Living and earning in New Zealand

[vgallogl]

Hi, 
My husband and I worked in the US for the beginning of 2025, and worked in NZ at the end of 2025. How do we state my foreign income from New Zealand? We also contributed to a KiwiSaver. How should we file that?

[pk]

@vgallogl , before answering with any degree of specificity, I would need a few answers ( to understand the situation):

1.Are you each/both US person ( citizen/GreenCard) ?

2. If  the answer is  "Resident for Tax purposes"  , then which country are you from ?  Did your visa expire ?  How long were you here for ?  

3. When did you enter NZ ? 

4. Do you have significant connection to the US -- own home etc. ?

Generally, as a US person you are taxed on world income.   However, if you entered  NZ, say July1st of 2025, then  your foreign sojourn / tax-home begins on the first full day  i.e. probably July 3rd 2025 ( local date /time ).  In such a case you would be best served by delaying your filing of US taxes  after you complete  12 months of stay -- you can then exclude  your foreign earnings from US taxes -- FEIE -- Foreign Earned Income Exclusion.   There are more "ands", "ifs" and 'buts".  First please answer my questions and I will come back and help.

pk

[vgallogl]

Thank you for the response. 

1.Are you each/both US person ( citizen/GreenCard) ?
Yes, both my husband and I are citizens. 

2. If  the answer is  "Resident for Tax purposes"  , then which country are you from ?  Did your visa expire ?  How long were you here for ?  
My husband and I have lived in the US since 2018. I am a born US citizen, my husband received US citizenship in 2023. We were both working in the US until August 2025. 
We moved to NZ in Oct 2025.  By NZ standards, we are considered tax residents in NZ when we have a permanent abode, which we could say is the day we moved here Oct 23rd (we moved in with family) or Nov 24th (when we started our lease). 

3. When did you enter NZ ? 
We entered NZ Oct 23, 2025. 

4. Do you have significant connection to the US -- own home etc. ?
We do not own a home in the US. Our connection to the US would be family and our citizenship. 


I'm reading on the US IRS site that to qualify for FEIE I need to be "a U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year."

I received my NZ permanent residency (NZ immigration status) in Oct 2024, but we did not move here until Oct 2025 (NZ tax residency status).  

I used the Interactive Tax Assistant (ITA), and it said I could qualify for an extension if I need the time to meet either the bona fide residence test or the physical presence test to qualify for either the foreign earned income exclusion or the foreign housing exclusion or deduction. You should request an extension if all four of the following apply:

• You are a U.S. citizen or resident alien.
• You have foreign earned income.
• You expect to meet either the bona fide residence test or the physical presence test, but not until after your tax return is due.
• Your tax home is in a foreign country (or countries) throughout your period of bona fide residence or physical presence, whichever applies.
  
  

Based on that, it is unclear to me if I will qualify for FEIE this year or have to wait another tax year i.e. what does the US consider to be a bona fide resident, the immigration status resident or tax resident?
- If bona fide residency is based on immigration status, then I would meet the 1 tax year qualification. So I would qualify for FEIE now. 
- If bona fide residence is based on tax residency status, then it would be a year from Oct 2024 and an extension would just be short... the extension filing would give me until Oct 15, 2026 "Your tax return will be considered timely if filed by 10/15/2026."

Thanks for all your help on this. 

[Vanessa A]

"What does the US consider to be a bona fide resident, the immigration status resident or tax resident?"

Tax residency, basically, once you move to the country and take the steps to establish a permanent home and truly live there, that is when your Bona Fide clock starts counting.  Your immigration status does not change the days for you to start counting.   However, you must be in the country for an entire tax year, not just a year.  This means since you did not move there until October of 2025, you would not qualify as a Bona Fide Resident for 2025 even if you did choose to file an extension.  

To qualify for bona fide residence, you must reside in a foreign country for an uninterrupted period...
 

Instead of the Bona Fide Residence test, you could potentially qualify for the Physical Presence Test which requires you to be in the foreign country for 330 FULL days during a full 12 month period.  So under this test, if you moved to New Zealand on October 1, 2025 and remained there for 330 days, you would be considered to have met the Physical Presence Test by the October 15th, 2026 extension deadline which would then allow you to claim the Foreign Earned Income Exclusion if you filed an extension using form 2350. 

Remember, even if you do qualify for the Physical Presence Test, you only get to exclude the income earned during the qualifying period on your 2025 return. 

[pk]

@vgallogl , thank you for answering my questions -- much appreciated.

Agreeing with and commending  my colleague @Vanessa A  for a quite expansive answer to you questions.  I just wanted to add:

(a)  For tax year 2025,  you have the

                    1.  option of waiting  ( till you meet the 330 days of away from the  US out of a continuous  365 days test period --- using Physical Presence Test ) i.e.  probably around  Oct 15th  , test period  Oct. 24th. 2025 through  Oct 24th 2026  ( you established your tax home on 24th of October, the first full 24 hour day after arrival ).  Turbo may balk at  10/15 because  your tax home  start date is later .   This  will result in your being able to exclude  foreign income during the period  10/24/2025 and 12/31/2025.

        OR      2.  File  whenever you are ready including the  foreign income ( US sourced and Foreign sourced income from 01/10/2025 till 12/31/2025 ), pay any additional taxes  .  Then after 10/24/2026 file an amended return claiming  Foreign Earned Income Exclusion. 

     (b)  While  Bona-fide resident has some advantages  ( not  requiring the 330 days of absence out of 365 days ), it generally requires IRS approval.

      (c)  AS a US person, you are required to participate into  Social Security & Medicare taxes -- in your case it would be 15.3% on about 92 % of your income.  There appears to be no  Totalization Agreement between US SSA and NZ-SSA.  You may have to participate in both.  Please consider checking with NZ-SSA authorities.

Is there more one of us can do for you ?

[SusanY1]

I just wanted to add a bit more to the good information given above.

For the KiwiSaver, you may trigger additional filing responsibilities  including FBAR, Form 3520, and PFIC filings.  If your underlying investments include mutual funds (which they likely do), then you likely have a Passive Foreign Investment Company (PFIC) to deal with.  

TurboTax does not include the form for PFICs, and there are some important choices to be made that are best made in the first year.  You would do well to find a firm in New Zealand well-versed in both US and New Zealand tax (there are several) to get help with this. 

Also, you are likely to benefit from the foreign tax credit versus the foreign earned income exclusion due to the generally higher taxes in New Zealand.  Of course, you should explore both options.

Your New Zealand tax year also differs from the US calendar year and your year hasn't quite ended yet.  You'll want to wait until you have filed your IR3s to prepare your US return.  

As a taxpayer living abroad, you have an automatic extension until June 15 to file your returns but you may wish to file for an extension of time to file to October 15th now to provide a little additional breathing room. 

Even though there is no totalization agreement with New Zealand, you won't owe medicare/social security tax to the US for your work in New Zealand if you are working for a New Zealand employer.  If you are both living and working abroad as a "common law employee" for an employer that has a local presence where you are, you don't owe social security taxes and cannot elect to pay them - but you also don't earn any credits in the US social security system for that work.   You will owe this tax if you are self-employed, working for a foreign affiliate of a US company, or working remotely for a US employer (in which case they are likely withholding this for you already.)

The most complex part of your tax situation is likely your KiwiSaver account - so please do (at least for this first year) get some professional guidance there so that you can help mitigate the tax on this. Failure to make certain timely elections related to PFICs can subject you to very punitive taxation on those investments.