US Taxes for Americans Living in Australia

Key takeaways

Moving to Australia does not end your U.S. filing obligation. The U.S.–Australia treaty's "saving clause" (Article 1(3)) lets the United States tax its citizens as if the treaty did not exist, apart from a short list of exceptions in Article 1(4).
Australian tax rates are usually high enough that the foreign tax credit (Form 1116) eliminates U.S. income tax on Australian salary — often with credits left over to carry forward. The foreign earned income exclusion (FEIE, $132,900 for 2026) also works for many, but it has costs the credit does not.
A surprising treaty rule: Australian social security (e.g., the Age Pension) paid to a U.S. citizen is taxable only in Australia, wherever that citizen lives (Article 18(2), excepted from the saving clause). The reverse applies to U.S. Social Security benefits.
Self-employed Americans resident in Australia generally owe no U.S. self-employment tax under the U.S.–Australia totalization agreement (Article 6(8)) — but you should obtain an SSA exemption letter and attach a copy to each return.
Superannuation is the largest grey zone. The treaty does not address super contributions or earnings, and no IRS guidance specific to Australian super was found in the sources reviewed. Super must still be reported on Form 8938 (when thresholds are met) and generally on the FBAR.
Australian managed funds and ETFs are a common PFIC trap. Holding them can trigger punitive U.S. tax rules and an annual Form 8621.

Who is affected, and why living in Australia changes nothing for U.S. tax

The United States taxes its citizens on worldwide income regardless of where they live. IRS Publication 514 states this directly: a U.S. citizen is taxed by the United States on worldwide income wherever he or she lives.

The U.S.–Australia income tax convention (signed August 6, 1982, in force October 31, 1983, amended by a Protocol signed September 27, 2001) does not change that. Its saving clause, Article 1(3), provides that a Contracting State may tax its residents and, "by reason of citizenship," its citizens "as if this Convention had not entered into force." The 2001 Protocol's Treasury Technical Explanation confirms that even a U.S. citizen who is treated as an Australian resident under the treaty "still is taxable on his worldwide income under the generally applicable rules of the Code."

Article 1(4) lists the exceptions — the treaty benefits that U.S. citizens keep despite the saving clause:

Article 9(2) (correlative transfer-pricing adjustments);
Article 18(2) (social security and other public pensions) and Article 18(6) (alimony and child support);
Article 22 (relief from double taxation);
Article 23 (non-discrimination);
Article 24 (mutual agreement procedure);
Article 27(1) (source rules);
Articles 19, 20 and 26, but only for individuals who are neither U.S. citizens nor green-card holders.

In practice, a U.S. citizen living in Australia files Form 1040 every year (if the normal filing thresholds are met), plus the information returns described below. People who live abroad on the regular due date receive an automatic two-month extension to June 15, claimed by attaching a statement — but interest still runs on unpaid tax from April 15 (IRS, "Automatic 2-month extension").

Green-card holders are also U.S. tax residents, but they may be able to use the treaty tie-breaker differently than citizens; that situation is outside the scope of this guide.

What the U.S.–Australia tax treaty actually says

Residence and the tie-breaker (Article 4)

Article 4(2) assigns a single treaty residence to an individual who is resident in both countries, applying in order:

the State in which the individual maintains a permanent home;
if a permanent home exists in both or neither, the State of habitual abode;
if habitual abode exists in both or neither, the State with which personal and economic relations are closer.

Article 4(3) adds that, in locating a permanent home, regard is given to where the person "dwells with his family," and in weighing personal and economic relations, regard is given to citizenship. The 1982 Technical Explanation notes that Australia does not recognize citizenship per se as a tie-breaker; it is only a factor at the third step. Unresolved cases go to the competent authorities under Article 24.

For a U.S. citizen, winning the tie-breaker as an Australian resident does not remove U.S. worldwide taxation (saving clause). Its main relevance is for determining which country gets primary taxing rights on particular income and how the double-tax relief in Article 22 operates.

The 2001 Protocol added a rule that a U.S. citizen is treated as a U.S. resident for treaty purposes unless resident in a third country for purposes of that country's treaty with Australia (Protocol Technical Explanation, Article 3).

Taxes covered (Article 2)

On the U.S. side, the Protocol extends coverage to all federal income taxes. On the Australian side, it covers the Australian income tax "including tax on capital gains" and the petroleum resource rent tax. The Technical Explanation notes that naming Australian capital gains tax makes clear U.S. taxpayers receive a foreign tax credit for it, while the resource rent tax is not guaranteed a credit by the treaty.

