The U.S.–Australia Cross-Border Financial Planning Guide for 2026

The U.S. and Australia have close economic ties and treaties designed to make it easier to live and work in both countries. Those treaties don't make the move simple, though. Each country taxes you under its own residency rules, and the two tax systems treat retirement accounts, investment funds, trusts and insurance differently.

This guide covers the main financial issues to work through before, during and after a move, whether you're an American moving to Australia or an Australian moving to the U.S. It's general education, not advice for your situation. Rules change, and cross-border cases depend heavily on the facts, so work with professionals who know both systems.

What should I do with my accounts and property before I move?

Before you move, decide what to keep, what to close and what to sell. Those decisions have tax consequences in both countries, so make them before you board the plane.

Bank accounts

If you're moving permanently, it can make sense to close some accounts and consolidate in your new country. There are also good reasons to keep at least one account open in your home country:

• Family transfers are easier with an account in that country.
• Ongoing bills and investments, such as a rental property or a mortgage, are easier to manage locally.
• Credit history. If you move back, an established banking relationship can make loans easier to get.

You'll also need an account in your new country. Depending on your visa and the bank, you may be able to open it before you arrive.

When moving money out of the U.S., use bank-to-bank transfers. Starting January 1, 2026, a 1% federal tax applies to remittance transfers that the sender funds with cash, a money order, a cashier's check or a similar instrument (IRS). Transfers funded from a bank account or a U.S. debit or credit card aren't subject to it.

Investment and retirement accounts

Americans moving to Australia often keep their 401(k)s and IRAs in the U.S. Cashing out early to move the money can trigger U.S. income tax plus a 10% early-withdrawal penalty. Keeping them, however, doesn't mean they're tax-deferred in Australia. More on that below.

Taxable brokerage accounts raise a practical problem. Many U.S. brokers restrict or close accounts for clients with foreign addresses. Check your broker's policy before you move.

Australians moving to the U.S. should be careful with Australian managed funds and ETFs. Once you're a U.S. tax resident, they're generally treated as passive foreign investment companies (PFICs), which carry punitive U.S. tax treatment. Superannuation also has no clear IRS treatment. Both are covered below.

Real estate and personal property

• Your home. If you might come back, renting it out may make sense. If the move is permanent, selling may be simpler. Both have tax consequences. Australia generally keeps taxing Australian real estate after you leave, and the U.S. taxes its citizens and residents on gains anywhere in the world. The timing of a sale relative to your move can change the outcome in both countries.
• Belongings. Decide what to sell, store or ship. International container shipping is expensive, so get quotes early.

Power of attorney

If you're leaving significant assets behind, appoint someone you trust under a power of attorney in that country. They can manage accounts, sign documents and handle problems on your behalf. Use a document that's valid where the assets are, since a U.S. power of attorney may not be accepted in Australia, or the reverse.

How are you taxed when you move between the U.S. and Australia?

What you owe, and to which country, depends on your citizenship, your residency in each country, the type of income and where your assets are. The U.S.–Australia income tax treaty helps prevent double taxation, but it doesn't resolve every situation. Here are the main issues.

Leaving: U.S. expatriation tax and Australian departure CGT

U.S. expatriation tax. U.S. citizens who renounce, and long-term green card holders who give up their status, may owe an exit tax if they're "covered expatriates" (IRS). Generally, a long-term resident is someone who held a green card in at least 8 of the last 15 years. For 2026, you're a covered expatriate if any of these applies (Rev. Proc. 2025-32):

• Your average annual net income tax for the prior five years is more than $211,000.
• Your net worth is $2 million or more.
• You can't certify five years of U.S. tax compliance on Form 8854.

Covered expatriates are generally treated as having sold everything they own the day before expatriating. For 2026, the first $910,000 of that net gain is excluded. Special rules apply to retirement accounts, deferred compensation and trusts, and there are limited exceptions for certain dual citizens from birth.

Australian departure CGT. When you stop being an Australian resident, CGT event I1 generally treats you as having sold assets that aren't taxable Australian property, such as many shares, at market value (ATO). You can choose to defer that tax until you actually sell. Australian real estate stays in the Australian tax net either way.

