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Home ยป Events ยป US Taxes & Expat You: Learning to Love Tax Time 2021 (Webinar Recording)

US Taxes & Expat You: Learning to Love Tax Time 2021 (Webinar Recording)

Everything you need to know about tax time.

2023 Expat Tax Webinar

All the answers to your questions about tax and accounting for those living in the United States from Australia.

2021 Webinar Recording

Josh Pugh (America Josh): Hi everyone. I'm in America, Josh, and welcome to US Taxes and Expat You: Learning to Love Tax Time by Aussie Recruit, UpTrend Advisory, and myself America josh. Thank you very much for joining us today. This afternoon, we put this webinar together each year, because just like you, we moved to the US from Australia and our cases and amongst yep.

With us that we had to sort out our lives, Texas was something that we had to consider. And it's a difficult space and interesting space and something that we can make exciting in this meeting. No doubt. As someone who personally, I have absolutely no idea when it comes to tax time, I could have benefited from something like this, where I got to submit some questions and ask some questions that are professional.

Four years ago, when I arrived Because I've seen how difficult it can get for a lot of people. I get a lot of emails and myself filing taxes from two different countries can be proved to be very difficult. The group of us, the three of us have spoken to thousands of Australians who have similar questions and we thought bringing a professional in to answer them was the best way forward.

So whether you've just arrived here or you've been here for years and want to make sure that what you've been doing is correct. We've designed tonight. Around all of you. So here's how it's going to work. In the next hour, we're going to go through a range of topics that you've all asked about. We had around 210 questions submitted and we've divided them into a number of categories, ranging from a really broad overview of tax requirements to questions of tax residency, 401ks, superannuation, F bars.

Foreign assets. We've worked hard to try and answer as many of those questions as possible with general advice. That's applicable to everyone. I, me and I going to each take turns, asking Jason questions and we'll take a Jason alert. Take it from there. We'll finish up everything in right about an hour.

So can I first introduce Amy Maya from Ozzie recruit who introduced Jason to kick us off?

Amy Meyer (Aussie Recruit): Thank you so much, Josh. Hi everyone. It's great to see you either again or be meeting you for the first time. My name's Amy and I'm based out here in San Francisco. I run an Australian ex-pat community out here and as Josh mentioned, also, Aussie Recruit.

So really happy to be with you here today. Tax is such a common pain point for us. Ex-pats out here. I moved out here eight years ago from Sydney. And I'm still going to Jason all the time with them. The most random questions that, that keep coming up and popping up over the years. So really grateful myself to be having these sessions annually to get all the latest information and understand what's changed over the past year, if anything, or otherwise just a really good refresher.

As, as Josh mentioned, I run Ozzie recruit out here. I essentially help Australians get jobs at friendly companies in the US so that's what I'm doing day to day and also creating these sorts of resources to try to help Australian ex-pats make their way in the U S. So, again, thanks so much for joining us today for this one-hour session.

And I would like to introduce our guest speaker for today. Jason Jason is the managing director of UpTrend Advisory and he's based out in San Diego and he is going to introduce himself now, but thank you so much, Jason, for joining us again. Thanks, Jason.

Jason Stoch (UpTrend Advisory): Yeah. Thanks. Thanks, Amy. Thanks, Josh. You know, I'm really excited to host this webinar with both of you.

Again, as you know, last year really did help a lot of people. For those of you who don't know me, and if it isn't already clear, my name is Jason Stark. I am a chartered accountant in Australia and a CPA in the US and I'm the managing director at upturn advisory. At uptrend advisory, we specialize in helping Australians living in the US as well as Americans living in Australia, navigate both country's tax systems.

So as a CPA and a chartered accountant, I know tax is complicated. And then if someone, if you're someone who doesn't have that background, Having two layers of taxation just makes it even worse. So I'm hoping that this webinar will help answer some of your burning questions. I want all of you who are watching to know that I did read through each question that was submitted.

And we'd love to be able to answer them. However, as we only have one hour today, it's just not possible. And so we're kind of trying to cater to the majority of you. I'm also conscious that those of you watching will have varying levels of comfort and knowledge of the US and Australian tax systems. So as a disclaimer, this webinar is intended to provide a basic understanding.

Of how the taxes work in the US and some of these answers may not apply to you if you want to be sure about your specific tax question, please reach out to me over to you, Amy. All right.

Amy Meyer (Aussie Recruit): Excellent. Okay, so let's get started, Jason.

It's my first time doing taxes in the U S what should I be doing them?

And how do they differ from an Australian tax return?