Social security taxes are not covered by the income tax treaty (1982 and 2001 Technical Explanations); they are handled by the separate totalization agreement.

Whether the Medicare levy falls within "Australian income tax" for treaty and U.S. foreign tax credit purposes was not found in the sources reviewed. (No IRS, Treasury or ATO primary source reviewed states whether the 2% Medicare levy is a creditable foreign income tax. The examples below include it in Australian tax for simplicity.)

Categories of income

Income	Treaty rule	Effect for a U.S. citizen resident in Australia
Employment income (Art. 15)	Taxable where the work is performed, with a 183-day short-stay exception	Australia taxes; U.S. also taxes via saving clause; double tax relieved by credit or FEIE
Dividends (Art. 10, as amended)	Source-country cap 15% (5% for 10%+ corporate holders; 0% for certain 80% corporate holdings)	U.S. may still tax citizens; special credit rules of Art. 22(4) apply
Interest (Art. 11, as amended)	Source-country cap 10%	Same
Royalties (Art. 12, as amended)	Source-country cap reduced to 5% by the Protocol	Same
Private pensions (Art. 18(1))	Taxable only in the State of residence	Saving clause applies — U.S. still taxes citizens
Social security / public pensions (Art. 18(2))	Taxable only in the paying State, including when paid to a U.S. citizen	Excepted from saving clause — see below
Annuities (Art. 18(3))	Taxable only in the State of residence	Saving clause applies
Alimony & child support (Art. 18(6))	Taxable only in the State where they arise	Excepted from saving clause
Real property and gains (Arts. 6, 13)	Situs State may tax	Credit relief under Art. 22
Other income (Art. 21)	Residence State, but source State may also tax	—

How double taxation is relieved for U.S. citizens (Articles 22(4) and 27(1)(c))

Article 22(4) is the key provision. Where a U.S. citizen is resident in Australia, the United States credits the Australian tax paid after Australia's own credit for U.S. source-basis tax under Article 22(2). Article 27(1)(c) then deems income to have an Australian source "to the extent necessary" to give effect to this credit. The 1982 Technical Explanation describes this as the United States re-characterizing enough U.S.-source income as Australian-source to let the credit be used, without reducing U.S. tax below what the U.S. could impose on a non-citizen Australian resident.

In practice this "re-sourcing" is claimed on a separate Form 1116 category; Publication 514 has a section on "Certain Income Re-Sourced by Treaty" and notes that a treaty-based return position may require disclosure. (The exact Form 8833 disclosure requirements for Art. 22(4) re-sourcing were not reviewed in the Form 8833 instructions.)

What is different from many other U.S. treaties

Australian social security paid to U.S. citizens is exempt from U.S. tax, wherever the citizen lives (Art. 18(2) and 1982 Technical Explanation). Article 29(2) allows either country to terminate Article 18(2) on its own, separately from the rest of the treaty.
No pension-fund article. Unlike some newer U.S. treaties, the 1982 treaty (as amended) contains no article deferring U.S. tax on contributions to or earnings in a foreign pension plan, and no provision recognizing U.S. Roth IRAs. Nothing to that effect was found in the treaty, Protocol or Technical Explanations reviewed.
Australian emigration tax coordination (Art. 13(5)–(6), added by the Protocol). An individual moving from Australia to the United States may elect to be treated for U.S. purposes as having sold and reacquired assets at fair market value immediately before ceasing Australian residence — a basis step-up. The Technical Explanation notes that under then-current law this only works in the Australia-to-U.S. direction.
Non-discrimination carve-out for citizens. The 1982 Technical Explanation records the understanding that non-resident U.S. citizens and Australian citizens are not "in the same circumstances" for U.S. tax purposes, so worldwide taxation of U.S. citizens is not discrimination under Article 23.

The Protocol's entry-into-force date is not stated in the Technical Explanation reviewed. (The commonly cited entry-into-force date of May 12, 2003 was not confirmed in a primary source reviewed.)

FEIE vs. foreign tax credit: which usually works better in Australia?

For the general mechanics of each tool, the stacking rule, and worked 2026 examples outside Australia-specific rates, see our guide on FEIE vs. Foreign Tax Credit.

