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US Taxes for Americans in Australia: FBAR, FEIE, the Treaty and Catching Up (2026 Guide)
Updated: Oct 6
Who this guide is for: Americans in Australia, and Australian founders selling to the US
Moving to Australia does not end your relationship with the IRS. A US citizen or green-card holder files a US return on worldwide income every year, wherever they live, and reports foreign accounts on top of it. Most of the people who call us from Sydney, Melbourne and Brisbane are not trying to avoid that — they simply never heard it, or heard it years after they moved. This guide lays out the US rules that actually apply in Australia, what the Australian Taxation Office (ATO) side of the picture means for the US return, and how to catch up if you are behind.
I am an Enrolled Agent, licensed by the US Treasury to represent taxpayers before the IRS from anywhere in the world. We work with four groups in Australia: US citizens and green-card holders who moved to Australia for work, a partner or the lifestyle; Australian-Americans and dual citizens with superannuation, property or family trusts in Australia; US expats running businesses or contracting in Sydney, Melbourne or Brisbane; Australian founders and freelancers who want a US LLC, EIN and US bank account to bill American clients. This is general information, not individual advice.
The US-Australia tax treaty and totalization: what they do and do not do
The US-Australia income tax treaty is in force; it coordinates pensions, dividends, wages and double-taxation relief between the IRS and the ATO but does not remove the US citizen's obligation to file a US return.
The US-Australia totalization agreement is in force, so Americans working in Australia generally avoid paying Social Security contributions into both systems on the same earnings — which system applies depends on the work arrangement.
The single most common misunderstanding we correct: a treaty never removes the obligation to FILE. It changes how specific income types are taxed, and the saving-clause in every US treaty lets the IRS tax its own citizens as if most of the treaty did not exist.
FBAR, FATCA and the accounts you have in Australia
FBAR applies to Australian accounts at Commonwealth Bank, Westpac, NAB and ANZ and every other local institution — and most superannuation accounts count too — once the combined high balance crosses the reporting threshold.
FATCA (Form 8938) is a second, separate report with higher thresholds for people living abroad; missing one and not the other is common and fixable. Both are informational — no tax is due on the form itself — but the penalties for skipping them are the largest in the expat rulebook.
FEIE vs. Foreign Tax Credit in Australia
The Foreign Earned Income Exclusion covers wages and self-employment income earned while a bona fide resident of Australia or physically present abroad long enough; it does not cover US-source income, superannuation growth or investment income.
Australian income tax is generally at or above US levels, so the Foreign Tax Credit usually does the heavy lifting — but the Australian tax year ends in June, which makes matching credits to the US calendar-year return a bookkeeping project.
The choice is not permanent, but revoking the exclusion locks you out of it for several years, so the decision should be modeled against your actual mix of wages, self-employment and investment income before the first return is filed.
Businesses, pensions and investments: the forms that surprise people in Australia
An Australian proprietary company owned by an American can trigger Form 5471; Australian managed funds and ETFs held outside superannuation are usually PFICs with punitive default treatment.
Superannuation is the defining US-side problem in Australia: the treaty does not plainly resolve how the IRS treats super growth and withdrawals, and practitioners disagree on whether a given fund also triggers Form 3520 and 3520-A foreign-trust reporting — the reporting position has to be chosen deliberately and documented, not assumed.
Every one of these forms carries an automatic, per-form penalty for non-filing that has nothing to do with whether tax was owed — which is why they matter more than the 1040 itself for many long-term residents.
What the Australian Taxation Office (ATO) taxes — and how it interacts with your US return
Australia taxes residents on worldwide income, so an American who becomes Australian-resident should expect the ATO to tax US dividends, rentals and retirement income alongside Australian wages — reconciled afterward through the treaty.
Australia has a wealth-type tax debate but currently taxes capital gains through the income tax with its own discount rules; the details change often enough that the current treatment should be confirmed before relying on it.
We are a US firm: we handle the US side in-house and coordinate with your local accountant on the Australia side, rather than pretending to be licensed in both.
Australia-specific patterns we see
Three things come up in Australia cases more than anywhere else:
Superannuation is where almost every Australia case starts: employers contribute by law, the balance grows for decades, and the US treatment of that growth is genuinely unsettled — the worst position is ignoring it until the balance is large.
The June-ended Australian tax year means an American's wage income rarely maps cleanly onto the US calendar year, so the Foreign Tax Credit has to be accrued and matched rather than copied from a payslip.
Family trusts are a standard Australian planning tool and a US reporting trap — an American beneficiary or trustee can pick up Forms 3520 and 3520-A obligations from a structure their Australian accountant considers routine.
Behind on US taxes? The streamlined path back
Americans in Australia who have not filed for years generally qualify for the Streamlined Foreign Offshore Procedures — three years of returns, six years of FBARs, a non-willfulness statement and no failure-to-file penalty — as long as the IRS has not already written to them.
The program is designed for exactly this population, and the non-willfulness statement is the part that needs a professional's attention — it is a signed narrative to the IRS, not a checkbox.
Australian founders and freelancers: reaching US clients with a US LLC
Not everyone reading this is American. Many of our Australia clients are Australian founders, freelancers and agencies who bill US customers and want dollar banking, Stripe and a US invoice. A non-US person can own a US LLC and get an EIN without a Social Security Number; the annual price is a Form 5472 information return and a pro-forma 1120, and the reward is US market access without a US tax return on the owner's worldwide income in most single-owner setups.
The trap is doing it halfway — forming the LLC and skipping the 5472, which carries its own automatic penalty.
Australia cities we serve
We work with clients in Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra and Gold Coast and everywhere else in Australia, entirely by video call, secure portal and e-signature, on US hours and Australia hours.
Frequently Asked Questions
Do I have to file US taxes if I live in Australia?
Yes. US citizens and green-card holders file on worldwide income every year regardless of where they live; the treaty and the FEIE reduce the tax, not the filing duty.
Do my Australia bank accounts need an FBAR?
FBAR applies to Australian accounts at Commonwealth Bank, Westpac, NAB and ANZ and every other local institution — and most superannuation accounts count too — once the combined high balance crosses the reporting threshold.
Is there a US-Australia tax treaty?
The US-Australia income tax treaty is in force; it coordinates pensions, dividends, wages and double-taxation relief between the IRS and the ATO but does not remove the US citizen's obligation to file a US return.
Does Australia have a Social Security totalization agreement with the US?
The US-Australia totalization agreement is in force, so Americans working in Australia generally avoid paying Social Security contributions into both systems on the same earnings — which system applies depends on the work arrangement.
I have not filed in years while living in Australia. What now?
Americans in Australia who have not filed for years generally qualify for the Streamlined Foreign Offshore Procedures — three years of returns, six years of FBARs, a non-willfulness statement and no failure-to-file penalty — as long as the IRS has not already written to them.
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This article is general information, not individual tax advice. Book a free 20-minute review or call, text or WhatsApp us to talk through your own situation.
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