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If you had a relatively simple tax return to complete each year in Australia (before moving to the USA), you may have muddled your way through the ATO’s tax pack or online tax return forms or used a tax preparation chain (think H&R block).
Now that you have moved to the USA, you may find yourself in a more complex situation of not fully understanding the tax laws in America (federal and state) or not fully understanding how the Australia – USA double taxation agreement applies to your situation, and whether you need to complete an Australian tax return while living overseas each year. If that is your situation, then now might be a good time to find yourself a good accountant.
WHY DO I NEED A GOOD ACCOUNTANT?
There are a number of reasons why, as an Australian expat in the USA, you should want a good accountant.
- To make sure you understand whether you are an Australian resident or not for tax purposes
- To make sure you understand what income you need to declare to the Australian tax authorities and USA tax authorities
- To make sure you claim all the tax deductions you are legally entitled to in each jurisdiction
PERSONAL CHARACTERISTICS OF A GOOD ACCOUNTANT
My personal success in investing and building wealth has a lot to do with having built a strong relationship with a very good accountant over the last fifteen years.
In my opinion, a good accountant should be willing to :
- Provide pro-active advice in relation to your tax affairs, investments, superannuation, relevant tax deductions etc
- Be patient and answer any and all of your questions related to your tax affairs. I am personally a big believer that everyone should build their tax and financial knowledge, and every engagement with your tax or financial advisers is another opportunity to learn. And don’t forget, you are legally responsible for how your tax return is completed, so you should understand where every number on your tax return comes from, and why it is required.
- Listen and be easy to talk to. You want to build a long term relationship with your accountant so you want to be able to get along with them.
WHAT QUALIFICATIONS SHOULD A GOOD ACCOUNTANT HAVE?
If you want to engage an accountant to do your tax return in Australia each year, they need to be a registered tax agent, and if you are seeking for your accountant to also provide personal financial advice (eg. in relation to a self managed super fund), then they will also need to have an Australian Financial Services Licence.
You should be aware that being a registered tax agent does not necessarily mean the person is an accountant. Tax agents are specialised in completing personal income tax returns and making sure you declare the appropriate income and claim all relevant tax deductions. Accountants (including CPA’s) are generally more concerned with tax planning and structuring but may also offer the services of a registered tax agent. CPA’s however may not specialise in personal income tax. It all gets a bit complicated doesn’t it?
I recommend to anyone with a slightly complicated tax situation (which generally captures most expats) that they work with an accountant experienced in not only personal income tax returns but expat tax issues as well.
Similar to Australia, in the USA there are enrolled agents (EA) and certified public accountants (CPA). Enrolled agents are tax professionals licenced through the IRS and CPA’s are accountants who have specific qualifications and have met specific education and experience requirements.
Unless your income tax returns are very simple, as an expat it is worth considering using the services of someone that is able to provide you a more holistic tax planning service which takes into account your unique circumstances of working abroad and potentially advise on the best way to structure your investments to minimise tax. What that means, is that I personally recommend an accountant that is experienced in dealing with both expat tax issues and income tax returns.
The ideal situation is that you would find someone who is qualified to provide both Australian and American financial advice and tax preparation services. If you are unable to find someone in the USA, you could also consider an accountant based in Australia who might be focused on providing support to American citizens living in Australia.
We are no longer living in a world where we need to rock up to our accountants office with a shoebox of receipts. Think laterally, and accept that the best accountant for you may not live in the same country let alone the same city as you.
In the event you can’t find one accountant to provide both services, you can employ the services of two separate accountants (one in Australia and one in the USA). To the extent they disagree on the tax treatment of certain investments or income, you can put them in touch with each other to resolve the differences.
This is a guest post from Craig Joslin, Founder of The Australian Expat Investor. Craig shares hints and tips to other Australian expats on protecting and building wealth while living abroad.
Disclaimer : This information is for educational purposes only and does not constitute financial or taxation advice. As this information is not advice and has been prepared without taking into account your objectives, financial situation or needs you should, before acting on this information, consider its appropriateness for your circumstances. Independent advice should be obtained from an Australian financial services licensee before making investment decisions, and a registered (tax) financial advisor/accountant in relation to taxation decisions. To the extent permitted by law, we exclude all liability for any loss or damage arising in any way.
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