The two tools

Foreign earned income exclusion (Form 2555). For 2026 the maximum exclusion is $132,900 (IRS news release IR-2025-103; Rev. Proc. 2025-32). To qualify you need a foreign tax home and must be either a bona fide resident of a foreign country for an uninterrupted period including a full tax year, or physically present abroad at least 330 full days in 12 consecutive months (IRS, "Foreign earned income exclusion"). Rules to note:

The exclusion covers earned income only — not pensions, Social Security, interest, dividends or capital gains.
Non-excluded income is taxed at the rates that would have applied without the exclusion ("stacking"; IRS FEIE page).
You cannot take a credit or deduction for foreign taxes on excluded income (Publication 514).
For IRA purposes, excluded income is not compensation, and excluded amounts are added back to MAGI when testing IRA deduction limits (IRS, "Individual retirement arrangements").
The exclusion reduces income tax but not self-employment tax (IRS FEIE page) — largely moot in Australia because of the totalization agreement (see below).
Revoking the election restricts re-electing for a period. (The IRS revocation page (five-year bar without IRS consent) was linked from the FEIE page but not reviewed.)

Foreign tax credit (Form 1116). You credit Australian income tax against U.S. tax on the same foreign-source income, dollar for dollar, subject to a limitation computed separately for categories such as general (wages) and passive (interest, dividends). Unused credits may be carried back one year and forward ten years (Publication 514). You can take the standard deduction and still claim the credit.

Why Australia usually favors the credit

From 1 July 2026, Australian resident rates are 15% on income from A$18,201 to A$45,000, 30% to A$135,000, 37% to A$190,000 and 45% above, plus the 2% Medicare levy (ATO resident tax rates page). In 2025–26 the lowest bracket was 16%. At typical professional salaries, the Australian average rate exceeds the U.S. effective rate on the same income, so the credit wipes out U.S. tax on wages and leaves surplus credits.

The FEIE also usually reduces U.S. tax on Australian wages to zero, but compared with the credit it:

generates no carryforward credits, which can shelter U.S. tax on future income or in a lower-tax year;
removes your ability to fund an IRA with Australian wages;
does not cover salary above $132,900;
may limit refundable family credits. (The rule that the additional child tax credit cannot be claimed by a taxpayer who files Form 2555 is commonly stated, but Schedule 8812 instructions were not reviewed.)

The FEIE can still make sense for someone with Australian income taxed at low rates (for example, a low earner or a year with large Australian deductions), or for simplicity. The choice should be modeled each year.

One structural complication: different tax years

The Australian income year runs 1 July to 30 June; the U.S. year is the calendar year. Publication 514 explains that a cash-method taxpayer claims the credit in the year foreign tax is paid, but may elect (on a timely original return, binding for later years) to claim it in the year it accrues — generally the last day of the foreign tax year. Accrued taxes paid in a foreign currency are generally translated at the average exchange rate for the year to which they relate, subject to conditions, and differences require a "foreign tax redetermination" if they change U.S. tax.

2026 numerical illustration (single employee)

Assumptions: single U.S. citizen, Australian tax resident all year, salary A$180,000, no other income, illustrative rate US$0.65 per A$1 (an assumption, not an official rate). For simplicity, Australian tax attributable to calendar 2026 is approximated as half of the 2025–26 tax plus half of the 2026–27 tax; a real return must follow the cash or accrual rules above.

Item	A$	US$
Australian income tax 2025–26 on A$180,000 (31,288 + 37% × 45,000)	47,938
Medicare levy 2%	3,600
Australian tax 2026–27 on A$180,000 (31,020 + 37% × 45,000)	47,670
Medicare levy 2%	3,600
Approx. Australian tax for calendar 2026 (average of 51,538 and 51,270)	51,404	33,413
Salary	180,000	117,000

Route A — foreign tax credit: taxable income $117,000 − $16,100 standard deduction = $100,900. U.S. tax before credit (2026 single brackets) = $16,910. Because all income is foreign-source general category, the credit limit is about the full $16,910. U.S. tax: $0. Excess Australian tax ≈ $16,503, available to carry back one year / forward ten.

Route B — FEIE: the $117,000 salary is fully excluded (below $132,900). U.S. tax: $0. No credits carry forward, and the excluded salary cannot support an IRA contribution.

