You signed the contract, booked the flight, and started packing. You are about to begin a teaching career at an international school — and the excitement is real.
Before you leave, there are a handful of tax decisions that are significantly easier (and cheaper) to make now rather than after you have settled in. The choices you make in the next few weeks can save you thousands of dollars on your first expat tax return and prevent compliance headaches that follow you for years. Here is what to do before you go.
1. Break Ties With Your State — Deliberately
The federal government taxes US citizens worldwide regardless of where they live. But your state of last residence may also continue taxing you unless you take specific steps to establish that you have left.
Before you move:
- Surrender or let expire your state driver’s license (get an international driving permit if needed abroad)
- Change your voter registration (deregister or register in a no-income-tax state if you establish domicile there)
- Close local bank accounts (or change your address to a no-income-tax state)
- Cancel your state-issued professional licenses if not needed
- Sell or terminate your residential lease
- Update your mailing address with the USPS
Why this matters: States like California, New Mexico, South Carolina, and Virginia have aggressive rules about taxing former residents. California, for example, presumes you are still a resident if you are abroad for less than 546 days under an employment contract. If you do not take affirmative steps to break domicile, your state may tax your entire foreign salary.
Best case scenario: Establish domicile in a no-income-tax state (Florida, Texas, Nevada, etc.) before departing. Some teachers use a family member’s address. The key is documentation — you need to demonstrate genuine intent to make that state your domicile.
2. Understand the FEIE Before You Arrive
The Foreign Earned Income Exclusion (FEIE) is likely the most valuable tax provision available to you as a teacher abroad. It allows you to exclude up to $132,900 (2026) of foreign earned income from US taxation.
The catch: You must qualify under either the physical presence test (330 full days in a foreign country during a 12-month period) or the bona fide residence test (established residence for a full calendar year).
For teachers arriving mid-year: If you start your contract in August 2026, you will not have a full calendar year of foreign residence until December 31, 2027. You can still use the physical presence test for your 2026 return — but you need to track your days carefully from your arrival date.
Action item: Start a travel log on the day you depart the US. Record every entry and exit date — including short trips home, conferences, and layovers. This log becomes essential documentation at filing time.
3. Know Your Housing Exclusion Potential
If your school provides housing or pays a housing allowance, the value is technically included in your gross income — but it can be excluded through the Foreign Housing Exclusion, which shelters housing costs above a base amount up to city-specific IRS limits.
Before you go: Review your contract to understand exactly how your housing benefit is structured. Is the school providing an apartment? Paying a stipend? Reimbursing expenses? The structure affects the calculation.
Action item: Keep records of all housing-related expenses from day one — rent, utilities, renter’s insurance, and any other qualifying costs. Even if your school provides housing, you will need the fair rental value of the property for the exclusion calculation.
4. Open Your Foreign Bank Account With FBAR in Mind
When you arrive abroad, one of your first tasks will be opening a local bank account to receive your salary. The moment you do, you likely trigger an FBAR filing obligation.
The FBAR requires you to report all foreign financial accounts if their combined value exceeds $10,000 at any point during the year. For most teachers receiving monthly salary deposits, this threshold is reached quickly.
Action item: As soon as you open a foreign account, note the account number, bank name and address, and start tracking your monthly balances. You will need the maximum balance during the year for the FBAR filing.
5. Consider Your Retirement Strategy Early
Teaching abroad creates a retirement planning gap that many teachers do not realize until years later.
- Social Security: Your international school almost certainly does not withhold FICA taxes. This means you are not earning Social Security credits while you teach abroad. For teachers who spend a decade or more overseas, this can significantly reduce future benefits.
- IRA Contributions: If you exclude all your foreign earned income under the FEIE, you may have no “compensation” for IRA contribution purposes — which can prevent contributions to both traditional and Roth IRAs. However, if you earn summer income in the US or if you use the Foreign Tax Credit (FTC) instead of the FEIE, contributions may be possible.
- School Pension Plans: Many international schools offer provident fund or retirement plan contributions. Before you enroll, understand the US tax implications — some foreign plans qualify as tax-deferred, while others may be classified as PFICs with unfavorable US tax treatment.
Action item: Have a retirement planning conversation with an expat tax specialist in your first year abroad. The decisions you make now compound over your entire international career.
6. Plan Your Summer Income Carefully
If you plan to return to the US each summer and work — tutoring, coaching, camp counseling, or other employment — that income has tax implications.
Summer US income is not excludable under the FEIE because it is earned in the United States. It is fully taxable at the federal level and may create state tax filing obligations in the state where you earn it.
Summer time in the US also counts against your physical presence test. If you spend more than 35 days in the US within your 12-month qualifying period, you may need to rely on the bona fide residence test instead.
Action item: Before committing to summer work, understand how it affects your overall tax picture. A few thousand dollars in summer income could cost you the FEIE if you are using the physical presence test — which could mean $10,000+ in additional federal tax.
The Best Thing You Can Do
The single best step you can take before moving abroad is to establish a relationship with a tax professional who specializes in expat returns — before you leave, not after your first filing deadline arrives.
A 15-minute conversation now can prevent expensive mistakes later. I work with American teachers at international schools across the Gulf States, East Asia, Southeast Asia, and beyond. Your situation is not new to me.