Jason Stoch (UpTrend Advisory): Yeah. So the first difference is that the US tax year is on a calendar year basis with a December 31 year ends. When compared to Australia's June 30 year ends in America, your taxes are due. April 15 of each year. So that would mean right now, April 15, 2021, is for the year 2020 tax year. And you can either file these returns through an accountant like myself, or you can prepare them through software like turbo tax or sprint tax yourself.

The only thing I would caution is that some of these softwares don't cater to non-residents. If you are a non-residents and they also rely on you knowing what you need to submit with your return.

Amy Meyer (Aussie Recruit): Okay. Great.

So do I still need to file an Australian tax return while I'm living in the US like living and working in the US?

Jason Stoch (UpTrend Advisory):

Yeah. So this would really depend on your own situation, but if you spend all of your time in the U S you may no longer need to file, or at least need to file a non lodgement in Australia, if it is your first time in the U S but you spent most of your time that year in Australia, you would need to file as a resident for tax purposes in Australia.

If you have income from Australia, such as a rental property or hex debt, you will have an ongoing Australian filing requirement, even when you're a non-resident.

Josh Pugh (America Josh): I mean, that leads to my first question because you keep mentioning resident and I know it's something that comes up a lot. When people ask me questions about tax, I quickly divert them to you, Jason, but being a resident or a non-resident of a country.

So how do I know if for tax purposes, if I'm a tax resident of the US?

Jason Stoch (UpTrend Advisory): that's probably the most important question with everyone's tax situation, because whether you're a resident or a non-resident will completely impact on how your tax return is completed. So to be a resident for tax purposes, you either need to have an immigration intending visa such as a green card or have passed.

What's called the substantial presence test, which would mean having, being in the US for over 183 days in the calendar year.

Josh Pugh (America Josh): Okay.

So if I'm a resident for textbooks in the US what types of information do I need to include from my Australia on my US tax return?

Jason Stoch (UpTrend Advisory): If you are a resident for tax purposes, you would need to state your worldwide income, which in this case means your Australian income.

Be it, investment properties share dividends interest in life. You may also have to state your foreign assets if they're above certain thresholds, and these will be things like your shares, your super, your savings, and your mortgage offsets, all of those types of things.

Josh Pugh (America Josh): Okay. So that was, if I'm a resident of the tax purposes in the US what about if

I'm a non-resident for tax purposes in the US what types of information do I need you to like, declare

Jason Stoch (UpTrend Advisory): yeah.

Yeah. So it's a much easiest situation because if you're a non-resident for tax purposes, you only need to state your us sources of income on your us return. So US employment income where stocks, us dividends us property, everything from Australia would be out of scope on your us return.

Josh Pugh (America Josh): Okay.

What about if I'm a non-resident that we just discussed, but I'm married to a US citizen.

Jason Stoch (UpTrend Advisory): If are married to a US citizen, you can learn to file. What's called married, filing jointly, which means you're submitting one combines returns together. This would allow you to potentially be in a better tax bracket for US purposes. However, this would make you a resident for tax purposes and then bring what you've got.

With regards to those fairly in scope for your us tax return.

Josh Pugh (America Josh): You mentioned before green cards. So what's the sort of the succinct,

If you do get a green card, what are the tax implications of getting that green card?

Jason Stoch (UpTrend Advisory): You have a green card. You'll always have a requirement to file us tax returns, whether you're living in the US.

Or have moved back to Australia. So even if you move back to Australia, you would still be considered a resident for tax purposes in the US and would have to state your worldwide income and foreign assets. The other implication is the long-term implication, where if you've held a green card for eight years out of the most recent 15, and one-on-ones they give up your green card, you might be in scope for what's called an exit tax would be based on your net wealth.

Josh Pugh (America Josh): Okay. So there's yeah. Significant implications to think about before going down the green card path. I know a lot of people due to COVID and just generally might've moved States within the United States. So if I'm normally in New York and I've moved to California to, you know, get some sun and avoid all these sirens outside

What do I have to do if I've moved States internally for that tax time?

Jason Stoch (UpTrend Advisory): Yeah. So you'll likely have what's called a multi-state return to do come tax time where your income is split between the two States, as opposed to only having to do one state return. This can get a little bit complicated. As some States allow credits for taxes that have been paid to other States while some do not.

So if this is something that applies to you, I would not recommend self-filing. If you have moved States within the year,

Josh Pugh (America Josh): Okay. And does that sort of similar concept apply? If I know a lot of people have traveled internationally, potentially even back to Australia to live and work.

But you know, if they're working remotely for the US company, what, what changes then for their tax?

Is it similar?

