US Expat Taxes for Americans Living in New Zealand – A Guide

Americans often move to New Zealand to enjoy an outdoor life, wide beaches, incredible landscapes, and the friendly pace of life. They don’t expect the US tax system to follow them across the Pacific, however unfortunately it does exactly that. Every US citizen must file a US tax return each year, even if they live full time in Auckland, Wellington, or Christchurch or if they pay local taxes in New Zealand. Many expats only learn this after either receiving a surprise letter from a New Zealand bank, or perhaps from a fellow expat.

In this article, we provide an overview of US expat tax reporting requirements for Americans living in New Zealand. You’ll learn how to reduce the risk of double taxation, stay compliant, and relax in the knowledge you won’t have any surprise letters from the IRS.

Do Americans living in New Zealand have to file US taxes?

All US citizens, including those living in New Zealand, must file a US federal tax return every year. You use Form 1040 to report your worldwide income on your US return. This includes but is not limited to salary, business income, dividends, interest, rental profits, and capital gains. Note that expats get an automatic filing extension to June 15th, though you can request an extension until October 15th.

Expats also face extra reporting rules. These include FBAR, FATCA, and special forms for foreign business interests and pensions. These forms often don’t imply any new tax liability, but they can trigger steep penalties if you miss them.

How the New Zealand tax system works in summary

New Zealand’s tax system is simpler than the US system. There is no broad capital gains tax, no estate tax, and no long list of deductions. If you’re a tax resident in New Zealand, you pay tax on your worldwide income, whereas if you’re not a tax resident you only pay tax on income sourced in New Zealand. You’re considered a New Zealand tax resident if you spend at least 183 days in the country in a 12 month period, or if your permanent place of abode is in New Zealand.

The New Zealand tax year runs from April 1 to March 31, while the US uses the calendar year. If you pay taxes in New Zealand as a resident, you can claim US tax credits to avoid double taxation of the same income, but you’ll need to work out how much New Zealand tax you paid in a calendar year or use the accrued method. The accrued method allows you to take a tax credit in the current year, even if taxes are paid in a subsequent year. The only downside is that once you use the accrued method, you cannot switch to the paid method in the future.

Foreign Earned Income Exclusion vs Foreign Tax Credit

There are two major US provisions that Americans abroad can claim to lower or eliminate their US tax liability: the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC). Many expats qualify for both, though one can give a better result than the other.

Foreign Earned Income Exclusion

Claiming the Foreign Earned Income Exclusion lets you exclude a fixed amount of foreign earned income from US tax up to a maximum threshold that rises each year. For 2025, it’s $130,000. To claim the FEIE you must qualify either through the Physical Presence Test or the Bona Fide Residence Test and file Form 2555.

The FEIE works well for expats with only earned income, rather than passive income from sources such as pensions, rental property, or investments. The FEIE does not remove US self-employment tax liability, however.

Foreign Tax Credit

The Foreign Tax Credit lets you claim US tax credits based on the amount of foreign taxes you pay. If you pay more New Zealand tax than the US tax you would owe, you typically won’t owe any US tax and may have excess credits you can carry back or forward. The Foreign Tax Credit can be applied to any type of income, passive or earned, and if you have kids, you can also claim the refundable Child Tax Credit. You can claim the Foreign Tax Credit on Form 1116.

There are pros and cons to both the FEIE and the Foreign Tax Credit depending on each expat’s situation, so speak with a US expat tax advisor to strategize what will be best for you.

KiwiSaver and how the IRS views it

While New Zealand sees KiwiSaver as a retirement plan with tax benefits and employer contributions, the US-New Zealand tax treaty does not classify it as a treaty-protected pension. This means the IRS treats KiwiSaver as a foreign grantor trust or a foreign pension with taxable yearly growth.

This can trigger US tax on gains inside the account. It also adds reporting of Forms 3520 and 3520-A. These complex forms carry large penalties when filed late, even when no tax is due. Seek professional advice if you are thinking of making contributions to KiwiSaver.

