Does a US Citizen Living in Australia need to Pay Taxes?

 If you are a US citizen but living and working in Australia, Then you have to pay US taxes. When it comes to individual income tax filing, the United States takes a relatively unique approach. For nations that do tax income don't tax income at all. Also, there are two used systems: 1) territorial based and 2) residence based. In the territorial based taxation system, countries like Singapore tax individuals only on income from sources inside borders of the country. On the other hand side, countries like France and Germany tax their local residents on all income earned from both overseas and local sources under the residence based taxation system. For non residents in these countries, income earned locally only is taxed similar to the territorial based system.

Do you know that about 244 sovereign territories employ territorial, residence or non income taxation at all? But there are only two countries that have citizenship based taxation systems: the US and Eritrea. 

Do all US citizens living in Australia have to file income tax return?

If you are an American living In Australia, it means as a US citizen; you have to file a US tax return and pay US taxes. You are subject to the same rules about income taxation as people living stateside. Also, Americans living and working in Australia must report all their overseas income based on US tax law. Remember, this can be complicated than preparing and filling taxes for US citizens living in Australia  by filing an IRS form 1040. This is because there are often calculations and disclosures in an expatriate tax return that national tax accountants might unfamiliar with that. These are: you have to mention amounts you report on your tax return in dollars. If you receive all your income or a part of it or even pay some or all your expenses in overseas currency, you should translate the overseas currency in to the US dollars.

Why you might not have to pay US tax for US citizens living in Australia?

    • The foreign earned income exclusion rule

Average income receivers who are US citizens living abroad take heart. But, you still have to undertake the administratively burdensome job of filing every year with the internal revenue system, you likely will not have to pay a fine in most cases exclude from your income for US expat tax return purposes upto a certain amount of overseas income  and in many cases exclude or even deduct income that comes in the form of overseas housing. To qualify for this exclusion, you must have a tax income in a country other than the US, you must receive income that qualifies as overseas earned income and you must be either a bona fide resident of a country  other than US for an uninterrupted period that includes a whole tax year. Or have been physically present in a nation or nations other the US for at least 330 days during and any period of 12 consecutive months.