US Taxes For Teachers Abroad
Jan 2, 2009 Other 2765 Views
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.