US and California tax for Australians: treaty, FBAR and your super

Move to LA and you swap one tax office for two, while the ATO keeps half an eye on you from home. The good news: it's manageable once you know which rules bite.

The short version

• Once you pass the IRS substantial presence test, you're taxed by the US on your worldwide income, like a local [1].
• California taxes residents on worldwide income too, at rates from 1% to 12.3%, plus 1% on taxable income over US$1 million [2][3][4].
• The Australia–US tax treaty helps at the federal level, but California generally ignores tax treaties and gives no foreign tax credit [2].
• Australian bank accounts, shares and probably your super must be reported on the FBAR and possibly Form 8938. The penalties for forgetting are steep [5][6].
• When you leave, California can keep treating you as a resident unless you clearly cut ties [2].

Two tax systems, one LA payslip

The US taxes income at federal level through the Internal Revenue Service (IRS). California adds its own income tax through the Franchise Tax Board (FTB). The City of Los Angeles doesn't add a separate income tax on wages. Your payslip will show federal withholding, Social Security and Medicare tax (together called FICA), California withholding and California State Disability Insurance (SDI).

The US tax year runs from 1 January to 31 December. Federal and California returns for a year are due on 15 April of the next year [3][5].

2026 federal rates

For the 2026 tax year, the federal standard deduction is US$16,100 for a single filer and US$32,200 for married filing jointly [7].

Source: IRS Revenue Procedure 2025-32 [7]. Amounts in US dollars.

California rates

California's 2025 rate schedule for a single filer starts at 1% and climbs to 9.3% from about US$72,700 of taxable income, then up to 12.3% above about US$743,000 [4]. The Behavioral Health Services Tax adds 1% on taxable income above US$1 million [3]. California's standard deduction is small: US$5,706 for a single filer in 2025 [3]. So a typical LA salary lands in the 9.3% bracket quicker than most Australians expect.

Are you a US resident for tax?

Tax residency in the US has nothing to do with your visa. An E-3 holder becomes a "resident alien" for tax once they meet the substantial presence test: at least 31 days in the US this year and 183 days over three years, counting all of this year's days, a third of last year's and a sixth of the year before [1].

Most Australians who move to LA on a job meet it in their first calendar year. The arrival year is usually split, called a dual-status year: nonresident before you arrived, resident after. There are elections that let some people be treated as resident for the whole year, and a married couple can sometimes choose to file jointly with a nonresident spouse. These are worth asking a preparer about, because a joint return gets the wider brackets.

California uses its own test. You're a resident if you're in the state for other than a temporary or transitory purpose, and you're presumed resident if you spend more than nine months there in a year [2]. Taking a job in LA for an open-ended period is a classic non-temporary purpose [2].

The treaty, Australian income and the ATO

What the treaty does

The Australia–US tax treaty decides which country gets first go at different types of income and includes a tie-breaker for people both countries call a resident. In practice, Australians in LA usually rely on it, together with the US foreign tax credit, to avoid paying full tax twice on the same income.

California is the catch. The FTB says treaties that limit themselves to federal tax don't apply to California, and California allows no foreign tax credit [2]. Rent from a flat in Brisbane or interest from an Australian account can be taxed in Australia and again in full by California.

Australia's side

Moving to LA doesn't automatically end your Australian tax residency. If you're still an Australian resident, the ATO taxes your worldwide income as well. If you've become a non-resident, Australia only taxes Australian-sourced income, and you should tell your bank so it applies non-resident withholding rather than asking for a TFN. Our guide to Australian tax residency after you move covers the ATO tests.

Watch the two calendars. The Australian income year runs 1 July to 30 June, the US one runs January to December. Keep monthly records of Australian income and tax paid so each return can pick out the right months.

Social security tax

FICA covers US Social Security and Medicare. If you're hired locally in LA, you'll generally pay it. The US–Australia social security agreement lets workers temporarily sent by an Australian employer stay in Australia's system with a certificate of coverage from the ATO [8].

