Guide to U.S. Expat Taxes in New Zealand
7 min read
November 18, 2022
November 18, 2022
At a glance
If you are a U.S. citizen or green card holder living in New Zealand, there are a few things you should know. Learn more about U.S. expat taxes in New Zealand with the experts at H&R Block.
U.S. citizens living in New Zealand get to experience all the best parts of living abroad — a high quality of living, naturally beautiful landscapes, and thriving cities. Yes, U.S. expats in New Zealand live the good life — as long as they keep up with their U.S. tax obligation.
Understanding U.S. expat taxes in New Zealand may seem difficult, but with the help of the U.S.- tax experts here at H&R Block’s Expat Tax Services, you’ll get caught up on the basics in no time.
Ready to file your U.S. taxes from New Zealand? Whether you file expat taxes yourself with our online DIY expat tax service designed specifically for U.S. citizens abroad or file with an advisor, H&R Block is here to help.
How U.S. taxes work for U.S. citizens living in New Zealand
The most common question we get from U.S. expats in New Zealand is if they still have to pay U.S. taxes even if they live and work in New Zealand.
The answer is yes — even if you’re currently living in New Zealand you likely still have to file U.S. taxes as long as you’re considered a U.S. citizen or Green Card holder. The reason for this is that the United States has a tax system based on citizenship, not residency. That means it doesn’t matter if you live in Austin, TX or Auckland, NZ — if you’re legally considered an American, you file U.S. taxes.
Taxable foreign income for Americans living in New Zealand includes:
- Rental Income
- Retirement account distributions
The New Zealand tax year is different than the U.S. tax year — it begins on April 1 and ends on March 31 of the following year. This has implications on how you report your foreign income to the U.S., as it will need to be reconciled with the U.S. tax year. When you file with H&R Block, your Expat Tax Advisor can do this reconciling for you. Get started with an Expat Tax Advisor now.
If you’re an Americans working in New Zealand, you can lower your U.S. tax bill and avoid dual taxation with certain tax strategies. The U.S. has options to help prevent double taxation for Americans living overseas, including tax credits, deductions, and income exclusions:
- The Foreign Earned Income Exclusion (FEIE) and Foreign Housing Exclusion – The FEIE and housing exclusion allow U.S. citizens in New Zealand to exclude up to a certain amount of foreign earned income if they meet certain requirements.
- Foreign Tax Credit (FTC) – The FTC allows Americans to claim a dollar-for-dollar credit on New Zealand taxes paid if they meet certain requirements.
- Tax treaties – To prevent double-taxation, the U.S. has tax treaties with individual countries, including the U.S./New Zealand tax treaty
If you’ve been living in New Zealand and have never filed a U.S. tax return, there’s good news: You may be able to get caught up on expat taxes without being penalized. The IRS has a program to help expats who non-willfully fell out of compliance — Streamlined Foreign Offshore Procedures — which the Expat Tax Advisors here at H&R Block can happily help you with. To qualify, you must:
- Have lived in a foreign country for at least 330 days during one of the last three years and not maintained a U.S. abode.
- Confirm that your failure to file U.S. tax returns was not willful.
U.S. taxes when retiring in New Zealand
If retiring in New Zealand is in your plan, you should first understand how taxes work when retiring abroad.
- Even if you’re retired, you still may have to file a U.S. tax return from New Zealand.
- You’ll still have to report money in any New Zealand financial accounts on your FBAR (more on that below) if you meet the requirements
- If you have a New Zealand pension or retirement account like a (KiwiSaver account) it may not have the same tax advantages for your U.S. tax filing. Many foreign pensions and retirement accounts can be classified as PFICs or foreign trusts, which trigger a whole host of other reporting requirements.
We recommend you speak with an Expat Tax Advisor before you dive into these types of taxes on your own.
U.S. citizens may have to report money in New Zealand financial accounts
If you have New Zealand financial accounts (like bank or investment accounts), filing your U.S. taxes may not be the end of your paperwork —you may also have to file a Foreign Bank Account Report (FBAR)
The U.S. enacted the Foreign Account Tax Compliance Act (FATCA) to increase transparency of U.S. citizens with foreign bank accounts, and your FBAR serves a similar purpose. One difference between the two is you submit Form 8938 to the IRS while you submit your FBAR with FinCEN, the U.S. Treasury Department’s Financial Crimes and Enforcement Network.
If you’ve had a total of $10,000 or more in foreign accounts at any one time in the year, you’d have to file an FBAR. For example, if you had three accounts with balances of $1, $2, and $9,999 at the same, all three would become reportable. If you have foreign assets with a value greater than $200,000, you’d also have to file FATCA Form 8938.
If you’re at all confused about your FBAR and FATCA filing requirements, it’s best to leave your U.S. expat taxes to seasoned pros who will dig into your specific tax situation to find all your filing requirements.
Basics of New Zealand taxes for U.S. citizens
As an American living in New Zealand, you may have to pay New Zealand taxes. While we recommend you speak with a residency expert, New Zealand’s Inland Revenue Department says you will generally be considered a New Zealand tax resident when either of these happens:
- You’ve been in New Zealand for more than 183 days in any 12-month period
- You have a permanent place of abode in New Zealand
Most U.S. expats will fall under the non-resident category, but residency and taxes in New Zealand are complicated subjects, and we recommend you speak with a New Zealand residency expert to determine your status.
New Zealand income tax rates for U.S. expats and the PAYE system
The New Zealand tax year begins on April 1 and ends on March 31 of the following year. Taxes are due to the Inland Revenue Department on or before July 7 of the same year.
There are two sets of income tax rates in New Zealand: One for residents and one for non-residents. New Zealand residents are taxed on worldwide income. Americans living in New Zealand who are not considered residents for tax purposes are only taxed on income from New Zealand sources.
You can see up-to-date, specific information on New Zealand taxes for non-residents on the Inland Revenue Department’s website, but in general, the non-resident tax withholding is a flat rate of 15%.
If you’re employed by a New Zealand employer and all your income is from your wages and other salary benefits, your NZ taxes may be automatically taken out under New Zealand’s Pay as You Earn (PAYE) system.
2022 New Zealand Tax Rates for Americans Who Qualify as Residents (after April 1, 2021)
|Up to $14,000 NZD||10.5%|
|Over $14,000 NZD and up to $48,000 NZD||17.5%|
|Over $48,000 NZD and up to $70,000 NZD||30%|
|Over $70,000 NZD and up to $180,000 NZD||33%|
How to file U.S. taxes from New Zealand
With H&R Block, you have two options to file expat taxes from New Zealand: With you in the driver’s seat using our DIY online expat tax service (designed specifically for expats), or by letting one of our experienced Expat Tax Advisors take the wheel. No matter which journey you choose, you get the 100% Accuracy Guarantee from H&R Block.
Here’s how to file your U.S. expat taxes from New Zealand:
- Head on over to our Ways to File page
- Pick your journey—in the driver’s seat with our online DIY tool or letting a Tax Advisor take the wheel.
- Once you’re through your chosen journey, you review your return and pay
- We file your return with the IRS
- You sit back knowing your taxes were done right
Looking for tax advice for U.S. citizens living in New Zealand? H&R Block Expat Tax Services has your back.
If you’re an American living in New Zealand, tax returns likely aren’t at the forefront of your mind until it’s time to file. Luckily for you, our Expat Tax Services are tailored for Americans abroad, making the process simple and your tax season stress-free. Looking for tax advice for U.S. citizens living in New Zealand? H&R Block Expat Tax Services has your back.
Start your U.S./New Zealand expat taxes for free today!
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