Higher earner variant (A$250,000 ≈ $162,500): under the FEIE, $29,600 remains taxable; after the standard deduction, $13,500 is taxed at the stacked 24% rate = $3,240, which can be offset by the Australian tax allocable to the non-excluded salary (roughly $9,887 on a simple pro-rata basis), leaving $0. Under the credit alone, U.S. tax before credit is $27,734 against roughly $54,278 of Australian tax — again $0, with about $26,500 of excess credit.

The United States and Australia have a social security ("totalization") agreement, signed September 27, 2001 and effective October 1, 2002 (SSA, status of agreements). For Australia, it covers the employer Superannuation Guarantee (SG) as well as the Age Pension, disability support pension for the severely disabled, widowed-person pensions and the carer payment (Agreement Art. 2; SSA Australia page).

Employees

General rule (Art. 6(2)): a person employed in one country, and the employer, are subject only to that country's laws for that employment.
Detached workers (Art. 6(3)): an employee sent by an employer in one country to work temporarily in the other stays under the home country's system if the assignment is not expected to and does not exceed 5 years; the competent authorities may extend this (Art. 6(13)). A U.S. employee seconded to Australia under this rule remains in U.S. Social Security and is exempt from SG for that employment; certificates are issued in the U.S. by SSA (Administrative Arrangement Art. 3).
The SG rate is 12% for 2025–26 and 2026–27, and from 1 July 2026 it is paid each payday ("Payday Super") on qualifying earnings, up to a maximum contribution base of A$270,830 for 2026–27 (ATO super guarantee page).

Self-employed

Article 6(8): a U.S. national resident in Australia who works as a self-employed person "shall not be subject to the laws of the United States." In other words, no U.S. self-employment tax.
SSA notes that Australia's SG does not compulsorily cover self-employment. The combined result is that a self-employed American in Australia may have no compulsory retirement contribution in either system.
SSA invites these taxpayers to request a letter of exemption from its Office of Earnings and International Operations and to attach a copy to the U.S. return each year (SSA Australia page).

Benefits

U.S. benefits: if you have at least six U.S. quarters of coverage but not enough to qualify, Australian "working life residence" can be counted to reach eligibility, producing a pro-rated U.S. benefit (Agreement Art. 7).
Australian benefits: U.S. coverage can be deemed Australian residence for minimum qualifying periods (Art. 9). The SG itself is excluded from the benefit provisions (Art. 1(1)(b); SSA page).

Taxation of the benefits

Under treaty Article 18(2), U.S. Social Security paid to a U.S. citizen living in Australia is taxable only by the United States, and Australian Age Pension paid to a U.S. citizen is taxable only by Australia. The 1982 Technical Explanation confirms that Australian social security paid to a U.S. citizen resident in Australia is taxable only in Australia and that this benefit survives the saving clause.

Publication 514 adds that no U.S. credit or deduction is allowed for social security taxes paid to a country with which the U.S. has a social security agreement.

U.S. retirement accounts (401(k), IRA, Roth) and Australian super

U.S. accounts held while living in Australia

What the treaty says:

Distributions from a 401(k) or traditional IRA are "pensions and other similar remuneration... in consideration of past employment" or annuities under Article 18(1)/(3), taxable only in the State of residence — but the saving clause preserves full U.S. taxation of citizens. Australia, as residence State, may also tax; Article 22 then relieves double tax.
The treaty contains no provision protecting tax-deferred growth or tax-free Roth treatment from Australian tax. Nothing addressing Roth IRAs was found in the treaty, Protocol or Technical Explanations reviewed.

Australian treatment of U.S. retirement accounts (whether annual earnings, contributions or Roth distributions are taxed in Australia) was not found in the sources reviewed. (No ATO primary source on the Australian tax treatment of U.S. IRAs, 401(k)s or Roth IRAs was reviewed. Obtain Australian advice before relying on Roth tax-free treatment in Australia.)

Practical points from IRS sources:

U.S. IRAs, Roth IRAs, 401(k)s and qualified plans are maintained by U.S. institutions and are not reported on Form 8938 (Form 8938 instructions, "Certain Financial Accounts").
Continuing IRA contributions requires U.S.-taxable compensation; FEIE-excluded wages do not count (IRS IRA page). The 2026 IRA limit is $7,500 ($8,600 at 50+) per the same IRS page.

Australian superannuation

What the treaty says: nothing specific about super contributions or fund earnings. Lump sums or pensions paid from super in retirement would generally fall under Article 18(1) (residence-State taxation), still subject to the U.S. saving clause.

