We all make mistakes and most of them you can walk away from with the knowledge of what not to do next time. But there are some expat mistakes that you simply cannot just chalk up to experience.
The saying “She’ll be right Mate” may be endearing in Australia, but here in the US, ignorance is not an excuse.
There are simple mistakes that can severely impact your finances and or your liberty, and the hangover may last for years. In the context of an Australian expat living in the US, here are our Top 10 mistakes to avoid.
#10: Trusting Australians who do not deserve your trust.
It is true that Australian expats tend to trust each other instinctively. On a scale of one to five, every Aussie seems to give each other a solid three on the trust meter. However, not all Australians living in the US have your best interest at heart.
Beware of individuals and companies attempting to capture your email and contact information. There is no such thing as a free lunch in New York, so chances are your information is being sold – or worse!
The Australian Community is a US public charity. Advice to job seekers, networking tips and the differences in the US interview process are all freely available on this website.
However, our highly successful charitable programs for assisting Australians overcome the challenges of living in the US have in some instances been copied by unscrupulous individuals, repackaged, and are now being either sold to Australians for a fee, or personal information captured and sold.
Members who choose to join our organization pay an annual tax deductible fee of $45.00. This gives access to additional resources through our private Enterprise Social Network powered by Microsoft Yammer that contains more than two dozen groups covering conversations on Finance, Employment, Tax, Legal, Visas, as well as social and professional connections to other Australians living in the US.
Yammer’s powerful search feature can quickly find an answer to any question that has been asked on a topic. Moreover if you cannot find an answer, you can tap into the knowledge of over 900 professional Australians living in the US, not just rely on an individual claiming to be an expert.
#9: Ending up on a Tenant “Black List”
If you can accept that there are always going to be issues when renting apartments, communal living in a city can be less stressful. Resolving any disputes amicably with your landlord is a good first step, but what happens if an action in Landlord Tenant Court is looming?
You may consider finding somewhere else to live. This may sound defeatist but even if you are 100% in the right, if an action is started in NYC Housing Court, your name will most likely be added to the tenant “Black List”.
Landlords and agents use public records to create a Black List to identify any potential trouble makers prior to approving a new apartment lease. See NY Times Article
If your name is on a Black List, regardless of your creditworthiness, that sunny new apartment you just applied for has Buckley’s chance of being approved.
#8: Not understanding whether you meet the Substantial Presence Test.
The Substantial Presence Test is a calculation that determines if you are a US resident for tax purposes. This does not give you any additional rights, just obligations under the IRS tax code to file and pay taxes applicable to US residents.
The magic number is 183 days.
It is calculated by adding all of days you were present in the US in the current year, 1/3 of the days of the year prior, and 1/6 of the days of the year before that. You must also be present a minimum of 31 days in the current year.
Naturally many companies ensure that their foreign executives do not exceed the 183 day test as this would kick off a series of tax consequences. Some of the obligations follow.
For specific information you can listen to our Tax Podcast.
#7: Failing to file a Foreign Bank and Financial Accounts (FBAR) or Foreign Account Tax Compliance Act (FATCA) Report
Everyone understands that paying income tax and filing a tax return are a given in the US if you are a US Tax resident, but there are additional filing requirements who have met the Substantial Presence Test: FBAR and FATCA.
Here is a link to the IRS website that shows the differences between FBAR and Form 8938
FBAR applies if you add up all of your non US bank and investment accounts (including those you are a signatory) and if on one or more days in the previous tax year these totaled more than US$10,000, you must file a FBAR. Depending on your assets you may also have to file FATCA.
You can follow the links to read more about each of these filing requirements, but bottom line is that if you fail to file, you may face a minimum $10,000 fine, or if it is deemed that you deliberately failed to file, the fine jumps to half of the value of your overseas cash and investments.
This may come as a shock to many who are hearing about this for the first time, or who were given misinformation and told that it did not apply to them.
This article is not meant to provide any specific tax or legal advice, but discussing your FBAR and FATCA obligations with your accountant is highly recommended, especially as to whether Australian Superannuation is considered exempt.
You can click here to listen to a top tax adviser discussing some of the tax challenges facing Australian expats.
#6: Failing to have an Estate Plan
Other than Taxes, the only other guarantee in life is death. Failing to have an Estate Plan effects Australians more than Americans given Death Duty was abolished in Australia in 1979, but it is may be as much as 40% or higher here in the US.
