Tax Time For International Educators

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Why did the Cannibal account get disciplined?… Because she was buttering up her clients!

  All kidding aside, it’s probably safe to say that many American International Educators are not well-informed when it comes to the overseas “tax thing.” We’re all pretty sure we won’t have to pay taxes back home, but for the most part, that’s as far as the knowledge base goes.

When tax time rolls around, as it always does, we are obligated to file, even if we don’t owe one cent. For help with taxes, some International Educators turn to on-line, mass-market software; others visit one-stop tax offices when back home on vacation. A small group, of which we all know a few, procrastinate for years, fearing the day the IRS catches up with them.

Do-it-yourself tax software works, but usually fails to clearly explain all the overseas issues. This leaves you wondering if you’ve filled in everything correctly. One-stop tax shops are normally not well-versed in the details of overseas tax issues, costing you fees and errors that may result in paying extra tax. Long-term procrastination, always a poor choice, is hard on your psyche and can lead to problems with the tax man, “who isn’t going to butter you up.”

Useful points to keep in mind this tax season

  • US citizens and residents living/working outside the US are allowed an automatic 2-month extension to file (to June 15), plus additional time depending on circumstances. Any tax owed is still due on April 15, so you’ll owe some interest when you pay later.
  • Your first year living overseas you will often need an extension beyond June 15 if you expect to qualify for the Foreign-Earned Income Exclusion, which requires 330 days out of country. An extension request should be filed by the regular deadline. For the 2016 tax year, the exclusion is $101,300.
  • If your school grants a tuition break to allow your kids to go to the school where you teach, the tuition amount is generally not considered taxable income. Housing benefits, on the other hand, even school-provided housing, are taxable in most cases.
  • Over the years I’ve relied on an accountant to take care of my taxes. She’s up-to-date on the tax code, charges a fair price, and I’ve not paid a cent in US taxes for many years. Best of all, I’m legal and feel secure in knowing that should a problem arise, she’ll handle it. Her fee is a small price to pay for convenience and peace of mind.

If you decide to go it alone and take the do-it-yourself route, be sure to check out the very active discussion on this topic taking place on the ISR Open Forum. It’s chock-full of useful advice and information from overseas educators with first-hand experience on the topic of taxes. You don’t need to be an ISR member to read/post to the forum.

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