your husband can deduct up to $97400 in 2013 as a foreign income exclusion (up from $96000 in 2012). This assumes that he paid foreign income tax on this amount, therefore the IRS will not tax him on it as another government has already done that. Another alternative is that he could include the amount of foreign income (i.e. not take the exclusion) as US taxable income and take a "foreign tax credit" for the amount of foreign income tax paid directly against the amount of US income tax assessed. Have a competent tax professional run each scenario and see which works best for you. Either way you do not get taxed twice.

Also, be sure to file as "married filing joint" as opposed to "married filing separately". MFJ almost always is more beneficial moneywise anyway, but remember that 2 years down the line you will need to prove that you two are financially "co-mingled"....and MFS is the opposite...it shows a separation of finances.

[AshleyLCBaker 7]

Thanks for the responses, everyone! I really appreciate it. We'll have to have a chat with a couple tax people in a couple different countries, but y'all have definitely made me feel less confused about the situation!