[neil-e3]

Hi there,

So here is the scenario. I am from Australia relocating to the States (West Coast). I will be relocating early June.

Facts –
- Australia – Has a July to June tax year. I will have worked from July 09 to May 10 and paid taxes (withholding taxes that is).
- USA – Has a Jan to Dec tax year. I would work from June 10 to Dec 10 (i.e 7 months thus satisfying the SPT?)
- Australia – I shall file my taxes to include income earned in the period per above and claim withholding taxes
- USA – how will my tax liability be working out? Do I file taxes for Income from Australia (Jan 10to May 10) + USA (Jun 10 to Dec 10)? What conversion rates (From AUD to USD) will be applied?

To complicate it further – I will have a rental property in Australia from Jun 10 to Dec 10 on which I will make a loss. I know I can offset this against my US income. (25k limit for filing jointly, reduced by 50% of the amount of adjusted income exceeds 100k)

I want to know in advance to I carry the right documentation with me to the states like month on month Australian payslips etc.

Please let me know.

[AtlantaTaxExpert]

Neil:

If you are single, you will file a dual-status return on which you will be taxed ONLY for income earned while in the U.S.

If you are married, you have the OPTION of filing jointly with your wife and you both CHOOSE to be treated as resident aliens for ALL of 2010. Then you will need to report your and your wife's Australian income.

In either case, you do have to report the income (and the resulting loss) on your Australian rental property using Schedule E.

You can use the average conversion rate for the entire year, or the average over the period you were in the U.S. or the conversion rate on the date you got the money. You just need to be consistent on which method you use.

[neil-e3]

OK, I am married and no kids.

I am a bit confused pardon me.

If I am married & I choose to filing jointly then I will have to declare income for US and AUS (Aus = Jan to May 10, US = Jun to Dec)?

My wife will not be working lets assume.

Here is an example-
My Australian income for 11 months say 110k which means Jan to May income = 50k.
My US income ( June to Dec 10) for 7 months say = 70k.
Wife's Australian income for 11 months say 44k which means the Jan to May income = 20k.

So, if I chose to file married joint and resident aliens for all 2010 my taxable income (assume no deductions) is = 50+70+20 = 140k?

Is this correct? Are there any other options?

[neil-e3]

OK, I am married and no kids.

I am a bit confused pardon me.

If I am married & I choose to filing jointly then I will have to declare income for US and AUS (Aus = Jan to May 10, US = Jun to Dec)?

My wife will not be working lets assume.

Here is an example-
My Australian income for 11 months say 110k which means Jan to May income = 50k.
My US income ( June to Dec 10) for 7 months say = 70k.
Wife's Australian income for 11 months say 44k which means the Jan to May income = 20k.

So, if I chose to file married joint and resident aliens for all 2010 my taxable income (assume no deductions) is = 50+70+20 = 140k?

Is this correct? Are there any other options?

My interpretation from above note from you is, if I were single then I can (by filing single) ONLY declare Australian Income on my US tax return if the income were earned whilst I am in US (so that will be zero given that Australian salary income won't exist). But if I file joint then I will have to declare income per above calcs?

[neil-e3]

Anyone any help on this?

[MukatA]

If you choose to file joint return as residents, you must both report your worldwide income. For your foreign income, you have two forms consider.
Form 2555 is earned income exclusion. If you meet the requirements, you will be able to exclude your earned income; same for your spouse.
Form 1116. If you are unable to exclude your earned income and/or have unearned income (like interest, dividend, capital gain), you can claim credit for taxes paid in the foreign country.

Generally, joint return is better than filing dual status return. Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income

[AtlantaTaxExpert]

If you need professional help to model the return BOTH ways to see which is best, email me at [email protected].