Job Discussion Forums

dkbarnes · Posted: Thu Mar 05, 2009 8:33 pm Post subject: Taxes

I'm just sorting through the ins and outs of being a newb at this and have been wondering (of course) about the finances. If I understand this correctly, being a U.S. Citizen, working overseas, I would have to pay country taxes AND U.S. income tax on earnings. Is this correct? Doesn't his heavily deplete your income? Is there a legitimate way around this?

spiral78 · Joined: 05 Apr 2004 Posts: 11534 Location: On a Short Leash

The U.S. doesn't tax foreign income on which you have paid foreign taxes unless you have made something like the equivalent of $80,000 USD in the fiscal year. As an English, teacher, you've nothing to worry about.

Yeah, the exact amount changes yearly - but I've been living abroad since 1996 and it's always been FAR, FAR, FAR more than I've made in a year.

No worries, truly.

Glenski · Joined: 15 Jan 2003 Posts: 12844 Location: Hokkaido, JAPAN

I second what spiral wrote.

Americans do not pay taxes on money earned abroad, up to about $87,500 (and if you make anything over that as an EFL teacher, you are exceptional!)

http://www.irs.gov/faqs/content/0,,id=199953,00.html

Get the 1040 form and 2555 or 2555EZ form. Your U.S. embassy can even help you with the average annual exchange rate for your country if you don't calculate it every time you get paid.

dkbarnes · Posted: Thu Mar 05, 2009 10:58 pm Post subject:

Thanks for the comments and the link. That makes it a more viable prospect for me.

naturegirl321 · Joined: 04 May 2003 Posts: 9041 Location: home sweet home

US taxes
If you�re an American citizen living overseas, you still have to file taxes. Although you may not owe Uncle Sam any money, by law you need to file. It�s a pretty straight forward process and if you fulfill simple requirements, you can be exempt for taxes up to $80,000 every year by filing the 2555EZ and the 1040. The 2555EZ is a simple form and shouldn�t take longer than ten minutes to fill out.

First off, you have to meet the tax home test. That means that you pay taxes in a foreign country. It makes sure you don't have to pay Uncle Sam, if you've already paid taxes in the country where you are living. If you meet this requirement than you have to fulfil one of the two below.

This first is fairly straight forward. If you've been away for 330 days out of 12 months, you can take the foreign income exclusion.

The second is a little bit more subjective. You have to be a bona fide resident for a year. Being a resident is the subjective part, it doesn�t mean that you actually have residency in the foreign country, but that you have set up residency. Examples of this are getting a license, purchasing property, opening a bank account, etc. A bona fide resident means that you go to the foreign country with the idea of making it your home and staying indefinitely. If you are only going for a year or two and intend to go back to the US, then you are not a bona fide resident.

There are more detailed instructions on the IRS website, so you can check there if you have any questions. So there you have it, a simple explanation of US taxes.

BAD NEWS is that supposedly any self employment, like private classes is taxes at about 20 percent, so either you pay the tax or get paid in cash and don't declare it.