Estate and Gift Tax Planning 2026: What US Expats in Australia Need to Know

Introduction

US citizens living in Australia face unique challenges with estate and gift taxes. While Australia does not levy inheritance tax, US estate tax still applies to worldwide assets. Understanding these rules for 2026 is vital for protecting wealth, planning gifts, and minimizing tax liabilities.

Overview of Estate and Gift Taxes in Australia for US Expats

• No Australian inheritance tax: Australia abolished estate taxes decades ago.
  
• US Estate Tax: US citizens must pay estate tax on worldwide assets above exemption limits ($12.92 million for 2023; updated annually).
  
• Gift Tax Considerations: Lifetime gifts may trigger US gift tax reporting requirements.

Strategies for 2026

1. Leverage the US lifetime exemption: Make strategic gifts within the lifetime exclusion limits.
   
2. Document gifts carefully: Proper records are required for US IRS reporting.
   
3. Consider gifting before death: Reduces the taxable estate and ensures smoother wealth transfer.
   
4. Coordinate US and Australian rules: Avoid unnecessary reporting conflicts and optimize tax outcomes.

Common Mistakes to Avoid

• Assuming no inheritance tax exists because Australia has none
  
• Ignoring US estate tax obligations on Australian assets
  
• Failing to file US gift tax forms (Form 709)
  
• Overlooking lifetime exemptions and strategic gifting opportunities

Resources for US Expats in Australia

• IRS Estate Tax: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax
  
• Expat US Tax: Estate Planning Guidance
  

FAQs

Q1: Does Australia have estate or inheritance tax?
A: No, but US estate tax applies to US citizens worldwide.

Q2: Can gifts reduce US estate tax liability?
A: Yes, gifts within the lifetime exclusion limit reduce the taxable estate.

Q3: Do I need to report gifts to the IRS?
A: Yes, gifts exceeding the annual exclusion ($17,000 per recipient in 2023) must be reported on Form 709.

Q4: Should I plan gifts differently in Australia than in the US?
A: Yes, coordination between US and Australian rules ensures compliance and tax efficiency.

Conclusion

For US expats in Australia, estate and gift tax planning in 2026 requires understanding both US rules and the local environment. Strategic gifting, careful documentation, and professional guidance ensure your wealth is protected and efficiently transferred.

Plan your estate and gifts strategically in 2026. Visit Expat US Tax to download our US-Australia Tax Guide 2026 and book a consultation with our expert advisors.