How the IRS treats super: not found in the sources reviewed. No IRS ruling, notice or publication specific to Australian superannuation was located. (The U.S. classification of an Australian super fund (for example, as a foreign grantor trust, an employees' trust under section 402(b), or otherwise) and the resulting U.S. tax on employer SG contributions and fund earnings could not be confirmed from a primary source. Practitioners take differing positions.)

Reporting points that are confirmed:

Form 8938: interests in foreign pension plans are specified foreign financial assets, reported in Part VI; the plan's underlying assets are not separately listed. Retirement accounts excluded from FATCA reporting by an intergovernmental agreement must still be reported on Form 8938 (Form 8938 instructions).
Forms 3520/3520-A: Rev. Proc. 2020-17 exempts compliant individuals from foreign-trust reporting for "tax-favored foreign retirement trusts" meeting all its conditions (tax-favored status, annual reporting to local authorities, contributions only from personal-services income, contribution limits by percentage of earned income or $50,000 annual / $1,000,000 lifetime, restricted withdrawals, nondiscrimination for employer plans). It does not affect Form 8938 or FBAR reporting. (Whether a particular Australian super fund — and in particular a self-managed super fund (SMSF) — satisfies every Rev. Proc. 2020-17 condition is a fact-specific determination not made in any primary source reviewed.)
FBAR: see below.

Local investments: PFICs and Australian savings vehicles

For the full mechanics of the default §1291 regime, the QEF and mark-to-market elections, and Form 8621 reporting, see our guide on PFICs.

PFIC risk in Australian funds

A foreign corporation is a passive foreign investment company (PFIC) if 75% or more of its gross income is passive, or at least 50% of its assets produce passive income (Form 8621 instructions). Most pooled investment vehicles meet one test.

Consequences under the default "section 1291" regime (Form 8621 instructions):

an "excess distribution" (distributions above 125% of the prior three-year average) and all gain on sale are spread over the holding period;
amounts allocated to prior PFIC years are taxed at the highest individual rate for each year, plus an interest charge;
losses do not offset that gain.

Alternatives exist: a QEF election (requires an annual information statement from the fund) or a mark-to-market election for marketable stock regularly traded on a qualifying exchange.

A separate Form 8621 is generally required for each PFIC for each year in which you receive a distribution, sell shares, make or report an election, or must file the annual report. There is an exception from Part I for shareholders whose total PFIC stock is $25,000 or less ($50,000 joint) at year-end, but only if no excess distribution was received and no gain was recognized (Form 8621 instructions).

Whether Australian unit trusts, managed funds and ASX-listed ETFs are classified as corporations for U.S. purposes (and therefore PFICs) depends on the U.S. entity-classification rules. (The entity-classification regulations under section 7701 were not reviewed; treating Australian unit trusts and ETFs as PFICs is the widely held practitioner view but is not confirmed here from a primary source.)

The Form 8621 instructions provide a Part I exception for PFICs held through "an arrangement treated as a foreign pension fund under a U.S. income tax treaty." The U.S.–Australia treaty has no foreign-pension-fund provision, so this exception does not appear available for PFICs held inside super. (This conclusion is an inference from the absence of such a provision in the treaty; no IRS statement applying it to Australian super was found.)

Franked dividends

Australia's imputation system means "franked" dividends come with credits for corporate tax already paid (2001 Protocol Technical Explanation, Article 6). How franking credits are treated for U.S. income and foreign tax credit purposes was not found in the sources reviewed. (Publication 514 discusses refunds of corporate tax under integrated systems in general terms, but no IRS source reviewed addresses Australian franking credits specifically.)

Bank accounts and term deposits

Interest from Australian banks is taxable in both countries and is passive-category income for the foreign tax credit (Publication 514). Australian tax on it is generally creditable; Australia's high rates usually cover the U.S. tax.

FBAR, FATCA and banking in Australia

FBAR (FinCEN Form 114)

Required if the aggregate maximum value of foreign financial accounts exceeds $10,000 at any time in the calendar year. All accounts must then be reported (IRS FBAR/8938 comparison).
Filed electronically with FinCEN (not with the IRS), due April 15 with an automatic extension to October 15.
Civil penalties are inflation-adjusted; for penalties assessed before August 1, 2016, non-willful violations carried up to $10,000 and willful violations up to the greater of $100,000 or 50% of the balance (same IRS page). (Current inflation-adjusted FBAR penalty amounts were not reviewed.)
Whether super accounts are "financial accounts" for FBAR is not addressed on the IRS comparison page. (The FBAR instructions on foreign retirement accounts were not reviewed. Most practitioners report super on the FBAR.)