Jason Stoch (UpTrend Advisory): Yeah. So if you've gone back to Australia and you're still working for your us company, you would still have a federal return to do, however, depending on how your company is federal. Correct? Yeah. Yep. Yep. Yeah. However, depending on how your company's payroll department works, you may only have a federal return to do, or you may still have to also do a state return to do, because if they've given you a W2 that says you've got California sourced income, even though you're not working there, you would still have to file a return for that state because California would be getting a copy of that w two and expecting you to file.

So. You know, if you are living in Australia as well in that situation, you would then also have to report this income on your Australian return. And then that's kind of where the tax treaties come into play.

Josh Pugh (America Josh): Okay. You mentioned before, you know, and we're talking about traveling between countries and you mentioned before that the financial years or us as calendar year and Australia is July, June, is there a best time to move?

You know,

If I'm going to go back to Australia or if I'm going to move to the US and I can plan those dates, is there a best time to do that?

Jason Stoch (UpTrend Advisory): Yeah. So this, this one is where it's completely case by case. And it's not something that's got a black and white answer as it, you know, depends on whether you've got things like shares or RSUs or properties or other kind of big rocks to consider and capitalize on.

So, you know, if you are considering making a transition like this, please consult an accountant like myself for specific advice for your situation. That's

Amy Meyer (Aussie Recruit): a good segue into my question, Jason about Australian investments. So you did just mention that you might have property or those sorts of things, maybe in the US or maybe in Australia, but this particular question is more around resident taxes.

So let's say I have Australian investments and income.

While I'm out here in the US for example, an investment property or capital gains from selling shares or stocks. How should I be declaring these on my US tax returns?

Jason Stoch (UpTrend Advisory): Yeah. So if you are a resident for tax purposes, you should be declaring them on your us return.

So you would report the income and expenses from your property for the calendar year, including any mortgage, interest and property depreciation. When it's capital gains, you would list, you know, the stocks at the price, you bought them, the price that you sold them, and then the appropriate gains and losses from there, with flow through and actually on your return.

Amy Meyer (Aussie Recruit): Then I'm thinking about the tax treaty between the us and Australia. I think there's generally a lot of questions that I see around so much about double taxation. I've been hearing it for eight years now. So maybe record straight here.

How do I, how will I avoid double taxation on the sorts of incomes?

Is there any double taxation? Obviously we don't want to be paying tax in two countries if we don't need to. So please

Jason Stoch (UpTrend Advisory): educate us on this. Yeah, Australia and America do have a tax treaty, which prevents double taxation between the countries. So if you paid tax in Australia on your investments, this would then be leveraged directly on your us.

Return us federal return as a foreign tax credit to offset. What the IRS calculates the same would apply if you pay taxes than us on us sourced income, and you're a resident for tax purposes in Australia, you would simply state your us income and us tax paid to the ATO, which would then create a credit to offset what Australia calculates the.

One thing to note though, is that when we're talking at a state level, so California or New York each state has its own view of whether it conforms to that tax treaty or not. So. If you're in a state that does not conform to that tax tree, you will be taxed again on your Australian sources of income.

So for example, unfortunately, California and New York do not recognize that foreign tax credits. So if you had that rental income or that capital gains from Australia, please be aware you'll be paying additional tax at that state level.

Josh Pugh (America Josh): Texas everywhere. Yeah. You mentioned before Jason, that's like i

If you're a resident for tax purposes, we have to be citing those foreign assets.

So what do we need to stay? Like, is there a sort of a list that we need to stay and how do we do that?

Jason Stoch (UpTrend Advisory): Yeah. So if you have 50,000, yeah. So if, if you have a 50,000 us dollars where. And what I mean, and it's not property, then you'll need to complete, what's called a statement of foreign accounts in your,

Josh Pugh (America Josh): sorry.

Sorry. Can you start that answer just one more time? Sorry. Just, it broke up a little bit and I think I missed the, I heard the, sorry.

So if I am a resident for tax purposes, we would like, how do we state those foreign foreign assets?

Jason Stoch (UpTrend Advisory): If you have over 50,000 us dollars worth of foreign assets. And in this case, foreign means non-American and not property.

Then you would have to state them through a form that is the statement of foreign accounts in your American returns. And you will state the amounts of income that you've received from them. So dividends from shares or interests from bank accounts, as well as, you know, the actual account balances. You will not be taxed on the value of these account balances.

It's more so the income source from those accounts and that's when the tax treaty would come into play to, you know, create tax credits based on, you know, what interests, what taxi paid on your interest income, as an example, outside of your us tax return. If you have over 10,000 us dollars worth of foreign assets, you would have an obligation to complete an fr F B a R M, which goes to another government agency who focuses on crimes and enforcements.

This can be filed very quickly on your own, through a portal. It will probably take, you know, the average person, 10, 15 minutes. And is due April 15, each year. This form would mirror that other form that I just spoke about, but you're not having to state the interest or difference tied to those accounts.