FBAR, FATCA and the Australian accounts you forgot about

This is where Australians get burnt.

FBAR (FinCEN Form 114). If you're a US person (which includes tax residents) and the combined value of your foreign financial accounts exceeded US$10,000 at any time in the year, you must file an FBAR [5]. That threshold is easy to hit: an everyday account, a savings account and an offset account all count. It's filed online with FinCEN, not with your tax return. The due date is 15 April, with an automatic extension to 15 October [5].

Form 8938 (FATCA). For people living in the US, Form 8938 is required if your specified foreign financial assets exceed US$50,000 at year end or US$75,000 at any time (single), or US$100,000 and US$150,000 for joint filers [6]. It goes with your tax return. Penalties for not filing start at up to US$10,000 and can reach US$60,000 after IRS notices [6].

1. List every account you hold or can sign on in Australia, including joint accounts with parents and business accounts.
2. Note the highest balance of each during the calendar year, converted to US dollars.
3. Add super, shares, managed funds and cash-value insurance to the list for Form 8938.
4. File the FBAR online by 15 April (October at the latest) and attach Form 8938 to your return if you're over the threshold.
5. Keep statements for at least the years you report.

Australian managed funds and ETFs. US rules on passive foreign investment companies can make Australian-domiciled funds expensive to hold and complicated to report. Talk to a cross-border preparer before you buy more.

What the US does with your super

There's no simple answer, and that's the honest position. The treaty doesn't clearly settle how the US treats Australian superannuation, and the IRS hasn't published specific guidance on it. Cross-border tax advisers take different views. Some treat employer super contributions and fund earnings as potentially taxable in the US each year. Others take a more favourable view based on the treaty or on how US rules treat foreign pension plans.

What most advisers agree on:

• Your super balance should be considered for FBAR and Form 8938 reporting.
• Making voluntary contributions while you're a US tax resident needs advice first.
• An SMSF raises extra US trust reporting questions.

Read our guide to super while living overseas for the Australian rules, then get a US preparer who works with Australian clients regularly.

Leaving California

California doesn't let go easily. When you move back to Australia or to another state, you become a part-year resident: taxed on all income while resident, and only on California-source income after [2].

The FTB looks at where your closest connections are, including where your spouse and children live, your home, your driver's licence, car registration, bank accounts, doctors and accountants, club memberships and property [2]. If you keep your LA apartment, your California licence and your car, expect questions.

There's a safe harbour for people domiciled in California who leave on an employment contract for at least 546 consecutive days, with return visits of 45 days or fewer per year. It doesn't apply if your intangible income tops US$200,000 in a year [2]. If you're simply going home for good, the cleaner path is to sell or end the lease, surrender the licence and close local accounts you don't need.

Before leaving the US, check whether you need a certificate of compliance (sometimes called a sailing permit) from the IRS. And trade notes with other Aussies in Cooee USA, our Facebook group for Australians in the USA, where tax season threads start every February.

Sources

1. Substantial presence test – Internal Revenue Service
2. Publication 1031: Guidelines for determining resident status (2025) – California Franchise Tax Board
3. 2025 Personal Income Tax Booklet – California Franchise Tax Board
4. 2025 California tax rate schedules – California Franchise Tax Board
5. Report of Foreign Bank and Financial Accounts (FBAR) – Internal Revenue Service
6. Comparison of Form 8938 and FBAR requirements – Internal Revenue Service
7. Internal Revenue Bulletin 2025-45 (Revenue Procedure 2025-32, 2026 inflation adjustments) – Internal Revenue Service
8. US–Australia social security agreement – Social Security Administration

Keep reading

• Getting a Social Security number in LA: the first number you need
• Opening a US bank account in LA and moving money from Australia
• The E-3 visa: working in the US as an Australian
• Your super while you live overseas