[ExpatInfoDesk]

Posted by Nancy,  5 replies

My husband was paid by a US employer in 2012 but we were living in Australia for 365 days. Will we receive a full refund on the taxes withheld throughout the year?

5 replies

Bill Burns

If you are a U.S. citizen, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside even if you were out of the country the entire year. Sorry, I wishh you could avoid paying the tax man but his reach is far and wide. The only way to avoid paying taxes is to renounce your U.S. Citizenship, which can be complicated and you have to pay an exit tax on the way out the door.

Bill Burns

I re-read your question….my answer is based on the assumption that you and your husband are U.S. citizens. If not, I do not know the tax laws of your home domicle but assume your home country would probably give you some sort of credit for foreign taxes paid but am not sure. Good luck.

joeblow

if you are out of the country (US) for 330+ days your income of 96,000 is exempt from taxes. (form 2555)

BlackBart

Joe low is correct, income earned while outside the usa is tax exempt up to 96,000 in 2012. However, if you earned less you might consider becoming a legal resident of a state with no state income tax, than file taxes as a resident of that state. If you have kids you may even qualify for the earned income tax credit.
Moving forward, change the number of deductions with your usa employer so that there are 0$ with held as federal income tax. You will still pay SS, Medicare and other mandatory with-holdings. But this is better than nothing. Buy turbo tax and try it both was, see what is better for your family. If you are lucky to make more than $96,000 you will pay income taxes on any amount ABOVE $96,000 only!

Cyclop

These replies only relate partial details , unfortunately as an sub contracted expat working for a US company in Japan I am finding out the hard way the truly complex and in depth nature of these issues. At home I file 1040 EZ. From here it’s 40 pages of tax forms.
Get professional counsel ASAP. The potential consequence can be significant. Spell that $$$$

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