It's purely what is the accounts? What is the balance? And that's it. There are other special forms and I don't want to go too into it. That would need to be filed if you have. Special vehicles in Australia, such as trusts or legal entities. But if you have those, just please flag that with your accountant, because that does trigger other things.

Josh Pugh (America Josh): Okay. So you've got the FBAR, which is just a reporting of basically sharing. Like I've got bank accounts overseas. And that's set like that. You just have to do that. And you it's, if you've got $10,000 over all of the accounts combined or more, and then there's the tax one, which is separate from that, which is actually, you know, paying taxes and interest and making sure that you're taking all those off.

So let's hypothetically say. That I should have been following those things and I didn't follow those things. And

I didn't tell the tax or FBAR or, you know, is there something I can do to correct that? Are there fines if you don't do that or is it just sort of a, you know, go back.

Jason Stoch (UpTrend Advisory): Yeah. So. It depends on what was not included, but should have been included.

So, you know, if you missed some of your foreign assets or foreign income or foreign forms, there are IRS amnesty programs, such as a streamlined filing program that you can go through to get back into compliance. But all of this is hinging on the fact that. Your original mistakes. Must've been as a result of misconduct.

So if you don't do anything about this and just let it go, there can be harsh penalties put on you by the IRS, if they do discover these fats. So, you know, if you fall into this situation, please reach out to me directly and we can discuss your options.

Amy Meyer (Aussie Recruit): Jason. I think I'm a slow on my FBARs. I think it took me over an hour. The first time.

Jason Stoch (UpTrend Advisory): this year,

Amy Meyer (Aussie Recruit): I actually created a spreadsheet with all of my accounts and every year when I need to file my FYI, just go back into that spreadsheet and update it. And it saves you so much trouble from having to go figure out what accounts you have, what account numbers they are. The mailing address of the institution or whatever it is.

Yeah. But I'm the, a goal of 10, 15 minutes for them.

Jason Stoch (UpTrend Advisory): Yeah, no pressure.

Amy Meyer (Aussie Recruit): So we're going to switch over to superannuation now. We've all heard very different opinions. Well,

I've heard very different opinions on the treatment of superannuation. And when you're a resident for tax purposes, can you share what you know about this?

Jason Stoch (UpTrend Advisory): I guess. The reason why this is so gray and there's no black and white answer is that, you know, we've just talked about the tax treaty, but superannuation has not been explicitly named in that treaty, which leads every accounts to have their own opinion on how it should be taxed. So I guess what it boils down to is if the IRS would consider superannuation to be.

In the technical terms, a foreign grants or trust, it would be viewed to be as taxable. And this all comes back to the concept of control. If the individual had control over their superannuation, now control can mean many different things. So. Control can be choosing where you have the ability to invest your superannuation, which all Australians do control can also exist when you have made the choice.

To make contributions to your super funds over what your employer does. As you know, the IRS has not made any rulings on what constitutes control for superannuation. It is really up to interpretation. So a potential argument for control is that. You know, if you've contributed more to your super funds than your employer has, you know, at that point, you've got more control over it.

In which case it would be viewed as a foreign granted trust and taxable. Whereas if it was just, you know, an employee sponsored super funds and you haven't made contributions to it in that case, you know, some firms might just state the balances on the appropriate forms, but not treated as taxable year over year.

If your super funds was a self managed, super funds or an SMSF, then the IRS would deem it to be a foreign grads of trust. So I hope that, you know, you all can appreciate how great this is. It is something that's evolving year over year as more opinions come out. But until the IRS kind of just come out and flat out, say like it's taxed, or it's not taxed.

You're going to be kind of in this gray situation. And I guess, you know, on the flip side with the us version of super so 401k, the ATO does not recognize it as a foreign super funds. So similarly 401k is not caught out is Taxable and not taxable in that tax treaty. So there are two rulings in Australia from the ATO that, you know, have essentially declared 401k is taxable.

Is there, if you're interested in that those rulings are publicly available, if you. Google them. But in summary, you know, superannuation is an asset that is stated in your foreign asset forms. However, the taxation, all that is still evolving and really depends on your accounts since interpretation.

Okay, great.

Josh Pugh (America Josh): Thanks for that. Four Oh one. The one thing to note before I ask it, another question is we are recording this webinar. So I know there's a lot of information and a lot of like things that'll sort of wash over you a little bit, but it's worth watching the whole thing. And then coming back and you can review what Jason has told us.

Cause we'll release those videos afterwards. Jason, On that there'll be some people that have HECS HELP or HECS loans from Australia. So taking student loans and then they might still have some value left in them.

What do I do if I have HECS HELP and I'm living in the US now?