The most basic Estate Plan is a will. If you are going to be staying in the US for any length of time, creating a US will is going to remove any question as to the legality of an Australian Will under US law.
If you are an expat and you meet the Substantial Presence Test, the IRS will tax your global estate should the worst happen. Simply being an Australian citizen will not protect you from US Estate Tax.
If you have Australian trusts set up, you are also going to need a professional to review these trusts to ensure that they will stand up to US tax law, or risk them being “pierced” by the IRS and their contents taxed.
The good news is that there are some legal strategies that use insurance policies inside trusts to ensure that your beneficiaries are not left with a major tax burden.
If you are unfamiliar with US Estate Tax or you have concerns, it might be a good idea to speak with your Accountant or Financial Adviser to ensure that your Estate Plan is in order.
The Australian Community can connect you with Australian professionals who are experts in this field.
#5: Driving on your Australian License after 90 days in the US.
It varies from State to State, but there is a limit as to the number of days you can drive legally on your Australian license.
In New York State, after 90 days of maintaining an address, you have 30 days to obtain a New York driver’s license. NY DMV Reference
New York will generally exchange an out of State license if you have one, but other than that, you are going to have to sit for a driving test.
The typical rationalizations for not complying with this are: “If I can rent a car with my Aussie license that should be OK? Right?” and “How would the Police know?”
Get pulled over for speeding or be involved in a minor fender bender and you are going to be asked some basic questions from the Police. Lying to the Police can be a misdemeanor offence, so you are going to make a bad situation worse when asked “When did you arrive in the US?” – especially since Law Enforcement’s computer system is now tied into Homeland Security.
#4: Failing to carry your Green Card with you at all times
The Immigration and Nationality Act (I.N.A.) Section 264(e) states that if a Permanent Resident fails to produce their green card, it is a misdemeanor and if you are found guilty you can be fined up to $100 and put in jail for up to 30 days.
Like it or not, that is the Law.
It would be a very unusual circumstance for you to be arrested and charged for not having your Green Card, but if say you produced an Australian license after being pulled over for speeding, and you had just lied to Police about why you do not have a US driver’s license, you may have failing to produce your Green Card added to your charges.
It costs $450 to file a Form I-90 to replace a lost Green Card. Some people may consider this “the cost of doing business” if you lose your wallet rather than risk not carrying your Green Card.
Now that almost everyone has a smart phone, snapping a picture of both sides of your Green Card and saving it to the cloud is advised.
#3: Failing to notify US Customs and Immigration Service that you have changed address.
Given most Australians are working in the US on Green Cards or non-immigrant visas such as the E-3 or L-1 etc., you must notify USCIS within ten (10) days if you change address.
Sounds like no big deal, until you read the penalties for failing to file a Form AR-11:
“A willful failure to give written notice to the USCIS of a change of address within 10 days of moving to the new address is a misdemeanor crime. If convicted, you (or the parent or legal guardian of an alien under 14 years of age who is required to give notice) can be fined up to $200 or imprisoned up to 30 days, or both. The alien may also be subject to removal from the United States. (INA Section 266(b)). Compliance with the requirement to notify the USCIS of any address changes is also a condition of your stay in the United States. Failure to comply could also jeopardize your ability to obtain a future visa or other immigration benefit.”
2: Taking legal, immigration and tax advice from posts on Social Media
You see them all of the time in social media groups: Posts giving bad advice on how to work two jobs on an E-3 or misinformation about your FBAR filing requirement. There are even blogs dedicated to how to circumvent Immigration law such as self-petitioning for an E-3 visa or commuting on a B1 visa.
The Australian Community has always maintained a policy of providing links to the IRS, USCIS or ethical legal and tax information. Our recent implementation of our Yammer Enterprise Social Media further raising the bar by providing our members direct access to Tax, Legal and Immigration professionals through instant messaging.
Certainly there are simple answers to simple questions, but taking advice from anyone other than a professional on complex issues usually results in either addition expense by having to undo the bad advice given in the first place, or in a worst case scenario loss of liberty through arrest and deportation.
#1: Being Arrested
Some Australians may see the law in 256 shades of grey, but here the law is in black and white.
Something as simple as jumping a subway turnstile may seem a victimless crime, but it can also have you arrested in a New York minute. Add resisting arrest or giving a false statement to Police and your day is going from bad to worse.
Rule #1 in the US is OBEY THE LAW, follow that advice and you will avoid finding yourself in a worst case scenario.