How to File U.S. Taxes 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 in the U.S. However, living abroad can also complicate certain issues, such as your U.S. tax requirements for expat English teachers. If you are an expat English teacher, this article will help you to understand how your residence outside the U.S. will affect your income tax liability.
Expat English Teacher Filing Requirements
Generally, the requirements for filing a tax return for an expat English teacher are the same inside and outside the United States. You must file a U.S. tax return if you receive more than a certain amount of gross income during the year. For 2024, the threshold is $13,850 for single filers and $27,700 for joint filers. However, this amount changes each year. Additionally, if you’re 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. The IRS will consider your tax return “on time” if you postmarked it by the due date. However, the IRS offers an automatic two-month extension to expats outside the country when their taxes are due. Remember that using this extension won’t change the due date of any taxes you may owe. You will owe interest if you don’t pay your tax liability by the regular due date.
TIP: Even if you qualify for the automatic two-month extension, you can still apply for an additional four-month extension, giving you until October 15 to file your return. Use IRS Form 4868 to request this extension, but remember to pay any taxes owed by April 15 to avoid interest charges.
Tax Deductions for Expat English Teachers
Teachers and eligible educators who spend their own money on classroom supplies are eligible for an educator expense deduction. While this is not a tax deduction credit, it is an above-the-line deduction of up to $300 for classroom expenses paid during the tax year.
Eligible expenses include:
- Computer equipment (including related software and services)
- Books and other reference materials
- Supplies (e.g., paper, pens, markers, and classroom decorations)
- Supplementary materials (e.g., educational games and activities)
- Professional development courses (including online courses and workshops)
- Classroom furniture (e.g., desks, chairs, and storage units)
- Educational subscriptions and memberships (e.g., professional organizations and online learning platforms)
- Internet access fees, if used for teaching purposes
- Curriculum development tools and materials
An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who works at least 900 hours a year in either a public or private school.
Education Expenses
Another teacher tax deduction that can be used to reduce your taxes is education expenses for tuition incurred in pursuing graduate school or other additional education. Education expenses can be claimed, subject to limitations and requirements, as either:
- Educator’s expense deduction
- Unreimbursed employee business expense (as a Schedule A itemized deduction)
- Tuition and fees deduction
- Education credit
If the education is part of your state school board’s certification renewal process, it may be deductible. However, if it is needed to meet the minimum educational requirements to qualify you for a particular position or if it will qualify you for a new trade or business, it is not deductible.
Once you have met the minimum educational requirements for teachers in your state, you are considered to have met the minimum educational requirements in all states. This is true even if you must get additional education to be certified in another state. Any additional education you need is qualifying work-related education. You may still be able to obtain a benefit from educational expenses that do not qualify for a work-related education deduction if you qualify for the American Opportunity Credit, the Lifetime Learning Credit, or the student loan interest deduction.
It would be best if you kept receipts to substantiate all expenses.
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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.
- You must be physically present in one or more foreign countries for at least 330 days during a 12-month period or be a bona fide resident of a foreign country for the entire tax year.
If you qualify for this provision for the tax year 2024, you can exclude up to $126,500 per person 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. This can further reduce your taxable income and alleviate your tax burden. The foreign housing exclusion applies to housing expenses that exceed a base amount, which varies depending on your location.
TIP: The foreign housing exclusion can include expenses like rent, utilities (except telephone), furniture rental, and residential parking. Ensure you document all housing-related expenses to maximize your deduction.
Other Credits and Deductions
If you can’t 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 can claim all of the same deductions and credits as those 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.
Common Tax Forms for Americans Teaching Abroad
When filing U.S. taxes as an expat English teacher, you will need to be familiar with several tax forms:
- Form 1040: This is the standard U.S. individual income tax return form. All Americans, including those living abroad, must file this form to report their worldwide income.
- Form 2555: You use this form to claim the FEIE. It allows you to exclude up to $126,500 of foreign-earned income from your U.S. taxable income in 2024.
- Form 1116: If you cannot exclude all your foreign-earned income, you may use this form to claim the Foreign Tax Credit. This helps reduce double taxation by allowing you to credit foreign taxes paid against your U.S. tax liability.
