Taxes For US Teachers Abroad

by Roger on January 14, 2008

by Roger | January 14th, 2008  

ctr_taxes.jpgIt’s tax season in the US, and if you have a US employer they should be sending you your W-2 forms by the end of the month. If you’re from the US and working overseas, and you need serious tax information, mosey on over to the real deal at the IRS website. What follows here are some assorted comments and thoughts I’ve collected. Keep in mind that this is an EFL blog and not an authoritative source of information on taxes. (Translation: if you get audited…don’t say I didn’t warn you!)

One of my first concerns was: my foreign employer sure is not sending me any W-2’s! What do I do? I found some form of an answer on the FAQ’s with the fine heading “Aliens and US Citizens living overseas”. Briefly, you fill out a form reporting your foreign earned income, but generally as long as it is under $85,000 or so in a year, it is excluded from taxation.

There is one complication. You either have to be A) “a U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year” or “a U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.” My understanding of the second point is: if your contract runs July 2006 – July 2007, that’s fine. There is a step later which proportions the income that is excluded from taxation (if the one-year period starts in July, it is only up to 43,000 that is excluded, and so on).

There is also the question of: Do you have to file? The short answer I’m fond of is: even if there is a reason why it might be okay not to file, it’s not a bad idea to file anyway.

The longer answer is: even in the US, if you make under a certain amount ($10,000?), you are in fact not obligated to file. Usually it makes sense to do so because you can get some or all of what you paid refunded. One difference with income earned overseas in EFL is that it’s very unlikely that you have paid US taxes, so it’s even more unlikely that you will get anything back. However, it still makes sense to file.

First of all, it’s better to make a mistake in the direction of doing something you didn’t need to do than vice versa. Also, though, you may need tax information in the future for a reason you haven’t thought of now. One possibility is for the financial side of further school. Many graduate schools require students to fill out the FAFSA to be considered for financial awards from the school. Even if you only want bank loans – you have to have filled out a FAFSA. And yes, the FAFSA requires tax information.

Finally, it’s my hunch that there is just a tad of suspicion attached to “over there” meaning “outside the US” nowadays. All you do on the 2555 is write down what you earned, so there’s not any strenuous verification process… but in my opinion it still just looks better that you’ve done it.

I can already hear our heavily taxed (ahem, let’s not get too carried away, it is the US) counterparts crying, “Why shouldn’t EFL teachers have to pay taxes?” Generally EFL teachers do pay taxes, but those taxes go to the countries they live and work in. In my cases, the salary quote I got was the take home amount, and the tax was framed more as an employer obligation than an individual burden.

Happy filing!


Cairogal January 30, 2008 at 10:27 am

I filed every year abroad, oftening asking myself, “What’s the point?” I’m glad my father insisted. When I got married I had to provide tax information for my husband’s visa. However, I wish my dad had interpreted the tax code accordingly. I started a contract in September, and he thought I had to pay taxes on the money earned between from September through December of that year. What I don’t understand is this: I leave in September 2008. I file taxes for 2008 in February of 2009. I’ve only been outside the US for about 6 months at that time…those taxes earned from Sept 2008-Dec 2008 are not taxed, despite it only being a 6 month period? Is this because I intend to remain outside for another 6?

Katie February 18, 2008 at 10:14 am

Sorry it has taken me ages to reply, Cairogal!

This is a good point – it can help for something like a spouse’s visa that you may not have thought of at the time.

As for your last question – I can’t say with any certainty but I understand the answer to be yes to both…though the maximum possible amount that can be untaxed is cut in half if you are only reporting income for six months.

I’m not sure, and have no accounting or tax background at all, so of course don’t take my word for it.

Andy February 10, 2009 at 11:26 pm

I have lived overseas for the past 10 years and failed to file my taxes as my earning was low in US$. But now I understand I should have still filed taxes in US. How do I compensate this error or is there some mechanism of filling back the taxes in the past years?


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