Jason Stoch (UpTrend Advisory): Yeah. So if you do have HECS or HECS HELP,  you will have to file an Australian tax return each year, based on your worldwide income, even though you may be a non-resident for tax purposes in Australia.

And the purpose of this is to allow the ATO to calculate what debt repayment would have been owed on your income if you had lived in Australia. So this isn't really a tax thing, but it's more of a debt collection mechanism for them.

Josh Pugh (America Josh): Gotcha. The banks in Australia. And I know I've seen these forms flying around a lot, the W8 and the W9.

I know I've had a lot of people asking me, you know, why have I been sent this and what do I have to fill in?

What's the difference between a W8 and W9? And do I have to complete them? And which, which one do I have to complete?

Jason Stoch (UpTrend Advisory): Yeah. So. Phase two forms, you know, simply instruct your bank or other provider to account for any taxes that have to be withheld on your behalf based on your residency.

So if you are a us resident for tax purposes, you will complete a w nine or if you're a non-resident you completed, that's it. It's pretty simple. Yeah. Awesome.

Amy Meyer (Aussie Recruit): Great. So.

With COVID impacting so many people last year, Jason has the US or Australia given any sort of special tax deduction.

Jason Stoch (UpTrend Advisory): So

Josh Pugh (America Josh): that's

Amy Meyer (Aussie Recruit): a bit of a lag there. So I just want

Josh Pugh (America Josh): to

that question?

Amy Meyer (Aussie Recruit): It looks like maybe. Oh, you're back,

Jason Stoch (UpTrend Advisory): Jason. Yeah, I'm back on. That is a bit of rubber bands in there. But I did, I did catch the question. So, you know, outside of taxes, The US did give people that are eligible stimulus checks, and we'll be giving more for anyone that's followed the news in terms of, you know, taxes.

The US is allowing people who take the standard deduction, additional deduction for charitable donations. So if you're filing a single or married filing separately, you will get a 300 charitable donation. If you've donated. That amounts. If you're filing married, you can get a $600 donation credits. And then something that's also brand new is called the recovery rebate credit available in your 2020 returns.

For those who are eligible based on the stimulus payments they received in 2019 or did not receive. So it's a last opportunity to kind of catch up on what in terms of working from home deductions due to COVID. The IRS, unfortunately still only allowing those who are self-employed to leverage that Australia though is allowing a COVID work.

This is incurred would have to be work-related though. We just lost you. I bought a new car.

Amy Meyer (Aussie Recruit): We just lost. You were saying that Australia, whoever has allowed a working from home deduction. And then you said something else that I missed.

Jason Stoch (UpTrend Advisory): Yeah. Sure. So Australia is allowing a, COVID working from home deduction at either an hourly rate or an actual expenses incurred and the expenses incurred would actually have to be work-related. It can't be, you know, I just bought a car. Oh, that's work-related it's, it's gotta be for purpose.

Amy Meyer (Aussie Recruit): Okay, great.

Okay. Good to hear on that. So we're going to talk about 401ks now.

So if I have a 401k investment and I want to move back to Australia which I know many Australians have been doing, especially throughout 2020, what should I be aware of from a US tax perspective?

If I want to withdraw from that 401k?

Jason Stoch (UpTrend Advisory): Yeah. So. If you are under the age of 59 and a half, and once you withdraw money from your 401k, you will have to pay a 10% early withdrawal penalty on whatever you draw, and then you will pay regular income tax on the amount that you withdrew. And, you know, as I flagged earlier, if you're doing this well in Australia, the ATO will want to attach that.

So you're almost facing three levels of tax in that situation. You've got the 10% and then the ordinary tax and then whatever Australia wants on top.

Amy Meyer (Aussie Recruit): Okay.

And can I withdraw my money from my 401k and put it into my superannuation tax-free?

Jason Stoch (UpTrend Advisory): So you can, however, depending on your age, their weight, there may be those withdrawal penalties that I just talked about in the US and then potential contributions tax when transferring it into your super, which is also age dependent.

So in Australia, if you're over 65 and wants to contribute your 401k to your super funds there are various tests. That you would have to pass. And then that transfer amount would be capped each year before it's taxable. If you're 64 or under there's a different cap and different rules that apply.


Amy Meyer (Aussie Recruit): So what I'm hearing are there exit penalties with early withdrawals?

So if you're an Australian living in the US working in the US Is it worth contributing to a 401k if you know, or envision yourself moving back to Australia, either in the near or

Jason Stoch (UpTrend Advisory): long-term. Yeah. So this is kind of a more financial advice based question than a tax question.