Australia's capital gains rules are also changing. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on June 26, 2026 (Australian Treasury). For gains accruing from July 1, 2027, it replaces the 50% CGT discount for individuals with cost base indexation and adds a 30% minimum tax on capital gains, with outcomes pro-rated for days spent as a resident. Further amendments are still being developed, so if you're leaving Australia or selling Australian assets around that date, model the timing before you act.

Who has to file where?

Americans in Australia. U.S. citizens and green card holders must file U.S. returns and report worldwide income wherever they live. If you become an Australian tax resident, you must also report your worldwide income to the Australian Taxation Office (ATO). Most residents don't pay Australian income tax on the first $18,200 of income, but that's a tax-free threshold, not a reporting threshold (ATO).

Australia uses several tests to decide residency, including whether you reside in Australia, the domicile test and the 183-day test (ATO). Foreign residents are generally taxed in Australia only on Australian-source income. Australian temporary residents, such as many people on employer-sponsored temporary visas, are generally taxed on Australian-source income plus foreign employment income earned while in Australia.

Australians in the U.S. You're a U.S. tax resident if you hold a green card or meet the substantial presence test. That means at least 31 days in the U.S. in the current year and at least 183 days over three years, counting all days this year, one-third of last year's days and one-sixth of the days from the year before that (IRS Topic 851). U.S. residents report worldwide income. Nonresidents are generally taxed only on U.S.-source income. If you're still an Australian resident, you keep filing in Australia on your worldwide income. If not, you file only on Australian-source income.

What if both countries say you're a resident?

If you're a tax resident of both countries in the same year, Article 4 of the treaty settles it in this order (U.S.–Australia treaty):

1. Permanent home. You're a resident of the country where you have a permanent home available to you.
2. Habitual abode. If you have a permanent home in both countries, or in neither, you're a resident of the country where you have your habitual abode.
3. Personal and economic ties. If that still doesn't decide it, you're a resident of the country with which your personal and economic relations are closer.

Treaty tie-breaker rules generally don't release U.S. citizens from U.S. tax. The treaty's saving clause lets the U.S. keep taxing its citizens as if the treaty didn't exist, with some exceptions. Claiming treaty residence can also require disclosure, such as Form 8833 for U.S. returns.

How do you avoid paying tax twice?

• Americans in Australia can claim the foreign tax credit for Australian income tax, or exclude up to $132,900 of foreign earned income for 2026 with the foreign earned income exclusion. Australian tax rates are often higher than U.S. rates, so the credit frequently works better. The two can be combined but not on the same income, so model both.
• Australian residents with U.S. income, including Americans living in Australia, can generally claim Australia's foreign income tax offset for U.S. tax paid on income that Australia also taxes, up to the limits.
• Social Security and other government pensions paid by one country to a resident of the other, or to a U.S. citizen, are generally taxable only in the country that pays them under Article 18 of the treaty.

The totalization agreement

The U.S.–Australia totalization agreement coordinates the two countries' retirement systems. On the U.S. side it covers Social Security and Medicare taxes and Social Security retirement, disability and survivors benefits. On the Australian side it covers the Superannuation Guarantee contributions employers must make for employees.

It does two main things:

• Prevents double coverage. In most cases, your work is covered by only one country's system, so you and your employer aren't paying into both for the same work.
• Combines work credits. If you don't have enough credits in one country to qualify for its benefits, credits from the other country may be counted to help you qualify.

Reporting foreign accounts: FBAR and Form 8938

U.S. persons, including citizens, green card holders and others who are U.S. tax residents, must generally file an FBAR with FinCEN if the combined value of their foreign financial accounts exceeded $10,000 at any time during the year. That applies to Americans in Australia and to Australians who become U.S. residents. Australian bank and brokerage accounts count. For superannuation, there's no FinCEN or IRS guidance that addresses it specifically. Many practitioners report super accounts on the FBAR, and on Form 8938 where the thresholds are met, as a conservative position, since the penalties for leaving off a reportable account can be much larger than the cost of reporting it.

