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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7869
Experience:  15years with H & R Block. Divisional leader, Instructor
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In General: Im a us citizen living/working in Australia

Resolved Question:

In General:
I'm a us citizen living/working in Australia permanently currently working for a non-profit organization. I file my taxes twice a year - with the H&R block usa & aus. There is quite of bit of prep work involved but I've been managing thus far - though I wish I could do both my tax filings with one firm - cost effectively - but that may be wishing for too much - however I welcome any suggestions/referrals.
Specifically:
This year - just recently (in July) I've earned some income (without an ABN as the amounts have been small) but soon plan to setup an ABN as I'm expecting slightly more business activity. I am seeking some guidance on what this entails - from a tax filing stand-point. I believe that I can file a 1099 on an annual basis in-so-far as the US in concerned. Is this right ? In Australia - if I have an ABN do I need to file tax statements - quarterly or annually ? Should I be seeking the services of a specialized tax accountant.
Please can you highlight the tax/regulatory overheads if I'm employed + have an ABN with some business activity - and suggestions as to how I might do this cost-effectively.
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D. :

Hello and thank you for using Just Answer,
The income you earned (even without the ABN) will be reported with your US return. You will be using Schedule C so you want to make certain to record your expenses as those will lessen your US taxable amount. This self employed income will also be allowed for your Foreign Earned Income Exclusion on your US return as long as you have not used up all of that with any wages.
You can look at your last US tax return and see the Form 2555 to see if you have been excluding or if you used the Form 1116 to claim the Foreign Tax Credit.

Robin D. :

Your situation is not something that can be made easier mostly because of the difference in the Aus and US tax year dates.

Robin D. :

You do not file a 1099MISC though for your US return you will just be showing the income on the Schedule C as self employment.

Customer:

so in-so-far as the us is concerned I do not need to file quarterly ? what about Australia ?

Customer:

and what is the difference (in principle) between Schedule C and 1099MISC ?

Robin D. :

I would say no for the quarterly filing at this point for the US. Untill you know that you will owe and how much then you would not have a penalty.

Robin D. :

The 1099 is issued to you from businesses you perform services for

Robin D. :

the Schdeule C is filed by you with your return to report the income

Robin D. :

no business in AUS would issue you a 1099MISC because that is a US doc

Customer:

regarding quarterly filing I don't quite understand - how will I know if I owe ?

Robin D. :

Your self employment income will be taxable to US on the NET not the gross, so you will need to look at the income and subtract your expenses. Then that amount can be excluded on Form 2555 (up to the yearly limit) but any amount over $400 will still be subject to Self Employment tax in US. That woudl be the real need for quarterly payments back to the US.

Robin D. :

You will want to use the 1040ES form (US) to calculate if you need to make the payments.

Robin D. :

As you are doing this work outside the US you can either esclude or use the foreign tax credit (AUS will tax you too on the income).

Robin D. :

What do you do with your wages?

Robin D. :

Exclude or use Form 1116?

Customer:

I don't use the earned income exclusion 2555 but instead Form 1116 to get the tax credit.

Robin D. :

Ok

Robin D. :

Then for the SE income you can still use the exclusion and that way you will get benefit under each way.

Robin D. :

The SE tax though is not excluded

Robin D. :

But your tax professional can calculate both ways and see which benefits you more

Customer:

How does self-employment work in Australia from a tax filing standpoint - do I file quarterly or annually - what forms are involved ?

Robin D. :

Let me pull up that info, one sec

Customer:

..... furthermore what is the additional overhead if I register an ABN and operate under as a (self) business (in Australia).

Robin D. :

It will all depend on the business structure you choose. If you stay as a small "home based business" then your situation is a little easier. You can still claim expenses.

Robin D. :

Have you looked at the above by the ATO?

Customer:

no I've not looked at the ATO ...... but just getting back a minute ...... if I understand correctly regarding the us ..... if I earn a NET self employment income of more than $400 then I need to file documents quarterly with the USA ?

Robin D. :

You will want to make those estimated payments if you have Net income over $400. This will make sure you do not get charged a penalty for underpayment, yes.

Robin D. :

It is merely a voucher and payment but no real document or return.

Customer:

and what is the tax document to file these estimated payments ? oh just a voucher - can you send me link ?if so what is the US doc for self-employment tax ?

Robin D. :

Sure...

Customer:

I'll read this doc later - but I presume it contains a table of some sort indicating the estimated amount that I should pay to US based on my NET earnings and the process for the same ?

Robin D. :

Full instructions are included

Robin D. :

Your first payment would be Sept

Robin D. :

The dates are also on teh vouchers

Customer:

great ..... now to Australia ...

Customer:

do you know if it is a quarterly mechanism or an annual mechanism ? is it also similarly based on amounts ?

Robin D. :

No it is not really similar to the US at all. You will want to use that link I sent you because it explains in full the different taxes that you may be liable for based on your structure and also what you are doing in the business.

Customer:

ok ....... I presume I will get a copy of this entire conversation in my email ?

Robin D. :

A copy is not sent to your e-mail but the CHAT session is saved under your My Questions when you log in. It is never erased an dyou can access at any time. After you rate you can hover over SHARE and see PRINT then you can save to a doc

Robin D. :

I really enjoyed working with you – My goal is to give you excellent service.

Customer:

thanks ..... I'm much more clear than when I started .......

Robin D. :

To start a new conversation with me on a new topic request me again.


If you use the link below, you can ask a question directly to me:
http://www.pearl.com/request/TaxRobin

Robin D. :

Your positive rating is always thanks enough.

Customer:

what are the costs involved ?

Robin D. :

costs for tax?

Customer:

no - costs to ask more questions of you ?

Robin D. :

You listed an amount so rating me or coming back here for a followup is not any additional cost.

Customer:

so I can follow-up with you at http://www.pearl.com/request/TaxRobin to ask additional question - perhaps for a limited period - one month ?

Robin D. :

That deals with any subscription you have with JA and I am not privy to any of that info so if you have any questions about that I must advise you to click on the contact Customer Support

Robin D. :

I know they offer subscriptions but I do not have enough info to advise

Customer:

ok

Robin D. :

If you followup is about business again come back here

Customer:

thanks a lot for this chat ..... I'll provide my (excellent) rating now ...... bye for now

Robin D. :

that would be a followup

Robin D. :

Best wishes

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7869
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 7 other Tax Specialists are ready to help you

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Robin D.
Robin D.
7312 Satisfied Customers
15years with H & R Block. Divisional leader, Instructor