And it really varies on the factor of firstly, you know, how much is in your 401k? What is your match? What is your contribution? How many years are you doing this? And what you plan on using it for, for example, You know, withdrawing to invest in your super or to invest in another assets that generates a return might be a better option if investing in those alternative vehicles gives you a better tax benefit than investing in 401k when considering in the withdrawal penalties.

It's definitely something that can get a little bit complicated and can become a complex exercise. So. I would recommend that, you know, you talk to a financial planner about this because it's, it's so specific to your situation and what your life goals are.

Josh Pugh (America Josh): Okay, great.

So, If I, you know, legally am allowed to, and I it's important to flag that because a lot of people are listening are going to be on E-3 who can't work for anything other than their employer.

But if I am not on an E-3 and I maybe have a green card and

I want to start a business in the US how does the tax work for sole proprietors?

Jason Stoch (UpTrend Advisory): Yeah. Like, so, yeah, so this works very similarly in the US as it does to Australia, when you're a sole proprietor, different structures have different requirements, but, you know, on your us return, you would essentially create a complete, a form that is your business's profit and loss statement.

And what I mean by that is your businesses income, less the expenses. To arrive at net profit or net loss, hopefully not net loss. You would then pay a self-employment tax, which varies state by state, on the businesses, net income amounts. And then outside of that, it would flow through to your return and you'll pay an ordinary tax based on which tax bracket you sit in now.

That's all easy, but what a lot of people forget about is the compliance piece, which is that as you're self employed, you are responsible for withholding your own taxes and making quarterly payments to the IRS at the federal level and the States. If that state collect state income tax based on your income for that quarter, there are a lot of resources online to help you with this.

Or you can work with an accountant like myself to assist you. And then the other thing as well, just to flag is that, you know, with the expenses, there are certain things that you should be cautious of, how you expense such as, you know, meals and entertainment. Because if they're not for business and you get audited by the IRS, you're probably not going to have a good time.

Josh Pugh (America Josh): Okay. So we'll a champagne lunches. Or you know, knock them off the list if you mentioned sort of consulting with a tax professional, also wondering about the fact that Australia and the US like we touched on before have different tax years.

How, how have you sort of manage if you've got different filing requirements, every sort of effectively six months.

Jason Stoch (UpTrend Advisory): Yeah. So there are one of two approaches that, you know, you can take, or you can just do nothing about it and file every six months. But you know, you can file an extension in one of the two countries that are under the lines with the other countries due dates. So if you file an extension in the US your deadline is October 15th, which is close to the Australian deadline.

And then, you know, If you're doing you know, your us return and you're not filing an extension, you can prorate your Australian income to, you know, a calendar basis, year income, as well as the tax paid to use on your us tax return. The US does allow you to accrue a foreign tax credit based on the tax that, you know, you'll end up paying to the ATO, even though you might not have paid it yet.

Josh Pugh (America Josh): Okay.

So that extension that you mentioned so that you can line things up. Is that something that you file every single year?

Jason Stoch (UpTrend Advisory): Yeah. You will have to file it every single year. If you want to have that extension, granted, it's not something that you can kind of opt into and have it in perpetuity.

Josh Pugh (America Josh): Okay. In addition to that you know, with the different countries, the,

If I've got income or if I've got valleys of bank accounts and things in Australian dollars, and I need to report in us dollars on the US tax documents, what foreign exchange rate do I use?

Like, is there a particular number or.

Jason Stoch (UpTrend Advisory): Yeah. So the ATO and the IRS both have exchange rates on their website that you can use, you can use either of them. The key thing though, is to be consistent with what rate you use in a year. So pick one of them, not both because they're different or, you know, don't use Google finance and then use the IRS in a different section.

The key is consistency. Okay. Awesome. That? Yeah. Cool. Okay. The

Josh Pugh (America Josh): other one we've got we had a few questions about, was around inheritance tax and wondering, you know,

Do I pay inheritance tax basically if it's from an Australia?

Jason Stoch (UpTrend Advisory): Yeah. So generally speaking, if the. To cease. The state portfolio only consisted of Australian assets.

Then you would not pay inheritance tax. If it does include us assets, then you may have to pay tax on it. So, you know, if the supplies to you, because it is one of those complex areas, please reach out to myself or another accountant to help discuss further and give you clarity on what your obligations would be.


Amy Meyer (Aussie Recruit): Jason.

What are some of the biggest mistakes that you have seen in past returns?

Jason Stoch (UpTrend Advisory): Yeah.

Amy Meyer (Aussie Recruit): Feel free to not fall back on this stories and read a lot of posts in our Facebook groups about this. Right. Josh,

Josh Pugh (America Josh): I've heard a lot. And I think we see a lot of people that are, you know, effectively saying like, you don't need an accountant and we're not going to say, you know, you have to at all by any stretch, that's not the point of what we're doing today.