- Form 8938: Known as the Statement of Specified Foreign Financial Assets, this form is required if you have significant foreign financial assets, typically with an aggregate value of more than $200,000 on the last day of the tax year.
- FinCEN Form 114: Commonly referred to as the Foreign Bank Account Report (FBAR), the IRS requires this form if you have foreign financial accounts exceeding $10,000 at any time during the year.
TIP: Familiarize yourself with the IRS Streamlined Filing Compliance Procedures. If you’ve fallen behind on filing your U.S. taxes, this program can help you catch up while minimizing penalties.
Additional Tax Tips For Expat English Teachers
Working overseas as a TESOL or TEFL teacher is an exciting adventure that most people will never experience. However, working outside the country can also create tax problems. The U.S. requires its citizens to file tax returns even if they aren’t living in the country.
Here are seven tax tips as a teacher overseas to help you understand the rules and prepare your return properly:
- You still have to file a return.
Even if you can exclude most or all of your income earned overseas and reduce your U.S. tax liability to zero, you must still file a tax return each year. - You may owe self-employment taxes.
If you are an expat English teacher abroad and earn self-employment income, you must pay self-employment tax. This tax will be calculated as a percentage of your Schedule C net income. - You may benefit from a U.S. tax treaty or totalization agreement.
To reduce or eliminate double taxation for citizens working in other countries, the U.S. has negotiated more than 60 tax treaties with foreign countries. Depending on the specifics of the treaty, you may be able to deduct contributions you make to foreign retirement accounts, qualify for an exemption for or from Social Security payments (under a totalization agreement) to the U.S., and/or defer taxes owed on earnings in foreign retirement accounts. You may also be able to claim a credit for income taxes you paid to foreign governments on income you earned from the United States. - You may be able to deduct moving expenses.
If you can’t exclude all of the income you earned in a foreign country, or if you have income earned in the United States, you may be able to reduce your tax liability by deducting some of your moving expenses and storage expenses. You must be employed in your new location for at least 39 weeks to qualify for this deduction. This deduction will include expenses you paid to move yourself and any other household members to the new country. However, remember that you won’t be able to deduct any expenses that can be allocated to income you have already excluded under the foreign earned income exclusion. - You may still owe state income tax as a teacher overseas.
You may still owe a state income tax even living outside the country. Currently, 41 states impose income tax on their residents, even if they aren’t living in the state when they earn the money. Ensure you learn about your state’s laws to comply with all the relevant requirements. You can avoid paying state taxes by relocating your legal domicile to a state without income taxes. Do this before you move out of the country
FAQs on Filing U.S. Taxes as an Expat English Teacher
Do I need to file a U.S. tax return if I earn less than the FEIE limit?
Yes, you must file a U.S. tax return regardless of your income level if you meet the filing thresholds. This ensures you remain compliant with IRS regulations and can claim the FEIE.
What is the deadline for filing my U.S. tax return as an expat?
The standard deadline is April 15, but expats receive an automatic extension to June 15. You can request an additional extension to October 15 if needed. Note that any taxes owed are still due by April 15 to avoid interest charges.
Can I claim the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC)?
Yes, you can claim both, but not on the same income. The FEIE excludes income from U.S. taxation, while the FTC provides a credit for taxes paid to a foreign government on income not excluded by the FEIE.
What happens if I don’t file my U.S. tax return while living abroad?
Failure to file can result in penalties and interest charges. Additionally, you may lose the opportunity to claim beneficial exclusions and credits, such as the FEIE and FTC.
Do I need to report my foreign bank accounts to the U.S. government?
Yes, file an FBAR if the total value of your foreign accounts exceeds $10,000 at any time during the year. You may also need to file Form 8938 if your foreign financial assets exceed specified thresholds.
Remember to File
You must still file a tax return even if you don’t owe any taxes because of the foreign-earned income exclusion. 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 minimize 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 clients’ unique needs; every tax situation is different and requires a personal approach to providing realistic and effective solutions.