How are E3 Visa holders taxed?

Australian citizens in the U.S. who hold an E-3 visa are subject to both U.S. tax law and Australian tax law. Here is a brief explanation of how they are taxed in both countries, as well as the importance of the Australian superannuation for them:

U.S. Taxation of E-3 Visa Holders

E-3 visa holders are U.S. tax residents if they meet the criteria for tax residency in the U.S., which typically means they pass the Substantial Presence Test. The Substantial Presence Test considers the number of days an individual is physically present in the U.S. over the past three years.

Substantial Presence Test Criteria:

You must be physically present in the U.S. for at least 31 days during the current year, and

You must have been present for at least 183 days during the past three years, calculated as:

• • All days in the current year,
  • 1/3 of the days in the previous year,
  • 1/6 of the days in the year before that.

If an E-3 visa holder meets these criteria, they are classified as a U.S. tax resident, meaning they are subject to U.S. tax on their worldwide income.

What does U.S. Taxation entail?

Worldwide Income Taxation: As a U.S. tax resident, an E-3 visa holder must report and pay U.S. taxes on their worldwide income (income from both U.S. and foreign sources).

Filing U.S. Tax Returns: E-3 holders need to file Form 1040 (U.S. Individual Income Tax Return) each year, reporting all of their income.

Deductions and Credits: The U.S. tax system provides various deductions and credits, such as the standard deduction or itemized deductions. You may also qualify for the Foreign Tax Credit if you are paying taxes to Australia on the same income.

Social Security and Medicare: E-3 visa holders are generally required to pay into the U.S. Social Security and Medicare systems. This is done through payroll withholding taxes (FICA taxes). They are typically subject to the same rules as U.S. citizens for Social Security and Medicare taxes, regardless of whether they will eventually receive benefits from these programs.

Australian Taxation of E-3 Visa Holders

Even though an E-3 visa holder may be a U.S. tax resident, they are still considered an Australian tax resident if they maintain significant ties to Australia. If they remain an Australian tax resident, they are also subject to Australian taxation on their worldwide income.

Double Taxation Relief – Tax Treaty:

To prevent double taxation, the U.S.-Australia Tax Treaty exists to allow residents of one country (such as Australia) to claim a tax credit or exemption for taxes paid in the other country (the U.S.). For example,

if an E-3 visa holder pays income tax in the U.S., they may be eligible for a Foreign Tax Credit in Australia, reducing their Australian tax liability on the same income. This is to avoid taxing the same income twice in both countries.

Australian Superannuation

If you are an Australian citizen then you are aware of Superannuation (Super), the Australian mandatory retirement savings system. Employers are required to contribute a percentage (currently 10.5% as of 2025) of an employee’s earnings into a superannuation fund.

Superannuation and E-3 Visa Holders:

For an E-3 visa holder working in the U.S., superannuation becomes important for several reasons:

• • If an E-3 visa holder is working for an Australian employer, the employer must continue to make superannuation contributions for the employee while they are in the U.S.
  • However, if the E-3 visa holder works for a U.S. employer, they are generally not entitled to have superannuation contributions made unless the employer has voluntarily agreed to make them. The U.S. employer is unlikely to make super contributions, as the U.S. does not have a superannuation system.

Contributions and Tax Implications:

• • Contributions to superannuation are taxed in Australia at a concessional tax rate (15%).
  • Super contributions made while working in the U.S. are still subject to this tax rate, and interest or investment returns within the super fund are taxed at 15%.
  • Contributions Cap: There are caps on how much an individual can contribute to their super fund each year (e.g., concessional contributions cap), and exceeding these caps can result in additional tax liabilities.

U.S. Tax Implications for Superannuation:

• • Superannuation funds are generally not taxed in the U.S., but contributions made to a super fund may not be recognized as tax-deferred in the U.S. system. This could have implications if you later withdraw money from your superannuation fund.
  • The U.S. may not offer tax relief for Australian super contributions, meaning E-3 visa holders may not receive U.S. tax deductions for contributions made to their superannuation fund.