A Guide to Teaching Abroad and Filing Taxes in the U.S.
Teaching abroad is not only a great experience, but one that allows you to mold minds across the globe. It’s fulfilling and transformative, but it doesn’t exempt you from filing your U.S. taxes. Expat teachers need to know how to proceed once tax season rolls around, or they risk penalties worse than detention.
If you’re an American teacher, you have to file your U.S. taxes, whether you teach stateside or on the other side of the world. There are certain expat filing requirements that teachers need to study up on, and there are also tax benefits available to those teaching abroad. Failure to file by the due date can result in fines and penalties. When teaching abroad, it’s important to file your taxes on time and take advantage of the benefits available to you.
US Tax Help values educators who teach abroad. We can help you file your U.S. taxes so that you can focus on your important work. For help navigating U.S. taxes while teaching abroad, call the CPAs for American expatriates at US Tax Help at (541) 362-9127, or visit us online today.
Do You Have to File Taxes in the U.S. While Teaching Abroad?
Whether you’re planning to teach abroad for a few semesters, or twenty years, you will have to continue to file taxes in the U.S. The United States operates within a citizenship-based taxation system. American teachers educating minds abroad must file still their taxes in the United States.
Teachers in the U.S. and abroad still have to file their annual tax returns with the IRS. This can get complicated if you live in another country but are still an American citizen. Teachers need to do their homework to know which forms they’re responsible for and for which benefits they’re eligible.
Having a tutor, like the CPAs at US Tax Help, can be beneficial for American expatriates who need assistance during tax season. When grading papers or devising lesson plans, the last thing you should have to worry about is your U.S. taxes. However, as long as teachers retain their American citizenship, they will have to file taxes in the United States.
What U.S. Tax Forms Do I Need to File When Teaching Abroad?
Educators have additional filing requirements for their U.S. taxes while teaching abroad. Expat teachers can fail their annual tax returns without filing these forms and face financial penalties. If you’re teaching abroad for any part of the tax year, there are certain forms to be aware of.
IRS Form 8938
Whether or not teachers working abroad will have to complete IRS Form 8938 will depend on their finances. American expats, including teachers, only have to submit IRS Form 8938 if they have a certain amount of foreign financial assets during the tax year. Single taxpayers must complete this form if they have more than $300,000 in foreign financial assets at any point during the tax year or more than $200,000 on the final day of the tax year. For married taxpayers, the threshold is double.
While this may not apply to all expat teachers, especially within the first months or years of teaching abroad, it may apply to you if your spouse also moved abroad with you. Depending on how long you remain teaching abroad, you may have to familiarize yourself with IRS Form 8938. However, if you’re just teaching abroad for a year or two, you may never have to concern yourself with this reporting requirement.
FinCen Form 114
When teaching abroad, you may decide to open foreign bank accounts to house your income. If, at any point, your aggregate foreign bank accounts exceed $10,000, you will have to complete FinCen Form 114, also known as a Report of Foreign Bank and Financial Accounts (FBAR). FinCEN, or the Financial Crimes Enforcement Network, only needs this report for informational purposes.
Are You Eligible for Tax Benefits in the U.S. While Teaching Abroad?
American expats teaching abroad are eligible for certain tax benefits. These benefits can reduce your taxable income and help you claim deductions in your annual tax return.
Foreign Earned Income Exclusion
The Foreign Earned Income Exclusion (FEIE) benefit is highly attractive to teachers working abroad. American expats are taxed on their worldwide income. However, this benefit allows expats, including teachers, to exclude some of their foreign income from their American taxes. In 2022, expat teachers can exclude $122,000 from their U.S. taxes. That may be your entire foreign salary. That would greatly reduce your taxable income, or eliminate it. Americans teaching abroad must meet either the Bona Fide Resident Test or the Physical Presence Test to qualify for the Foreign Earned Income Exclusion benefit.
Depending on how long you plan to teach abroad, you may be eligible for additional benefits within the Foreign Earned Income Exclusion benefit. For example, if you intend to permanently live abroad and teach, you may be eligible for the Foreign Housing Exclusion. This is part of the FEIE and allows teachers working abroad to deduct or exclude rent or utility costs from their annual tax returns. To qualify, teachers must meet the criteria of FEIE benefit, file for the FEIE, and use the funds from their foreign employer to pay for their housing. Also, your housing expenses must be greater than the base amount for the area in question to qualify.
Educator Expenses Deduction
All American teachers are eligible for the Educator Expenses Deduction, regardless of where they live. So, if you use your personal funds to pay for classroom materials or supplies, you can deduct a portion from your annual tax return. Although you might have known about this deduction while you lived in America, you might not have known that it still applies when you work abroad. The CPAs for American expats at US Tax Help want teachers working abroad to know that they’re eligible for the Educator Expenses Deduction.
Teachers can deduct up to $250 of out-of-pocket expenses from their annual tax return. So many teachers want to give their students the best school experience possible, so they use their own money on supplies or materials. Even expat teachers can benefit from the Educator Expenses Deduction, which rewards teachers who go the extra mile for their students in the U.S. or abroad.
Our CPAs Can Help You File Your Taxes in the U.S. While Teaching Abroad
We can give American expats teaching abroad the study guide they need to file their taxes in the United States successfully. To learn more about filing your taxes while teaching abroad, call the CPAs for American expatriates at US Tax Help at (541) 362-9127, or visit our website today.