But it sort of, you know, one of the things that you see that are things worth flagging and reasons that there is an advantage to coming to someone.

Jason Stoch (UpTrend Advisory): Yeah. I mean, every everyone's human you know, so, you know, some of the common mistakes I've seen is, you know, not using the correct filing status.

Resulting in overpaying taxes missing information such as social securities or supporting documents, such as W2's, which aren't a big mistake, but can create delays from the IRS to process your return because they'll send you a letter asking for the information math, era's thinking, you know, you can deal with it.

Australian returns, well, Australia income early on your Australian return and your us income only on your us return and not considering the overlap when you have to not taking advantage of deductions that you're eligible for such as child tax credits, I'm filling in the wrong forms or just missing forms.

And then I guess the worst one is just not filing at all.

Josh Pugh (America Josh): Okay. So yeah, the number one to take time for today is make sure you file your taxes. The just wondering, so should you know, on, on filing and whether you can do it yourself or not.

Should you have the same accountant in both countries or is it okay to use one company and accountant in the US and one in Australia?

Like, do you see what's the general advice there?

Jason Stoch (UpTrend Advisory): I don't see an issue with it. As long as both accountants have an understanding of how the one hand feeds the other. And what I mean by that is how, what you do in Australia impacts the us and how, what you do in the us impacts Australia, because you might ends up creating an issue for yourself.

If that isn't considered, for example, if you're. Your accountant in Australia is wanting to set up a trust for you or set up a proprietary limited that will create implications on the us return, which can be costly if it's not structured in the right way. So to that end, it would be important to have, you know, someone that deals with both.

But as long as you know, the Australia council understands the implications in the US side, then, you know, you can have two separate providers. It's when there is that disconnect that there may be issues.

Josh Pugh (America Josh): Gotcha.

Amy Meyer (Aussie Recruit): So do you have any last advice for everyone here that's joined us today or is watching our recording later on any advice as people are getting ready to do their taxes?

Jason Stoch (UpTrend Advisory): Yeah. Yeah. So I would say, you know, preparing now is a great idea as it will put you in the best position for tax returns for a number of reasons, it gives you time to collect all the documents you need. Often, you know, people start the process too late and it can become very stressful. Can delay the process or create further issues.

You know, personally with my clients, I've started reaching out in December to kind of, Hey, here's everything I need so that you've got ample time to be ready. So, I guess it's also important to keep in mind that if you do decide to file your tax returns with a, with an accountant, that this is the busiest time of year for them.

So it's important to secure them right away, as opposed to trying to engage someone in a few months time when it's already the deadline.

Amy Meyer (Aussie Recruit): What happens then that gives

Josh Pugh (America Josh): them, we're just going to call you in March, Jason, that was about

Amy Meyer (Aussie Recruit): your

Jason Stoch (UpTrend Advisory): problem. So every, you know, counseling might be different and I guess it comes down to capacity.

So, you know, speaking for myself, let's say I'm very, very busy in March and you know, I've planned out the rest of my time till the deadline. I might not take you on as a client just because I don't have the time. And I wouldn't want to take you on as a client and rush your return. If I know it's going to need to take more time because there's complexity.

So in that case, you know, I will tell you to find another accountant which you know is fine because if you find someone that's great, it's just not one of those things you want to leave to the last minute.

Josh Pugh (America Josh): Awesome. I think there was a, I just noticed I was having a quick look through the questions. I noticed there was one here just about your tax file number in Australia.

If you can't find a Tax File Number Jason, do you know where if somebody needs to recover that if that's something easily done, is it?

Jason Stoch (UpTrend Advisory): Yeah. So it's. You know, you can do one of two things. If you have an account sense, they can liaise with the ATO to get your tax on. Number. Alternatively, you can just call it the ATO yourself, verify yourself, and they'll give you your taxed on them.

But cool.

Josh Pugh (America Josh): And there was one other question just while we're, I'm just going through quickly that we were talking a lot about 401ks. And I know one thing that I've seen pop up when, you know, looking at employment options and benefits and things and this may come down to you know, financial planning thing, more so than a tax thing,

But is a 401k treated the same way as an IRA and Roth IRA, or are they sort of all completely different houses and, and yet should be treated separately.

Jason Stoch (UpTrend Advisory): So, are you talking about in terms of, of how Australia would touch them or just how they, yeah.

Josh Pugh (America Josh): Yeah. I think the, in relation to, you know, we were talking about how 401k is a traded in Australia. So is that the same if someone here has an IRA?

Jason Stoch (UpTrend Advisory): Yeah. Yeah. The, the language that's used in the private rulings is what they call the excess of Corpus, which is essentially the growth on your contributions would be taxed.


