Why is a kangaroo illustrating this article?
You would think, since my office is in a small rural community in upstate NY, that I would not get too many questions about international taxation.
Not so.
Case in point: "My son moved to Australia in 2014, but now he wonders if he still has to file U.S. tax returns."
If you are a U.S. citizen or a resident alien of the United States and you live abroad, you must report, and are taxed, on all your worldwide income. But then it gets complicated...
You may qualify to exclude from income an amount of your foreign earnings that is adjusted annually for inflation ($99,200 for 2014, $100,800 for 2015, $101,300 for 2016, and $102,100 for 2017). On a joint return, these amounts are per person. You can choose to treat a nonresident alien spouse as a US resident for this purpose.
For income in excess of those exclusions, and income that is not foreign earned income, the tax rates are based on income before the exclusion.
If you have foreign self-employment income, the above exclusions apply for income tax purposes, but do not apply for self-employment tax purposes.
If you DO pay US taxes on your foreign sourced income, you can take a tax credit for taxes paid.
It can get a lot more complicated. You might participate in your foreign county's version of social security. There could be tax treaties that affect how some of your income is taxed. If you are an "expat" wondering about your US tax obligations, you need to get some professional help.
