How to Protect Superannuation From US Taxes?
Published on December 19, 2024
Seth Hertz, a tax professional with 35 years of experience, specializes in US tax preparation, tax planning, and tax advice for US citizens and Green Card holders living and working in Australia.
*30-minutes US$437.
Table of Contents
How can US citizens in Australia protect their superannuation from US taxes?
While there’s no single solution that eliminates US tax exposure, there are strategies that can help minimize your liability.
Is there a simple way to avoid US taxes on superannuation?
No, there isn’t a one-size-fits-all solution.
The best strategy is staying compliant with US tax reporting requirements. That means reporting your superannuation contributions to the IRS every year, even if it’s a hassle. Doing so will make things smoother when you start withdrawing from your super during retirement.
Let’s find the best strategy for your Superannuation. Contact us today.
How can I reduce your US tax liability?
One key way to reduce tax liability is timing.
Working with a tax advisor can help you figure out the best time to make withdrawals or rollovers from your superannuation account. Sometimes, adjusting the timing of these transactions can lower the amount of tax you owe in the US.
Also, planning ahead gives you more flexibility. For example, if you know you’ll stop working and start withdrawing from your super in 10 years, you can structure your finances to minimize tax hits at that time.
Should I report my superannuation to the IRS?
Yes, it’s recommended.
While you may not like the idea of the IRS knowing about your super, it’s better to be transparent. Reporting your super every year helps you avoid future problems, like penalties or surprise tax bills. If your contributions are reported and taxed properly, it’s possible you won’t owe much, if any, tax when you eventually start withdrawing.
There’s no easy fix, but by staying compliant with IRS reporting rules, timing your withdrawals wisely, and utilizing foreign tax credits, you can greatly reduce the chances of being hit with a large US tax bill during your retirement.
