Thursday 18 April 2013

Filing US Taxes as a TEFL Teacher

The following is a guest post by Greenback Tax Services.

As a TEFL teacher in a foreign country, you’re probably busy spending most of your free time devising lesson plans and immersing yourself in the local culture. For most TEFL teachers, teaching abroad is not so much about the money you earn, but about the enriching experience that follows. Most teachers are accustomed to earning a moderate salary that pays for living and travel expenses, with little left toward savings.

Unfortunately, even a moderate income in a foreign country is not exempt from US taxes. And for you, that means you are still required to file US income tax returns if you earn above the filing thresholds (see table below).

2012 Tax Year Filing Requirements for Most Taxpayers

Filing Status
Age at the end of 2012
Gross income at least

under 65

*65 or older

head of household
under 65

*65 or older

married, filing jointly**
under 65 (both spouses)

*65 or older (one spouse)

*65 or older (both spouses)

married, filing separately
any age

qualifying widow(er) with dependent child
under 65

*65 or older

* If you were born before January 2, 1948, you are considered to be 65 or older at the end 
of 2012.

**If you did not live with your spouse at the end of 2012 (or on the date your spouse died) and your gross income was at least $3,800, you must file a return regardless of your age.

Filing Taxes as An Expat

Contrary to what some people might believe, the IRS is not out to get expats.  All US citizens or residents who live inside or outside the USA are required to file US tax returns reporting their worldwide income. This does not mean that you will necessarily owe money, but you still do have to report your income. Tools like the Foreign Earned Income Exclusion and the Foreign Tax Credit can help you reduce or eliminate some or all of your US tax liability. 

The Foreign Earned Income Exclusion (FEIE) allows US expats to exclude up to $95,100 (for the 2012 tax year) of their foreign earned income from US taxation. This amount is tied to inflation and will increase to $97,600 for the 2013 tax year. There are certain criteria US expats must meet to qualify for FEIE, however, namely the Physical Presence Test or the Bona Fide Residence Test.  Basically, if you lived inside a foreign country for at least 330 days in a 365 day period, then you would qualify for the FEIE under the Physical Presence Test. To see the complete list of FEIE criteria, click here

Important Tax Deadlines

Like most US citizens and residents living in the US, if you do owe taxes to the IRS, you are required to submit any payments by April 15th. However, as a TEFL teacher living abroad, you are granted an automatic two-month extension on filing your tax return (to June 15th). So, if you don’t owe the IRS any money, you can take advantage of the extension. It is important to note that you will need to attach a statement to your tax return listing why you qualify for this extension. If you need additional time, you can complete Form 4868, which can be filed electronically, and receive an extension to October 15th.

Other Considerations:

  • All income must be expressed in terms of US dollars on your tax return
  • Any amount owed to the IRS must be paid in dollars
  • Paper or electronic returns are available

While filing US tax returns might not be one of your top priorities, it is an important process that ensures you are compliant with US tax regulations. If you have questions about filing your tax returns as a TEFL teacher, Greenback Expat Tax Services offers professional tax preparation services for US expats. Get in touch with us today.


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