Separately, you may need Form 8938 with your tax return. For a single filer living abroad, the threshold is more than $200,000 in specified foreign financial assets on the last day of the year or more than $300,000 at any time during the year. Thresholds are lower for people living in the U.S. Penalties for missing either form can be steep, even when no tax is owed.

Australian residents must report foreign income to the ATO, including interest from U.S. accounts and gains on U.S. investments.

U.S. retirement accounts in Australia

This is one of the least intuitive areas. Under Article 18 of the treaty, pensions paid for past employment are generally taxable only in the country where the recipient lives, but the U.S. saving clause still lets the U.S. tax its citizens. The bigger issue is Australia's treatment of the accounts themselves.

In an ATO private ruling, a U.S. 401(k) was held not to be a foreign superannuation fund because it allowed withdrawals before retirement for other purposes (ATO private ruling). Under that approach, contributions came back tax-free in Australia, but the earnings portion of a distribution was assessable, and an interest charge could apply. Private rulings apply only to the taxpayer who requested them, but they show the risk. A Roth IRA distribution that's tax-free in the U.S. can still be taxable in Australia.

Contributing from abroad has limits too. IRA contributions require taxable compensation, and income excluded under the foreign earned income exclusion doesn't count. Check with your plan administrator and tax advisor before contributing.

529 plans and HSAs. Australia doesn't recognize either one as tax-advantaged. A 529 can pay qualified expenses at eligible schools abroad, including many Australian universities. An Australian resident, however, may be taxed on the earnings, and the plan may be treated as a foreign trust. HSA earnings and withdrawals that are tax-free in the U.S. may be taxable in Australia. Get advice before you keep funding either account after a move.

Australian superannuation in the U.S.

How the U.S. taxes Australian superannuation is unsettled. The IRS hasn't issued guidance specific to super, and the U.S.–Australia income tax treaty doesn't directly address it. The totalization agreement covers Superannuation Guarantee contributions, but only to decide which country's retirement system covers your work. It doesn't decide how super is taxed.

Here's what is reasonably clear:

• Super isn't tax-deferred in the U.S. just because it is in Australia. A U.S. tax resident with a super account may have U.S. taxable income from contributions, earnings or distributions, depending on the position taken.
• Reporting is the safer course. Many practitioners report super accounts on the FBAR and Form 8938 even though the rules don't name super specifically.

Where practitioners differ is the tax treatment. Common positions depend on the type of fund and who made the contributions:

• Employer-sponsored or retail funds are often treated as a foreign employees' trust. Under that approach, employer contributions and earnings can be taxable in the U.S. as they vest or accrue.
• Self-managed super funds (SMSFs) are often treated as foreign grantor trusts, which can mean reporting the fund's income on your U.S. return and filing Forms 3520 and 3520-A.
• Some practitioners treat super as a foreign pension taxed mainly when you withdraw it, but that position carries more risk without IRS guidance.

These are practitioner positions, not settled law, and the IRS could disagree with any of them. The practical approach is to work with a cross-border tax professional to pick a position that fits your fund, document why, and apply it consistently each year. Changing positions from year to year is what tends to cause problems.

Passive foreign investment companies (PFICs)

A foreign corporation is a PFIC if at least 75% of its income is passive, or at least half of its assets produce or are held to produce passive income. Most Australian managed funds and ETFs fall into this category when held by a U.S. person. Without a qualified electing fund (QEF) or mark-to-market election, gains and certain distributions are taxed at the highest ordinary rate plus an interest charge. U.S. persons who own PFICs generally must file Form 8621 each year. For many Americans in Australia, the simplest approach is to hold Australian shares directly, or hold U.S.-domiciled funds where permitted, rather than Australian pooled funds.

On the Australian side, residents report worldwide income, including income from foreign companies and trusts. Australia's attribution rules can tax some foreign income before it's distributed.

Equity compensation

Stock options, RSUs and employee share schemes are taxed differently in each country, and timing differs too. Which country taxes a grant depends on where you lived and worked between grant and vesting or exercise, and where the employer is located. Each country may tax a proportion of the income, so you'll often need sourcing calculations and foreign tax credits on both sides. Get a calculation done before you exercise or sell around a move.

