Question for the Money Doctors
Question submitted on Feb 14, 2013.
QuestionI am thinking of teaching overseas, but the school year begins in July 2013, and ends in August 2014. I will have to pay that country''s taxes, but what are the ramifications since I will not be there the whole calendar year?
Hi - Foreign taxation is very complex and you should seek professional advice from a CPA. However, there are (at least) 3 things to consider while working out of the country:
1) US Citizens are taxed on worldwide income. So, you will have to pay US tax on the income you earn abroad.
2) However, you may qualify to exclude from income up to an amount of your foreign earnings - up to $95,100 for 2012. To exclude this income, you must live outside the US for at least 330 days over a 12 month period.
3) You may also be eligible to claim a foreign tax credit for taxes you pay while living abroad.
Like I said, this stuff is complex and is worth the money to hire a professional to help you navigate it. To find a CPA in your area, visit http://findapfs.org. Good luck!
For additional information visit http://www.360financialliteracy.org/