Tax obligations for US citizens and expatriates living abroad

US citizens living in Australia face unique tax obligations due to the United States being one of only two countries that enforces citizen-based taxation rather than residence-based taxation. While the Australian Taxation Office (ATO) determines residency based on statutory tests such as domicile and residence, the Internal Revenue Service (IRS) requires US citizens to report their worldwide income regardless of their physical location.

Managing these dual systems requires navigating different fiscal calendars, as Australia’s tax year runs from July 1 to June 30, while the US follows the calendar year. Common misconceptions among expatriates include the belief that obtaining a foreign visa or work permit automatically ends home-country tax obligations or that living in a new country for 183 days settles all tax residency matters. In reality, tax residency is a complex assessment of economic interests, family, and employment, often resulting in overlapping reporting requirements for worldwide income and assets.