Amy Meyer (Aussie Recruit): I've also had a question here sent to me. And just since we have a little bit of time, I just want to ask you someone's asked how much they should expect to pay an accountant for a us return. I'd imagine potentially a bride or whatever. Maybe you can just give some indication about what you'd pay using the accountant versus say maybe one of the softwares, like doing it yourself, turbo tax or something like that.

Just some sort of indication.

Jason Stoch (UpTrend Advisory): So it's one of those ones that's really hard to answer because I know with my firm, for example, we quote based on the forms that are required. So, you know, or a turn that is just the W2 is cheaper then, or a turn that as, you know, W2 income plus. Properties in Australia plus shares plus the trust.

It's also custom. But generally speaking, you know, the Toba taxes will be cheaper because you're doing most of the legwork. But obviously that comes with the risk that you need to know what you need to put in. Whereas you know, other firms will kind of. Hope to discover your variables and hope to uncover what forms are needed and then quote you based on what they think will need to be done.

As in terms of like pricing it's it's so, so far it's so wide range like

Josh Pugh (America Josh): completely. Yeah, completely depends. If you're going to fall, if you're going to rock up and yeah. Just have your taxes then, and you just got one employer, then that's obviously substantially different from someone with income coming from two different countries and yeah.

Jason Stoch (UpTrend Advisory): Yeah. Hey, one question. Oh, it's $500, but it's yeah.

Josh Pugh (America Josh): Sorry. I cut you off there. Yeah.

The one question and sort of broadly sorry, I'm just ready now. Social security number. Do you need a social security number to file a tax return in the US

Jason Stoch (UpTrend Advisory): so. You either need a social security number or an individual taxpayer identification number, and you will be issued if you're ineligible for a social security number.

I guess you do need one of those two things to be able to file a tax return in the US okay. Cool. Oh,

Amy Meyer (Aussie Recruit): Jason, we watched your, your face.

Josh Pugh (America Josh): You're just a big kid.

Amy Meyer (Aussie Recruit): Josh, have you got any more?

Josh Pugh (America Josh): No, I'm I'm good. That's I've reached, I think the end of my list.

Amy Meyer (Aussie Recruit): Excellent. Great,

Jason Stoch (UpTrend Advisory): great, cool.

Amy Meyer (Aussie Recruit): Well, Thank you so much for everything, Jason, we really appreciate it. Not a year of, of excellent content. Thank you to you. And yeah, Josh, did you have any kind of want to share too?

Josh Pugh (America Josh): No, I think we had a few questions about, you know, following up and I know some people have sent in specific questions and they've sent in. You know, very, we had a lot of questions that were very particular to an individual. You know, I've got a fiance and I'm applying for a green card and I want to get my two kids to make sure that we'd like, and we absolutely tried to take all of those questions and distill them down to their essential bits.

But the best way that you can sort of move forward is reaching out to. To Jason and that's exactly what he, he does. And asking those particular questions, because I think as Jason said at the very top, it's important to know that every single person's tax is completely. Different from every other person.

So there are always hard and fast rules that apply, you know, you should all just fill in this one form because it turns out if, as Jason was mentioning before, if you have more than $50,000 worth of assets, suddenly you've got a new form that somebody next to you might not be filling in. So I think it's just making sure that you've you know, this is where the value comes from having it you know, these conversations and then knowing what what to expect and what you should be doing and what you should be thinking about.

But thank you, Jason. Really appreciate your time.

Amy Meyer (Aussie Recruit): Yeah. And as Josh, during our set. Sorry, Jason, go ahead.

Jason Stoch (UpTrend Advisory): No, that's okay. It's okay. I was just going to say thank you guys. It's it's been really fun again.

Amy Meyer (Aussie Recruit): Great. And as Josh mentioned, we do have a recording of this session. So look out for a follow-up email from us that will have a copy of this recording. And we'll also have a brief survey. We love to provide you with resources that help you as an ex-pat out here, we are all ex-pats here on this call Australia.

So we feel the same pain point. So definitely reach out to Josh and I, if you have other ideas and you can submit those through the survey. For these sorts of sessions. So thank you again to everyone. We hope you have a great rest of the day and we will see you next time.

Josh Pugh (America Josh): Thank you very much, everyone.


Josh Pugh

Josh Pugh

Josh is a business founding, digital marketing focused, charity driving, community builder from South Australia, living in New York City. After moving in 2017, Josh realized that there was an opportunity to curate and help the community of expats who moved to the United States โ€“ and launched America Josh. Josh is also the President of Variety โ€“ the Children's Charity of New York, Secretary at The Mateship Foundation, and Founder & CEO at Fortnight Digital.View Author posts

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