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I am a dual Australian / British citizen living in the United States on a G-4 spousal visa. I am classed as a non-resident alien in the US so fill out a 1040NR and only pay tax on US based income.
So my question is: Where am I resident for tax purposes? I left Australia 7 years ago on an L1A but changed to G4 a year later in March 2010
Am I in no man's land for tax residency?
Disclaimer: I'm not a lawyer nor a tax advisor
USCIS “visitor” status is not imply IRS “non-resident alien” status. IRS has what it calls Substantial Presence Test:
You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least:
- 31 days during the current year, and
- 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
- All the days you were present in the current year, and
- 1/3 of the days you were present in the first year before the current year, and
- 1/6 of the days you were present in the second year before the current year.
However, in you particular case, since you say that you're on G-4 visa, it would seem that you're exempt from being resident (therefore a “non-resident alien”):
An individual temporarily present in the U.S. as a foreign government-related individual under an “A” or “G” visa, other than individuals holding “A-3” or “G-5” class visas.
Being IRS “non-resident alien” might not always be a good thing, in fact you loose the posibility of using many tax decuctions and credits, ending up paying significanly higher taxes in US. On the other hand you don't pay US taxes on your income earned outside of US.
This will be a very hard question to answer as you need an accountant specializing in all 3 countries to give you the right answer. However, I help you with Australian one so you may work out the rest by doing more research (although it should be fairly similar to Australia). In Australia you can declare to be a resident or a non resident. The normal requirement is to stay more than 180 days in a financial year in the country. However, even if you do fly in fly out jobs they will consider you a resident and make you to pay tax on your foreign income (made law by Rudd/Guillard government since 2009). If you have a high Australian income it is in your benefit to choose becoming a resident (considering you are a citizen it is possible) as your income tax rate is a lot lower than when you are a non resident. In any case, any of these countries will ask you to pay income on your foreign income unless you have gone around being a resident in the US somehow. The tax office in Australia never gives you a straight answer in grey areas and they will try to get as mush as tax they can from you. To me it seems you make your money in Australia while you live in the US. In this case, it is a trade off to see which way you pay less tax: 1- Be an Australian resident and pay less tax on your Australian income while you also have to pay tax on foreign income if any (soon or later OECD countries will exchange your financial information which makes it too difficult to avoid paying tax). 2- Be a non resident and pay more tax in Australia while paying no tax on other income. What bigger countries like Apple do: make the head office in a country with very low tax rate such as Ireland. Sell your product from Ireland to Australia double the price. Pay tax in Ireland for the income (which is much lower than Australia). Show that you had no income in Australia from selling iPhones (say you buy from Apple Ireland for $650 and sell in Apple Australian shop for $655).
