Expat tax returns
May 7, 2011 10:50 PM Subscribe
Testing your powers of deduction (groan).... do you know a US based accountant who is proficient with foreign income, or an Australian accountant proficient in US returns?
Posting for a friend. She is a USian in Melbourne Australia on a long term working visa. Initially she was employed as a contractor but in June was made a permanent employee. The timing of the employment status change straddles the US tax year and the whole situation has left us a little mystified.
Do you have recommendations for an accountant that can handle this? The special requirements boil down to: self employment, AUS 457 visa and relevant deductibles. Competitively priced would be nice, but it is more important to find someone good. Thanks.
Posting for a friend. She is a USian in Melbourne Australia on a long term working visa. Initially she was employed as a contractor but in June was made a permanent employee. The timing of the employment status change straddles the US tax year and the whole situation has left us a little mystified.
Do you have recommendations for an accountant that can handle this? The special requirements boil down to: self employment, AUS 457 visa and relevant deductibles. Competitively priced would be nice, but it is more important to find someone good. Thanks.
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If I understand your friend's situation and question correctly, she wants information with respect to the US tax implications of her reclassification from contractor to employee with an Australian company. Is that correct?
If that's correct, I can tell you that what your friend will report on her US return is no different than if she were in the US and this happened. She will report the income she earned as a self-employed person as such (most likely on Sch. C), and pay self-employment tax on it via Sch. SE. The income she earned as an employee is reported as wages just as though she were here in the US. The only thing that being in Australia changes is provided she qualifies under the provisions of IRC Sec. 911, she is eligible for the foreign earned income exclusion. Both the self-employed income and the wage income qualify as earned income. If she filed and paid Australian income tax, she will most likely be able to claim a foreign tax credit using Form 1116. The specific Visa she is in Australia under isn't relevant for US tax purposes as she is a US citizen.
Australia does have a fiscal tax year (July 1 - June 30) and that does make things a bit more complicated from a reporting standpoint in that the tax documents provided by Australian entities need to be gathered from 2 different foreign tax years and manually aggregated to come up with a value that represents the amount earned from Jan - Dec. It also makes the claiming of foreign tax credits (if eligible) complicated for the same reason. But, all of these things are merely compliance and reporting nuisances. They don't affect the deductibility or taxability of items.
If I were preparing the return, there are a few things that I would want to ask this person that I won't get into all that here. I would be happy to give your friend more advice if she wants it - MeMail me!
posted by AskGMoney at 7:42 AM on May 8, 2011