April 15th, taxes are due today if you are a US citizen! Even the 6.3 million US expats living and working abroad need to file taxes- including international teachers!
First of all, let me say, that I am by NO MEANS a tax professional! (I thought about training to become one, but while I find peoples’ personal histories interesting, and it is nice to indulge my nosy side, I just don’t enjoy numbers THAT much!) haha. My lovely mother has been filing my taxes for me for the past 12 years because she is a certified tax preparer through H & R Block (if you are in Portland you should look her up- Kandy Isberg).
However, many of my new international teaching friends seem to know even less than I do, so I was inspired to write this post.
10 Tax Tips for International Teachers
- Do it: You must file your taxes! No matter where you live, and as long as you made more than $9000USD, the IRS wants you to file taxes.
- Foreign Earned Income Exclusion: International teachers work overseas for ten months. Most of us don’t want to work when we come home for a visit so we don’t have any US earned income. If you are like me and you only go home to the US for a few weeks and you also have no US earned income, you can most likely qualify for a Foreign Earned Income Exclusion (FEIE).
- Foreign Taxes: One benefit of many top schools is that you earn a tax-free income. If you work at one of those schools, don’t worry about this. If you are like me, and you are charged foreign taxes, there is a credit for that! I just read a post from another blogger who claimed to get a chunk of these foreign taxes back from her host country so you might look into this as well.
- Foreign Bank Accounts: I have read that it is becoming more and more difficult to get foreign bank accounts for US citizens because you must file taxes on these accounts too because of the U.S. Foreign Account Tax Compliance Act. According to this website there is a form called FBAR that you need to file if you have a foreign bank account.
- Student Loans: I have mentioned before that I am paying off my student loans at an accelerated rate. Well, your student loan provider will send you a paper telling you how much interest you have paid on your student loans. This amount will be figured in…somehow…on your taxes. Read about it here. I usually allow the IRS to contact my student loan provider every few months to re-qualify for the Income-Based-Repayment (IBR) plan using my tax return information. This is the easiest way I’ve found to re-qualify for the lower payments if you are an international teacher.
- Double Taxation Agreements- If you are working in certain countries you might not be required to pay taxes there because you are going to file in the US anyway. This way you are not potentially getting charged twice on the same income. Check the IRS website to see if the country you are working in has a DTA with the US.
- Foreign Pensions: If you work at a great school you will most likely be forced to pay into a foreign pension (retirement account). I’m going to have to do this next year! I love getting free money from my employer so I am in favor of it, but according to Forbes, “US expatriates covered by a funded foreign pension plan … are treated as participants in a “nonqualified” deferred compensation plan….” This probably means that there is yet another form you need to fill out and more paperwork to trace down.::Sigh::
- Come Quietly: If you have failed to file for a few years and you don’t want to risk $10k+ fines, then you might want to look into the Offshore Voluntary Disclosure Form.
- Give Up Citizenship: If you are truly committed to living and working overseas, and don’t mind visiting the US as a tourist, you can renounce your US citizenship. It seems a bit drastic to me, and I hope to one day have a house to come home to every summer in Portland, but some people find the allure of foreign life too hard to give up. I have read that in the past few years this is becoming more and more popular since Foreign Accounts and Tax Compliance Act (FATCA) came about in 2010.
- Find an Expert: Taxes are confusing and the IRS wants your money! I would forgo using TurboTax like you might have done while working in the US, and instead use the services of an expert tax preparer. There are whole companies dedicated to servicing expats who live and work abroad. Like I mentioned before, my mom works with H&R Block and I have successfully used them while teaching abroad for the past four years so I know they are an option. A quick Google search came up with this company too.
Again, I’m not a tax professional so take all of this with a grain of salt. I just hand my tax information over to the professionals. Just make sure you file your taxes!