How should I manage currency exchange?

Costs of converting

The spread between a dealer's buy and sell price is a cost you pay every time you convert U.S. dollars to Australian dollars or the reverse. Airport kiosks and retail exchange counters are usually the most expensive. Banks and dedicated transfer services with transparent fees are usually cheaper, and larger transfers often get better rates. If you convert often, compare providers' total cost, including the spread and fees.

Exchange-rate risk

If you earn in one currency and spend in another, exchange-rate swings change your real income and expenses. A large one-time conversion, such as house sale proceeds, can lose meaningful value if the timing is poor. A few ways to manage that:

• Match currencies. Where practical, hold assets in the currency of your future spending, such as a home purchase or retirement income.
• Stage large conversions over time rather than converting everything on one day.
• Hedge with care. Currency hedging can reduce volatility but has costs and complexity. Get advice before using it.

Currency also affects taxes. The U.S. measures gains and losses in dollars, so a property sale or a foreign mortgage payoff can create a taxable currency gain even when nothing changed in Australian dollars.

How does moving affect my estate plan?

An estate plan that works in one country may not work well, or at all, after a move. Your residency, where your assets are, where your beneficiaries live and your spouse's citizenship all matter.

Wills

Many people with assets in both countries use a separate will in each country, with each will covering only the assets located there. That can speed up probate and reduce legal costs for your executors. The wills must be drafted together so one doesn't accidentally revoke the other. Tell both lawyers about both documents.

If you have minor children, name guardians and think through where your children would live. That gets complicated if your children live in one country and your preferred guardians live in another.

Trusts

Trusts are common estate planning tools in both countries, but they don't travel well. A U.S. revocable living trust can be treated very differently under Australian tax law once you're an Australian resident. An Australian family trust can be a foreign trust for U.S. purposes, with complex reporting for U.S. beneficiaries. Before you create a trust in either country, or keep using one after you move, have estate and tax lawyers in both countries review it.

Advance directives

Health care directives and medical powers of attorney are governed by local law. Sign new documents that meet your new state's or territory's requirements rather than relying on documents from your old country.

Marrying a U.S. citizen

If your spouse is a U.S. citizen and you aren't, special U.S. estate and gift tax rules apply:

• No unlimited marital deduction. Assets passing to a non-citizen surviving spouse generally don't qualify for the marital deduction unless they pass through a qualified domestic trust (QDOT). Without one, estate tax may be due at the first death if the estate exceeds the exemption. For 2026, the basic exclusion amount is $15 million per person (Rev. Proc. 2025-32).
• Jointly owned property. When a U.S. citizen dies owning property jointly with a non-citizen spouse, the full value is generally included in the citizen's estate unless the survivor can show their own contributions. Keep records of who paid for what.
• Gifts between spouses. Gifts from a U.S. citizen to a non-citizen spouse qualify for a higher annual exclusion, $194,000 for 2026, rather than the unlimited exclusion between citizen spouses (IRS).

Inheritances

The U.S. doesn't tax a U.S. person who receives an inheritance from abroad. However, a U.S. person who receives more than $100,000 in gifts or bequests from a nonresident alien or foreign estate during the year must report them on Form 3520. A handful of U.S. states have their own inheritance taxes. Australia doesn't have an inheritance tax, but capital gains rules can apply when you later sell inherited assets.

What insurance do I need after the move?

Insurance protects against medical costs, the loss of income from disability and the financial impact of a death. Moving countries can quietly leave gaps.

Health insurance

Americans moving to Australia. U.S. health plans generally won't cover you in Australia. Australia's public Medicare system covers citizens, permanent residents and certain people applying for permanent residency (Services Australia). Most Australian taxpayers pay a 2% Medicare levy. Many residents also buy private hospital cover for more choice of doctors and hospitals. If you're on a temporary visa, you're usually not eligible for Medicare, and many visas require you to keep adequate private health insurance.

Higher-income Australian residents without private hospital cover may owe the Medicare levy surcharge. For 2025–26, the surcharge starts above $101,000 of income for singles and $202,000 for families (ATO).

