Will I Pay Taxes While Teaching English Abroad? [For Americans]

So…You are planning on getting TEFL Certified and teaching English abroad? That's amazing. Just make sure you are fully prepared regarding all financial matters you will need to consider both at home and abroad, including taxes.

My name is Doug Waxman, Business Development Director & Admissions Advisor at ITA and I have teamed up with Gregory Lucyshyn with Expatriate Tax Consulting (MY ACCOUNTANT & also ITA’s preferred expat accountant) to help you out with the question, will I have to pay taxes while teaching English abroad?

Let's dive in and answer a few commonly asked questions:

Will I Need to File a U.S. Tax return & Will I pay Taxes in the U.S. while I am Abroad?

US citizens earning more than $100,000 USD per year, or the equivalent in foreign currency, are required to file a US federal tax return. Failure-to-file penalties start at $135 and can increase with interest and additional fines.

Most citizens working abroad earning less than $100,000 USD (or the equivalent in foreign currency) will owe no income tax, due to the Foreign Earned Income Exclusion. As an English teacher abroad you will probably not be making more than $100,000 USD, so you will most likely NOT owe any income tax on the money earned abroad as an English teacher.

Filing is simply an exercise in navigating the complex IRS tax forms and being in compliance with federal law.

Note: If you are not a U.S. citizen, you should consult the relevant government bodies for taxation and overseas citizens for your nation.

For Americans, we recommend reviewing the IRS website for all up-to-date information regarding your taxes while living and working abroad as well as speaking with a tax professional:

Read more: U.S. Citizens and Resident Aliens Abroad

Some taxes you may be required to pay while living & teaching English abroad:

• Capital gains taxes: you may need to pay tax on any capital gains you incur when selling stocks, bonds or other financial securities or assets in the U.S.
• Local property taxes: if you own a home or other property you will not be exempt from paying applicable property taxes. 

Will I Pay Local Taxes in the Country Where I Teach English Abroad?

When teaching English abroad, you will typically be paid in each country’s local currency and may be responsible for local taxes, which can vary greatly by nation. Like the U.S., each nation maintains its own tax laws & policies.

We recommend speaking with your employer to understand what taxes you may be responsible for during your teaching contract.

All International TEFL Academy students and graduates will receive free lifetime job search guidance which includes advice and additional resources for paying taxes abroad.

Here are just a few examples from different countries abroad:

Costa Rica – Canadians and Americans are required to sign up with a Tributacion, a government branch that oversees income taxes for their legal ability to work. All teachers will be required to file their taxes in October. A 10% tax is paid if yearly earnings exceed 2800000.00 Colones (about $6000 USD.)

Spain – Many teachers in Spain will work for language schools on a tourist visa or tutor students privately and get paid all in cash.  It is common for teachers in Spain to not pay any local income taxes while teaching abroad.

South Korea – Employers in South Korea will simply take out a small portion of your paycheck for local income tax.  Around 3% - this is way less than we pay in the United States!

Here is an in-depth worldwide personal tax guide you or your accountant can use as a reference point: Worldwide Personal Tax and Immigration Guide.

NOTE: International TEFL Academy is a TEFL certification school & we are not professional tax advisors. Also, tax laws in any country are subject to change at any time. If you have questions about taxation in the U.S. or elsewhere, you should consult a professional expert and/or resources provided by the appropriate government body of the country in question.

About Gregory Lucyshyn: I have been preparing taxes for over 15 years, have a Masters of Science degree in Taxation, became a CPA in 2004, and have been preparing US tax returns for foreigners or citizens living abroad since 2005. I am intimately familiar with foreign-earned income, exclusions, housing allowances, credits and other required forms and deadlines. I have been living abroad for over 4 years.