Finally getting around to this. One advantage of moving to Australia will be simpler tax rules and forms though at higher income levels the tax rates are higher. But there are lots of loopholes. Australia does not require any information on individual transactions or to specify how much income came from what specific account or security. There are no state income taxes either.
Following up on my post on foreign accounts, I just noticed you don't need to admit to owning a foreign account if you have less than $10,000 in those accounts. That would reduce the numbers who ought to file considerably. I also notice for the first time that I am meant to file some form with the Treasury Department due to owning a foreign account with more than $10,000. If you don't file you could be subject to a penalty of $10,000. I've never filed and never been fined. Guess that now I noticed it I'll file it.
It's a lot trickier filing a U.S. tax return when you have foreign accounts as you don't get those 1099 forms for them and you have to work out how to classify all the different payments in US terms. Also you need to claim back foreign taxes paid.
What I am noticing so far is that my dividends received have almost doubled since last year ($6199 vs. $3254) and my interest received is ten times higher ($2303 vs. $216.18).
6:43PM
Finally completed my Federal return. I owe $400. I guess there will be a small penalty for late payment. Miscalculated when I asked for the extension thinking I would be getting a refund. The state return is always pretty quick. After we decide on moving I'm going to run some scenarios of whether I should up my withholding, pay estimated taxes or just pay the interest next April. Due to my increased 403b contributions my withholding is currently less than last year but probably my investment income will be up on this year (I hope). To avoid estimated taxes or interest for not paying them I will have to withhold at least as much as this year's tax bill.
Dinner and then on to my state return.
11:51PM
I owe the state $1260 including a $14 penalty :( The penalty is based on the difference between my withholding and last year's state tax bill. Last year I had a big Federal Tax Refund and a very small state tax bill.
4 comments:
Yes, the ATO doesn't require the detailed info to be supplied with your submitted tax return (under our "self assessment" system there's no point), but you are supposed to kept all the relevant substantiation details. When you eventually get a "desk audit" you most certainly will need to supply all the detailed transactional info if requested!
Regarding the Oz tax rates - with pension income from Australian superannuation now being tax exempt for retirees over 60s under the new 'Simpler Super' rules, and the ability to salary sacrifice up to A$50K pa into super (effectively paying 15% tax on that money instead of your marginal tax rate) the Oz tax system is a lot more friendly for higher income earners. The last budget also announced that they're going to significantly raise the threshold for the top tax rate next year (unless Labor wins the election in the meantime). Also, anyone on a 'high' income would probably be using gearing to 'convert' taxable income into tax deferred capital gains, which will eventually be taxed at half the relevant marginal tax rate. So you can basically halve the nominal "top marginal tax rate" for all practical purposes.
Regards
http://enoughwealth.com
I lived in Australia from 1996 to 2002 and the tax rates and superannuation regime now are definitely an improvement on that period. I think one problem in the US system is that the brokers only need to report sales to the IRS and not purchases and they have the "wash sale rule" that doesn't exist in Australia. So they need detailed transactional detail for shares from the taxpayer. For futures, they get reported the net P&L and that is all you need to supply for the IRS too yourself. Futures are taxed at a concessionally low rate in the US and not in Australia. That is one downside of Australia. Otherwise the tax rates on upper middle income people are similar to in high tax US states or maybe lower when you consider social security taxes. It used to be that the middle class in Australia was taxed much higher than in the US while the poor and rich (through all the Australian loopholes) was taxed lower. That's no longer the case.
so what if you have 10 foreign accounts with only $9k in each, do you still have to report them?
sorry, thats just how my mind works!
No, it's the total of all accounts and you need to report the income whether or not you check the box.
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