Australians moving to the U.S. U.S. health care is expensive, so arrange coverage from day one. Options include an employer plan, the Affordable Care Act marketplace for lawfully present immigrants, or a private plan. Use short-term visitor coverage only as a bridge. Medicare is available at 65 to people with enough U.S. work credits. Otherwise, lawful permanent residents can generally buy into Medicare after five years of continuous U.S. residence. If you'll remain an Australian tax resident while in the U.S., review whether dropping Australian private hospital cover could trigger the Medicare levy surcharge.

Life insurance

Americans moving to Australia. A U.S. policy usually stays in force after you move, unless it excludes foreign residence. Buying a new U.S. policy after you've moved is harder, and many insurers won't cover foreign residents. Some will if you apply and sign in the U.S. Beneficiaries abroad can generally claim, but they may need extra documents, such as Form W-8BEN. Australian insurers generally require you to live in Australia and meet visa conditions when you apply. Many Australian super funds also include default life and disability cover.

Australians moving to the U.S. Australian policies, including cover held through super, often continue overseas, but check the terms. Once you live in the U.S. you can buy U.S. coverage. Naming a beneficiary in Australia is allowed, but the claim may take longer. Life insurance death benefits are generally income-tax-free to U.S. beneficiaries. In Australia, death benefits paid from super to someone who isn't a dependant for tax purposes, such as an adult child, can be taxed (ATO).

Disability insurance

Americans moving to Australia. Many U.S. disability policies limit or exclude benefits for people living abroad, or require you to return to the U.S. to claim. Read your policy's foreign residence terms before you move. In Australia, the National Disability Insurance Scheme funds disability supports for eligible people who live in Australia and are citizens, permanent visa holders or Protected Special Category Visa holders, generally if they apply before 65. The NDIS isn't income replacement, so private income protection insurance, often available through super, fills that role.

Australians moving to the U.S. Australian income protection may not pay if you live overseas. In the U.S., Social Security Disability Insurance pays benefits if you've worked long enough and recently enough under Social Security, and the totalization agreement may help you qualify. Employer group coverage and individual disability policies can cover the rest.

Your U.S.–Australia move checklist

• Confirm your residency in each country for the year you move and the year after, including any treaty tie-breaker position.
• Model departure taxes before you leave, including Australian CGT event I1 and, if relevant, the U.S. expatriation tax.
• Plan the timing of asset sales around your move and Australia's July 1, 2027 CGT changes.
• Review every account for its tax treatment in both countries, especially 401(k)s, IRAs, Roth IRAs, super, 529s, HSAs and Australian managed funds.
• Set up reporting, including the FBAR, Form 8938, Form 8621 for PFICs and Form 3520 where needed.
• Choose how you'll convert currency and plan any large transfers.
• Update your estate documents in both countries, including coordinated wills, powers of attorney and health directives, and a QDOT if your spouse isn't a U.S. citizen.
• Fill insurance gaps in health, life and disability cover before your old coverage ends.

Getting help with a cross-border move

Moving between the U.S. and Australia takes planning well before the move and ongoing coordination afterward. The most expensive mistakes are usually timing mistakes, such as selling an asset in the wrong year, contributing to the wrong account or missing a reporting form.

Mercer Street provides U.S.-focused financial and tax planning for professionals with international lives, including Americans moving to Australia and Australians moving to the U.S. Here's what that means in practice:

• What we do: U.S. tax planning and consulting, including the tax side of the decisions in this guide, financial planning, and reviewing your returns for planning opportunities.
• What we don't do: we don't prepare U.S. or Australian tax returns or FBARs, and we don't give Australian tax or legal advice. We can refer you to a qualified preparer, and we work alongside your Australian accountant, lawyer or financial adviser.
• Investment advice: depending on where you live, licensing rules may limit whether we can give investment advice. If you live in Australia, we can coordinate with a licensed adviser there. For an example of how these issues come together, see Ryan's case study on cross-border planning for an Australia-bound expatriate couple in The Tax Adviser. If you're planning a move, schedule a consultation.