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I am a Federal employee and my employer assigned me from the…

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I am a Federal...

I am a Federal employee and my employer assigned me from the US to Australia. We were not able to bring our vehicles from the US as they are left hand drive and Australia is right hand drive. We had to purchase vehicles for transportation to and from work and for maintaining our household in Australia. I want to understand what if any deductions I can make on my US taxes associated with the selling of the cars in the US and the purchase of the cars in Australia. Am I able to deduct the sales taxes I paid in Australia on the cars?

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

We are employees of the US State Department and the State Department transferred us from the US to Australia for work.

Submitted: 2 months ago.Category: Tax
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4/2/2018
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 2 months ago
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,054
Experience: Former IRS Revenue Agent
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I'm Fiona, former IRS revenue agent. I am looking at your question and will get back to you soon. Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP,IMTA

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Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 2 months ago

Dear Customer,

The sales tax is non-deductible. In the U.S. Form 1040, Schedule A, the sales tax is referred taxes paid to the state of resident. Therefore, the Australia sales tax is non-deductible.

When you work overseas, the sales tax you paid on the vehicle for transportation to and from home is commuting expenses and living expenses. Such expenses do not qualify for employee business expenses.

Hopefully, working overseas, you will be qualify for income exclusion provided all requirements met.

However, living expenses is non-deductible on Form 1040. Most taxpayers have to purchase vehicles or pay some type of transportation cost to go to work to earn wages or income. They are not deductible.

Regards,

Fiona

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Customer reply replied 2 months ago
Thank you for the response. My situation is just a bit different than what I think you are describing. Although I work and live overseas, I am doing so at the direction of the US Government. This means I have to pay both federal and state taxes in the US. Right now I have to maintain two households, one in the US as that is where I will return once my assignment in Australia is up and the residence in Australia. I have three cars in the US and I had to buy cars here in Australia for work. So my burden for work and living expenses is twice that of a normal person in the US. Does that make sense?
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 2 months ago

Dear Customer,

You made the choice to work overseas to keep the job and make a paycheck. If your employer, whether the U.S. government or not, is not going to reimburse you for your extra living expenses, the IRS of the U.S. Treasury is not where you get your reimbursement. Should it be allowed in your instance when there is no such tax law for other taxpayers, you are asking the other taxpayers, Americans or others who are not working in your position and getting your wages, to pay for your living expenses.

Many, many people working in the U.S. or overseas are in your similar situation, maintaining several households, with long commuting expenses, and working several jobs at the same time.

That sales tax has no tax law it can follow to make any tax deductions on your tax return.

It is suggested that you go back to your employer to seek a more reasonable compensation package.

Regards,

Fiona

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