@ileana-figueroa7 ,
(a) A US person ( citizen/GreenCard/Resident for Tax purposes ) is taxed on world income by the US
(b) A US person, with wages from a local entity or from self-employment and being present in a foreign place, can either exclude ( Foreign Earned Income Exclusion) or take foreign tax credit ( for taxes paid to a foreign taxing authority).
(c) In your particular case , because of length of stay in Australia ( approx. 7 months :(
1. I am not sure whether Australia taxed you as a resident ( > 6 month stay, domiciled etc. ?? ) on your world income or as Non-Resident and therefore just on Local sourced income.
2. In any case because you cannot meet the Physical Presence Test ( 330 days away from the US during a continuous 12 month test period ), your only path to reduce double taxation burden is to either take a credit or a deduction for the taxes paid.
3. Note that under the tax treaty, US will recognize the full amount of taxes paid to a foreign taxing authority but allow ONLY the lesser of actual paid and that imposed by the US on the same income ( the remainder is carried backward or forward ). If you choose deduction instead, it is reported as tax and therefore comes under the SALT limitation.
Does this help ?
Is there more I can do for you ?