Form 8938 (FATCA)

For taxpayers who meet the presence-abroad test, the thresholds are (Form 8938 instructions):

Filing status	Last day of year	Any time in year
Single / married filing separately	> $200,000	> $300,000
Married filing jointly	> $400,000	> $600,000

Penalties: $10,000 for failure to file, plus up to $50,000 more for continued failure after IRS notice; a 40% accuracy penalty on underpayments tied to undisclosed assets; and an extended statute of limitations (Form 8938 instructions). Foreign social security equivalents are not reportable, but foreign pension plans are.

Australian banks and FATCA

Australia and the United States signed a Model 1 FATCA intergovernmental agreement on April 28, 2014, in force June 30, 2014 (Australian Treasury; U.S. Treasury FATCA table). Australian financial institutions report U.S. account holders to the ATO, which exchanges the data with the IRS (ATO, automatic exchange of information).

Whether Americans in Australia face difficulty opening accounts was not found in the sources reviewed. (No primary source addresses account-opening practices; any such claims come from anecdotal or secondary sources.)

State taxes: the domicile question

Leaving the United States does not automatically end state tax residence. Each state applies its own domicile and residency rules, and some states treat former residents as still domiciled until they clearly establish a new permanent home. The general principles are covered in our guide on state taxes after moving abroad. (No state primary source was reviewed for this guide; rules vary by state, and the federal treaty and foreign tax credit do not bind states.)

Complete worked example (2026)

Profile: Sarah, a single U.S. citizen, has lived and worked in Melbourne since 2023. She is an Australian tax resident and passes the FEIE bona fide residence test. Calendar 2026:

salary A$165,000 from an Australian employer;
A$3,000 interest from an Australian high-interest savings account;
employer SG contributions of 12% (A$19,800) to her super fund; super balance about A$120,000;
illustrative exchange rate US$0.65 per A$1 (assumption).

Australian tax (approximation for calendar 2026):

	A$
2025–26 income tax on A$168,000 + 2% Medicare levy	46,858
2026–27 income tax on A$168,000 + 2% Medicare levy	46,590
Calendar-2026 approximation (average)	46,724 (≈ US$30,371)

U.S. return using the foreign tax credit:

Line	US$
Wages (A$165,000)	107,250
Interest (A$3,000)	1,950
Total income	109,200
Standard deduction (single, 2026)	(16,100)
Taxable income	93,100
U.S. tax before credits	15,194
Credit limit — general category (≈ 98.2% of income)	≈ 14,923
Australian tax allocated to wages (pro rata, simplified)	≈ 29,828
Credit limit — passive category (≈ 1.8%)	≈ 271
Australian tax allocated to interest (pro rata, simplified)	≈ 542
Net U.S. income tax	$0
Excess general-category credit to carry over	≈ 14,905

Superannuation sensitivity. If Sarah's advisor concludes that SG contributions are currently includible in her U.S. income (one possible view; see the superannuation section), U.S. taxable income rises by about $12,870 and U.S. tax before credits to about $18,031. Her Australian tax still exceeds that amount, so the net U.S. tax would likely remain $0 — but the treatment of fund earnings and later distributions would also change. (The U.S. treatment of SG contributions is not established by any primary source reviewed.)

Information returns:

FBAR: yes — her savings and transaction accounts alone exceed $10,000 in aggregate (super likely also reported; see above).
Form 8938: likely not — super (~$78,000) plus bank balances are below the $200,000 / $300,000 thresholds for single filers abroad, assuming no other foreign assets.
Form 8621: none, because she holds no Australian funds outside super. If she bought an ASX ETF, PFIC analysis would apply.
Form 1116: two categories (general and passive).
Deadline: June 15, 2027 with the abroad statement (interest on any balance due runs from April 15); FBAR April 15, 2027 with automatic extension to October 15, 2027.

