New Zealand and US Taxes: What American Expats Need to Know

New Zealand taxes residents on worldwide income at rates up to 39%, and the US-New Zealand tax treaty provides some protection against double taxation, though it is less comprehensive than treaties with European countries. The Foreign Tax Credit usually covers most or all of the US tax owed on New Zealand wages given the similar or higher NZ rates. There is no totalization agreement between the US and New Zealand, so self-employed US citizens in New Zealand may owe both US self-employment tax and NZ social insurance levies on the same income. KiwiSaver, New Zealand's voluntary workplace retirement savings scheme, is not recognized as tax-advantaged by the IRS, and contributions and earnings inside a KiwiSaver account are generally subject to current US taxation. The underlying KiwiSaver funds are managed investment schemes that almost certainly qualify as PFICs under US rules, which adds Form 8621 reporting obligations on top of the ordinary tax issue.