Trying to get your head around taxes in you home country can be a pain, but it is even more difficult when you are temporarily living overseas.
before we go too far, I should add, I am not a tax professional. this post is just about my experience. If you are unsure about filing taxes, make sure you speak with a professional.
Using A Professional
For the first few years, that is exactly what I did. Even though my tax situation was pretty straight forward, in Australia I had used H&R Block a couple of times. They have plenty of offices in the US. I reached out and asked for someone familiar with “resident alien” tax returns. I am a human, that’s just the legal term they use to describe someone from overseas living in the US.
After all, this is typically how filing my taxes looked like without using an accountant:
Each year that I filed my taxes in the US, it generally took a few hours. This was because I had bank accounts back in Australia. They had to list each bank account, the amount and any interest earned during that financial year. You likely wouldn’t have to do this if the amount in your overseas account is less than $10,000 US.
In the US, depending on the state you reside in, you may need to file forms for Federal and State taxes. Thankfully, we lived in Florida where there is no state income tax (thanks Disney and the tourism industry!).
Filing Your Own Taxes
The downside of using a tax professional is that it costs money. Generally it can be anywhere from $200 to over $1,000 depending on how many different forms they have to file for you. Most of the time you will get some money back on your return, so it isn’t that bad. That said, there was one year where I ended up paying additional taxes, plus the accountant so that hurt!
This year, having returned to Australia at the end of 2019, we had to figure out how to lodge our US taxes from abroad. We contacted H&R Block in Australia but they wanted $400 for us to fill out some forms that would be similar to completing our taxes directly through the IRS website for free. So we went for the free option.
Using our previous tax returns as a guide, we filed our return directly through the IRS website using Free File. They certainly don’t make it simple. We submitted our return a couple of times but got email notifications we had to resubmit. After resubmitting a couple of times it finally went through. We had to complete the standard 1040 plus three other forms. It probably took 4-6 hours all up but we saved a bunch of money.
Have you had to try and fill your taxes? How did you go?