What You Need To Know As An Expat English Teacher
When you choose to live and teach outside the United States, you are sure to have a lot of unique experiences that aren’t available to English teachers still living in the U.S. However, living abroad can also complicate certain issues, such as your U.S. income tax requirements as an expat English teacher. If you are an expat English teacher, consult the information below to understand how your residence outside the country will affect your income tax liability.
Expat English Teacher Filing Requirements
In general, the requirements for filing a tax return for an expat English teacher are the same inside and outside of the United States. You must file a return if you receive more than a certain amount of money in gross income during the year. For 2016, the threshold is $10,350 for single filers and $20,700 for joint filers. However, this amount changes each year. In addition, if you are self-employed, you must file a return if your net income from self-employment exceeds $400, even if your gross income is under the threshold for your filing status.
Tax returns and payments for expats are due on the same day as tax returns for people who live and work in the U.S. Your tax return will be considered “on time” if it is postmarked by the due date. However, the IRS also offers an automatic two-month extension to expats who are outside the country when their taxes are due. Keep in mind that using this extension won’t change the due date of any taxes you may owe. If you don’t pay your tax liability by the regular due date, you will owe interest.
Foreign Earned Income Exclusion For Expat English Teachers
Most expat English teachers will qualify for the foreign earned income exclusion, which essentially prevents them from paying taxes in the United States for most or all of the income they earn abroad. In order to qualify for this exclusion, you must:
- Be a U.S. citizen or resident alien with a tax home in a foreign country.
- Have foreign earned income.
- Be physically present in one or more foreign country for at least 330 days during a period of 12 months or be a bona fide resident of a foreign country for the entire tax year.
If you qualify for this provision, for tax year 2016 you can exclude up to $101,300 of your foreign earned income from taxation in the United States. A return will still be required to claim this tax benefit. However, you will likely be required to pay taxes on the income you earn in the country where you work.
Foreign Housing Exclusion and Deduction
If you are an expat working abroad, you may also qualify for the foreign housing exclusion and deduction.
Other Credits and Deductions
If you aren’t able to exclude all of your income with the foreign earned income exclusion, you may be able to reduce the amount of tax you owe to the United States by claiming other credits and deductions. In general, people living and working outside the United States are allowed to claim all of the same deductions and credits as those who are living inside the United States. However, if you have claimed the foreign earned income exclusion, you cannot deduct or claim credits for any expenses that can be allocated to the income you have already excluded. This rule applies to most deductions and credits, with the exception of deductions for real estate taxes on a personal residence, contributions to charity, alimony payments, retirement contributions, mortgage interest, medical expenses and personal exemptions.
Remember to File
Even if you won’t owe any taxes because of the foreign earned income exclusion, you must still file a tax return. Remember to file your return before the due date each year to avoid unnecessary trouble with the Internal Revenue Service.
Filing a tax return as an expat English teacher can be confusing. To make sure that you are minimizing your tax liability while complying with all applicable U.S. laws, contact Tax Samaritan today for assistance.
Our goal at Tax Samaritan is to provide the best counsel, advocacy and personal service for our clients. We are not only tax preparation and representation experts, but strive to become valued business partners. Tax Samaritan is committed to understanding our client’s unique needs; every tax situation is different and requires a personal approach in providing realistic and effective solutions.
If you would like a quote, please click on the button below for a free, no obligation Tax Preparation quote and/or free 30-minute consultation to discuss your situation as an expat English teacher further:
Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US tax preparation and representation. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.
When looking for a tax professional, choose carefully. We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent (America’s Tax Experts). If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation, like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).
Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.