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Tax question: was I a (taxed) resident of two countries in the year I arrived?

Tax question: was I a (taxed) resident of two countries in the year I arrived?

Old Aug 5th 2002, 9:21 pm
  #1  
Shannon
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Default Tax question: was I a (taxed) resident of two countries in the year I arrived?

I arrived in the US from Australia in December 2000. I was doing market research for 3 months for my Australian employer, paid in Australia, paying Australian tax.

I married my USC spouse in February 2001. Resigned my job in March and since then have considered myself a US resident.

We are now doing the 2001 US tax return and it seems from our reading that I am considered a US resident for the whole year, and since I did the work in the US, the Australian income is "US source income" and will be US taxed.

I did my Australian tax return in June 2001 and was taxed in full on the income, as they considered me an Australian resident working abroad until I resigned in March.

Is this possible? that I was a resident of both countries and will, effectively, pay 75% tax for those three months?

Any advice on where to get advice would be good. Or similar experience, anyone?

Shannon
 
Old Aug 6th 2002, 12:20 am
  #2  
Stuart Brook
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Default Re: Tax question: was I a (taxed) resident of two countries in the year

Shannon wrote:
    >
    > I arrived in the US from Australia in December 2000. I was doing market research
    > for 3 months for my Australian employer, paid in Australia, paying Australian tax.
    >
    > I married my USC spouse in February 2001. Resigned my job in March and since then
    > have considered myself a US resident.
    >
    > We are now doing the 2001 US tax return and it seems from our reading that I am
    > considered a US resident for the whole year, and since I did the work in the US,
    > the Australian income is "US source income" and will be US taxed.
    >
    > I did my Australian tax return in June 2001 and was taxed in full on the income, as
    > they considered me an Australian resident working abroad until I resigned in March.
    >
    > Is this possible? that I was a resident of both countries and will, effectively,
    > pay 75% tax for those three months?
    >
    > Any advice on where to get advice would be good. Or similar experience, anyone?
    >
    > Shannon

Generally, in these circumstances, you will be able to claim a foreign tax credit in
one or the other countries (generally the one you pay more taxes to) thus reducing
the total payable to the amount you'd have paid the higher taxing country for the
period you are considered a tax resident of both. In some cases a tax treaty exists
which makes the determination easier.
 
Old Aug 6th 2002, 1:02 am
  #3  
Shannon
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Posts: n/a
Default Re: Tax question: was I a (taxed) resident of two countries in the year I arrived?

I was looking and found a Tax Treaty between Australia and the US. However, from the reading it seems that I should NOT have been a tax resident in Australia (ie they should repay the tax?) AFTER the fact.

I was a resident when I was taxed but not when the time came for the tax return.

However, they determined that I WAS a resident. Australia has higher tax than the US.

I guess I will consult a tax agent and see if I can claim a tax credit for the US-equivalent amount of Australian tax I paid.

Shannon
 

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