Some expats limit their KiwiSaver contributions to avoid complex filings. Others contribute anyway for employer matching. The right approach depends on your long-term plans and your tolerance of extra US reporting.

FBAR and FATCA reporting for New Zealand accounts

Most Americans in New Zealand open local bank accounts and sometimes investment accounts. These might include checking accounts, savings accounts, KiwiSaver, brokerage accounts, business accounts, and joint family accounts. Non-US financial accounts create new reporting duties, however.

FBAR rules for expats

You must file a Foreign Bank Account Report (FBAR) when the total of all your foreign financial account balances exceeds 10,000 USD at any time during the year. This threshold applies to combined balances, not each account.

The FBAR form, which is filed to FincEN, asks for the highest balance in each account during the year, as well as other details such as the name and address of the financial institution, and the account name and number. The deadline for FBAR filing is October 15th.

FATCA rules for expats

FATCA is the 2010 Foreign Account Tax Compliance Act, and it requires Americans to file Form 8938 if your foreign financial assets exceed $200,000 at year-end or $300,000 at any point during the year ($400,000 and $600,000, respectively, if filing a joint tax return).

Form 8938 covers a wider list of assets than the FBAR, including foreign pensions, stock holdings, and certain trusts. Missing FATCA comes with significant penalties, so seek advice before you file. Note that Uncle Sam is also receiving details of Americans’ foreign accounts directly from the financial institutions where the accounts are held.

Self-employment and business income in New Zealand

Self-employed Americans in New Zealand must report income to both tax authorities. You must pay New Zealand income tax and ACC levies. You must also report the same income to the IRS. Expats often feel surprised to learn that US self-employment tax still applies.

The US has Social Security agreements with several countries, however unfortunately New Zealand is not on that list. This means US self-employment tax applies even when you already pay tax in New Zealand.

Some expats explore forming a New Zealand company to manage tax exposure. This route creates new reporting duties with the IRS, but can save significant sums of tax. Expats running a business in New Zealand should get personalized advice, as there are many moving parts.

FAQs for Americans in New Zealand

1. Do I still need to file US taxes if I pay tax in New Zealand?

Yes. The US taxes citizens based on citizenship, not residency. You must file a US return even when New Zealand already taxes your income. You can often use credits to avoid double taxation.

2. Does KiwiSaver create US tax issues?

KiwiSaver often creates extra reporting and sometimes US tax on annual growth. The US does not treat KiwiSaver like a tax-deferred plan. Many expats file Forms 3520 and 3520-A to stay compliant.

3. Are my New Zealand bank accounts reportable to the US?

Yes. Most accounts in New Zealand appear on the FBAR and may also appear on Form 8938 (FATCA). This includes checking accounts, savings accounts, KiwiSaver, and many investment platforms.

4. Can I use both the FEIE and the Foreign Tax Credit?

You can use both, but not on the same income. Most expats in New Zealand receive stronger results with the Foreign Tax Credit due to New Zealand’s higher tax rates.

5. Do I owe US self-employment tax on freelance income in New Zealand?

Yes. New Zealand does not have a Social Security agreement with the US. You must pay US self-employment tax even when you already pay income tax and ACC levies in New Zealand.

6. What happens if I missed several years of US filings?

You may qualify for the IRS Streamlined Filing Procedures. This program allows many expats to catch up without penalties when they can show their failure to file was not intentional.

The adventure of living in New Zealand as an expat

Life in New Zealand as an American is a rare mix of calm, community, and outdoor beauty. Taxes can feel complex and oppressive, but seeking advice from a US expat tax specialist to create a smart strategy will help you stay compliant and confident that you are optimizing your cross-border situation. Once you are set up and filing smoothly, you can focus on the adventure of living in New Zealand as an expat rather than worrying about taxes.

Note that if you’ve been living in New Zealand but not filing US taxes as you didn’t know you had to, you may qualify for an IRS amnesty program called the Streamlined Procedure. Get in touch to find out more.