I am an Australian tax resident and U.S. citizen living in Australia with an IRA. My understanding is that my IRA will be taxed in the US at time of withdrawal. I 'm trying to understand what the ATO rules are what FTCs I'm eligible for and if my withdrawals are assessable in Australia?
Hi @jones76,
The response I gave on your other post should be relevant here too.
You've probably realised it's not a simple topic, @jones76 ! You probably should seek guidance from an appropriately-qualified professional (as did a US citizen family member of mine). We didn't find pre- or post-residency to be relevant, and in general the ATO treats both traditional and Roth IRAs the same, so if your IRA is the latter you will in effect be taxed twice (the after-tax contributions and the ATO tax on withdrawals).
But you said "taxed in the US at time of withdrawal" so that implies a traditional IRA. You will probably need to be able to separate contributions, either or both of employer or your own (jointly known as "corpus"), from the IRA's growth, as the growth is taxable at your marginal rate (i.e. it's ordinary income) in Australia. If the contributions are subject to IRS taxes, you should be able to include these as a foreign tax credit in your ATO return.
(No comments about your IRS returns - you're obviously always a US tax resident too, but this is the ATO Community after all!)
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