Australian citizens have a specialized US Visa they can apply for to gain temporary rights while living in the United States, called the E-3 Visa. The E-3 Visa is a convenient and effective measure for any Australian working in the US for any given period of time, however it is very important to understand that if a E-3 visa holder were to remain in the US for a sufficient length of time, they will ultimately be deemed and considered a US Person by the IRS. Therefore, by applying the Substantial Presence Test and confirming tax resident status, the taxpayer will be required to disclose their foreign assets and income earned worldwide
To be eligible for the E-3 visa, you must be able to demonstrate that you are a national citizen of Australia, have a legitimate offer of employment from a US company, possess the required academic or experiential credentials, and will be filling a position that can be considered a specialty occupation. Form I-129 is the Petition for Nonimmigrant Worker, and can be used to apply for a status change or an extension of your stay should the need arise. The following documents should be provided for your Form I-129:
- A Labor Condition Application (LCA) specifically filed to support your potential E-3 classification
- Credentials that demonstrate your qualifications for the international position
- Job offer letter or other verifying documents from your new employer stating that you will be performing within a specialty occupation and will be paid the higher of the proposed wage
- Before employment can begin, you must have the required license or other official permissions to practice in the desired specialty occupation
Compare the period of your stay to the potential extension of your stay. If your initial stay is 2 years, you can receive up to 2 years per each granted extension. There is no maximum number of granted extensions, however there are exceptions to this rule.
Substantial Presence Test
A nonresident E-3 Visa Holder (or any nonresident) may be taxed as a U.S. person if they comply with the Substantial Presence Test. The test is a counting-days assessment to determine if a person has become a U.S. resident for tax purposes during their time out of the country. To learn more about the ins and outs of the Substantial Presence Test, click here!
The Substantial Presence Test applies to any non-U.S. Citizens and non-Legal Permanent Residents who have spent noteworthy amounts of time in the U.S. and do not qualify for the 8840 closer connection test or the 8843 Exemption. A person with a substantial presence in the US becomes subject to US Tax and mandatory reporting of their worldwide income. This also requires clear reporting of any offshore accounts and assets on forms such as the FBAR. Failure to report assets or investments could result in sizable fines and penalties, which can be reduced or avoided pending compliance with the IRS Offshore Disclosure.
Meeting the Substantial Presence test means you are taxed on your worldwide income, unless you are exempt. Generally, US Citizens or Green Card Holders are required by law to file the standard 1040 Tax Return. If the relevant taxpayer has foreign bank accounts and meets the lowest threshold requirements, they are required to promptly file an FBAR (Report of Foreign Bank and Financial Accounts) for full asset disclosure. This applies to E-3 Visa Holders as well, so long as they meet the presence test.
When a person first moves to the US, if they have earned income, then they are required to file a 1040 tax return. Until they become a Legal Permanent Resident or US citizen, they can file the 1040-NR. Problems tend to arise once when, once a person has lived in the United States for a certain amount of time, they become subject to standard American taxation as if they were a US citizen or a Legal Permanent Resident. Now, this person will be taxed on their worldwide income and are legally required to comply with all reporting requirements for foreign assets and accounts.
Failure to comply with foreign account reporting could result in substantial fines, penalties, and even a criminal investigation. If the person is found to be willful out of compliance, their failure to report their accounts could result in an unfortunate 100% penalty. Should you fall out of compliance with US tax regulations and offshore account reporting, there are many IRS Amnesty Programs to assist you in that situation.
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