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

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

I don't know the ins and outs of Australian tax, but assuming it's similar to both UK and US tax law for departing residents, you should pay up until the time you leave. You might even be due a refund if there is a tax-free allowance that is spread over the whole tax year.

As for the US tax: you are a resident for the whole year based on the physical presence test (more than 6 months in the year). This means that your entire year's income is subject to US taxes. Don't worry though, because you can take a foreign earned income exclusion ($80 000 pro-rata over the year so approx US$20k in your case). If you earned more than this in Australia, you can then go on to deduct the actual foreign taxes paid, if they are more than what you would have paid had the money been earned in the US. Bottom line is that you shouldn't have to pay double taxes.

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

Interesting.. What kind of work visa did you have when you were working for 3
months?? If you were on a B1 visa, you generally wouldn't be doing work that you
would have paid US tax on. Of course, your 3 months of work doesn't sound like it
would be eligible work under the limits of B1 or VWPP. So, if it were me, I would
count it solely as Aust Income. However, you need a tax professional or IRS to answer
that question.

Your Australian income for the year would be deducted up to about $80,000 US
(prorated)

So, the biggest question is where was that income earned. If you were really
"working" in the US then you should be able to deduct the income from the
Aust. return.

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
    >
    > --