Moving to Houston from abroad

Who

An energy engineer transferred to the Houston office of an Australian employer on an L-1 visa, arriving in the spring with a spouse and two primary-school-age children. The family kept a superannuation account, a portfolio of Australian managed funds, a bank account and their former home, which they rented out rather than sold. The spouse planned to look for work once the children were settled.

What they came in with

• They did not know when they became a U.S. tax resident, whether the first return would be dual-status or full-year, or whether the Australian income earned before arrival would be taxed in the U.S.
• Superannuation was a black box. They didn't know whether U.S. tax applies to employer contributions and earnings, or which forms it shows up on.
• The managed funds were Australian-domiciled, which generally makes them passive foreign investment companies (PFICs) under U.S. rules, with punitive tax treatment and their own reporting.
• They had never heard of the FBAR or Form 8938 and had been told by a colleague that "nobody files those."
• The U.S. entity's benefits package included a 401(k) with a match, an employee stock purchase plan and restricted stock units. They had no U.S. credit history and wanted to buy a house within a year.
• The children's education savings sat in an Australian bank savings account. Estate documents were Australian wills only, and the spouse is not a U.S. citizen.

What we did

The family first contacted us from Australia, about three months before the move, for a limited-scope project at the hourly rate to answer the residency and superannuation questions before they arrived. Two meetings in, it was clear almost every part of their finances touched the move, and they converted to a comprehensive plan.

• Residency and the first return. With a spring arrival, the family would meet the substantial presence test in the arrival year, so U.S. residency would start on the day they arrived. We laid out the dual-status filing approach for year one, under which Australian income earned before that date stays outside the U.S. return, and referred the family to a cross-border tax preparer who handles the returns. Mercer Street does not prepare tax returns; we build the plan and coordinate.
• Treaty review. We walked through how the U.S.–Australia treaty treats employment income, the rental property and pensions, and where the treaty is silent, including the unsettled U.S. treatment of superannuation. The family chose a conservative reporting position with the preparer rather than an aggressive one.
• PFIC triage. We identified which of the managed funds were PFICs, compared selling before the residency start date with holding and making elections, and sequenced the sales so they settled before the family arrived. The proceeds were reinvested in U.S.-domiciled funds once a U.S. brokerage account was open.
• Reporting checklist. We set up an annual list of foreign account forms, with the thresholds that apply to the family: the FBAR for foreign financial accounts over $10,000 in aggregate, Form 8938 at its higher thresholds, the superannuation account on both as a conservative position, and the Australian bank account that collects the rent. Real estate held directly isn't reported on either form, but the rental income and expenses go on the U.S. return each year. See the U.S.–Australia cross-border guide.
• Benefits enrollment. We prioritized the 401(k) at least to the match, set up a withholding true-up for RSU vesting, modeled the ESPP discount against the family's cash needs for a down payment, and compared the health plans, including whether an HSA-eligible plan made sense.
• Home purchase. We planned the down payment transfer from Australian accounts so it was documented as the family's own funds rather than a gift, and identified lenders that underwrite relocating employees without a U.S. credit file.
• Education and estate. Texas has no state income tax, so the 529 choice came down to plan quality and cost; the family opened one and left the Australian savings account alone until they decide whether the move is permanent. We flagged the non-citizen spouse estate rules and referred them to an attorney for U.S. wills and beneficiary designations that work alongside the Australian wills.

Outcome

• A first-year filing approach agreed between the family and their preparer before the deadline, with foreign account forms on the calendar rather than discovered later.
• PFIC exposure resolved before U.S. residency began, so the family never held those funds as U.S. taxpayers.
• Employer benefits elected deliberately, with cash flow mapped through the home purchase.
• A single annual checklist of cross-border obligations, in plain English, that the family can follow and hand to the preparer each year.

What it cost

See the fee summary at the top of this page. Mercer Street does not prepare the returns, manage the investments or earn anything on the mortgage or the 529.