Common mistakes Americans make after moving to Australia

Assuming that no U.S. tax due means no U.S. return due. The filing obligation and the FBAR/8938 obligations exist independently of the tax result.
Choosing the FEIE by default. In a high-tax country, it often discards valuable carryforward credits and blocks IRA contributions.
Buying Australian managed funds or ETFs (or holding them through a self-directed brokerage account) without considering PFIC rules and annual Form 8621 filings.
Leaving super off Form 8938 and the FBAR, or assuming Rev. Proc. 2020-17 resolves all super reporting. It covers only Forms 3520/3520-A.
Mismatching tax years. Reporting Australian tax for a July–June year as if it were calendar-year tax, or switching between cash and accrual methods without following Publication 514's rules.
Converting currency inconsistently — Form 8938 uses the Treasury year-end rate; foreign tax credits use payment-date or average rates depending on method.
Paying U.S. self-employment tax unnecessarily as a self-employed resident of Australia, or failing to obtain and attach the SSA exemption letter.
Counting on Roth IRA tax-free treatment in Australia without Australian advice.
Selling a home or repaying an AUD mortgage without U.S. analysis. The Australian main-residence exemption does not determine the U.S. result. (U.S. home-sale exclusion limits (section 121) and foreign-currency gain on mortgage repayment (section 988) were not reviewed in primary sources for this guide.)
Ignoring state domicile when leaving a high-tax state.

Frequently asked questions

Do I still have to file a U.S. return if I'm an Australian tax resident and pay more tax in Australia?

Yes, if your income meets the normal U.S. filing thresholds. The treaty's saving clause (Art. 1(3)) preserves U.S. taxation of citizens; Australian tax reduces U.S. tax through the foreign tax credit or the FEIE but does not remove the return.

Will the United States tax my Australian Age Pension?

No. Under treaty Article 18(2), social security and other public pensions paid by Australia to a U.S. citizen are taxable only in Australia, and Article 1(4) excepts this from the saving clause (confirmed by the 1982 Technical Explanation). Article 29(2) allows either country to terminate this provision separately.

Under Article 18(2), Social Security paid by the United States to a resident of Australia or a U.S. citizen is taxable only in the United States.

I'm self-employed in Sydney. Do I owe U.S. self-employment tax?

Generally no. Article 6(8) of the totalization agreement removes a U.S. national resident in Australia from U.S. coverage for self-employment. SSA recommends requesting an exemption letter and attaching a copy to each annual return.

Do I report my super fund to the IRS?

On Form 8938, yes, if your specified foreign financial assets exceed the thresholds: foreign pension plans are reportable (Form 8938 instructions). Forms 3520/3520-A may be excused under Rev. Proc. 2020-17 if all its conditions are met. Whether super is reportable on the FBAR is not addressed in the IRS sources reviewed, and its income-tax treatment has no specific IRS guidance in the sources reviewed.

Should I use the FEIE or the foreign tax credit?

For most salaried Americans in Australia, both bring U.S. tax on wages to zero, but the credit usually leaves more flexibility: excess credits carry forward ten years, IRA contributions remain possible, and income above $132,900 is covered. Model both each year.

When to hire a professional

Consider engaging a U.S.-qualified preparer (CPA or enrolled agent) experienced with Australia, and where relevant an Australian registered tax agent, if you:

hold or plan to hold Australian managed funds, ETFs, or listed investment companies (PFIC exposure);
have a self-managed super fund, make large personal super contributions, or plan to withdraw super;
are self-employed or operate through an Australian company or trust (controlled foreign corporation, Form 5471, and trust reporting issues may arise);
have missed prior U.S. filings or FBARs — see our guide on the Streamlined Filing Compliance Procedures;
are selling Australian property, especially a home with a large gain or an AUD mortgage;
are moving between Australia and the U.S. (dual-status years, Article 13(5) elections, state domicile);
are considering renouncing U.S. citizenship — see our guide on the US exit tax (the treaty's saving clause reaches former citizens who renounced for tax-avoidance purposes for 10 years, per Art. 1(3), as amended for long-term residents by the Protocol).

Sources

Source	URL	Used for	Page date
IRS — Australia tax treaty documents	https://www.irs.gov/businesses/international-businesses/australia-tax-treaty-documents	Index of treaty, Protocol, Technical Explanations	Last reviewed Aug 9, 2026
U.S.–Australia Income Tax Convention (1982)	https://www.irs.gov/pub/irs-trty/aus.pdf	Arts. 1, 2, 4, 10–13, 15, 18, 19, 21–24, 27, 29; dates	Treaty signed Aug 6, 1982
Treasury Technical Explanation (1982 Convention)	https://www.irs.gov/pub/irs-trty/austtech.pdf	Saving clause, Art. 4 tie-breaker, Art. 18(2), Art. 22(4), Art. 27(1)(c)	Dated May 24, 1983
2001 Protocol	https://home.treasury.gov/system/files/131/Treaty-Australia-Protocol-9-27-2001.pdf	Amended articles (listed, not separately reviewed)	Signed Sept 27, 2001
Treasury Technical Explanation (2001 Protocol)	https://home.treasury.gov/system/files/131/Treaty-Australia-Protocol-TE-3-5-2003.pdf	Taxes covered, citizen residence rule, dividend/royalty rates, Art. 13(5)–(6), franking	Not stated on document reviewed
IRS news release IR-2025-103 (2026 inflation adjustments)	https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill	2026 FEIE, standard deduction, brackets	Oct 9, 2025
IRS — Foreign earned income exclusion	https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion	FEIE tests, stacking, SE tax, excluded items	Last reviewed Jun 12, 2026
IRS — Individual retirement arrangements (international)	https://www.irs.gov/individuals/international-taxpayers/individual-retirement-arrangements	IRA compensation and FEIE; 2026 IRA limits	Last reviewed Aug 6, 2026
IRS Publication 514 (2025)	https://www.irs.gov/publications/p514	Credit vs. deduction, taxes on excluded income, accrual/cash, exchange rates, carryovers, social security agreements	2025 edition
IRS — Automatic 2-month extension	https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad-automatic-2-month-extension-of-time-to-file	June 15 deadline, interest from April 15	Last reviewed Feb 7, 2026
IRS — Comparison of Form 8938 and FBAR	https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements	FBAR threshold, due dates, penalties, asset table	Last reviewed Sep 19, 2026
IRS — Instructions for Form 8938 (11/2021)	https://www.irs.gov/instructions/i8938	Thresholds abroad, foreign pension plans, U.S. IRAs excluded, penalties	Last reviewed Apr 30, 2026
IRS — Instructions for Form 8621 (12/2025)	https://www.irs.gov/instructions/i8621	PFIC definition, section 1291, QEF, MTM, $25,000 exception, treaty pension exception	Last reviewed Apr 30, 2026
IRS — Internal Revenue Bulletin 2020-12 (Rev. Proc. 2020-17)	https://www.irs.gov/irb/2020-12_IRB	Forms 3520/3520-A exemption for tax-favored foreign retirement trusts	Mar 16, 2020
SSA — Totalization agreement with Australia	https://www.ssa.gov/international/Agreement_Pamphlets/australia.html	Coverage, self-employed exemption letter, benefits	Certified Nov 25, 2019
SSA — U.S.–Australian Social Security Agreement (text)	https://www.ssa.gov/international/Agreement_Texts/Australia.html	Arts. 1, 2, 6, 7, 9; Administrative Arrangement	Agreement in force Oct 1, 2002
SSA — Status of totalization agreements	https://www.ssa.gov/international/status.html	Signing and effective dates	Certified Nov 25, 2019
ATO — Tax rates: Australian residents	https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents	2025–26 and 2026–27 rates; Medicare levy 2%	Last updated Aug 13, 2026
ATO — Super guarantee	https://www.ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds/super-guarantee	SG 12%, Payday Super, maximum contribution base	Last updated Apr 17, 2026
Australian Treasury — FATCA IGA treaty page	https://treasury.gov.au/tax-treaties/intergovernmental-agreement	IGA signature and entry into force	Not stated
U.S. Treasury — FATCA	https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-act	Australia Model 1 IGA in force	Not stated
ATO — Automatic exchange of information (CRS and FATCA)	https://www.ato.gov.au/about-ato/tax-avoidance/international-exchange-of-information/automatic-exchange-of-information/automatic-exchange-of-information-crs-and-fatca/1-introduction	ATO role in FATCA reporting	Not stated

A note on scope: this guide is general information, not tax or legal advice. Which treaty provisions and elections apply to you, how the saving clause and Article 1 interact in your case, and how Australia treats your specific accounts all depend on your own facts. Get advice from a US preparer experienced with Forms 1116, 8621 and 8938 and an Australian tax adviser before you rely on anything in this guide.

U.S. Taxes for Americans Living in Australia: The 2026 Guide