US Tax For Teachers And How To Provide Better Support
- Melanie Mackenzie
- May 13
- 4 min read
Updated: May 14
Without fail each year at the start of US tax filing season, the same thing happens at international schools with American staff. Emails start and US tax-related questions land on someone’s desk, HR, the Business Manager, sometimes the Head, and oftentimes no one is quite sure how to answer them.
The good news is that most of what your US staff are dealing with is entirely predictable. And a little background knowledge on your part goes a long way: not to give tax advice, but to look informed, be a supportive employer, and to help avoid the last minute panic that arrives every spring.
Here are the things we think are worth knowing.
The US Taxes Its Citizens Wherever They Live
This surprises a lot of people. Most countries tax their residents, however the US has a citizenship-based tax system. This means that every American on your staff, regardless of how long they have been overseas, will likely be required to file an annual US tax return.
This is not optional, and it does not go away when someone takes a post abroad. Your US teachers are managing an ongoing tax obligation in addition to whatever local jurisdiction tax requirements apply, and it is a system most US domestic accountants do not fully understand.
April 15 Is Not The Deadline
Americans living abroad receive an automatic two-month filing extension to June 15. So while US citizens back home are focused on the April deadline, your US staff technically have more time to file.
There is a catch. If any tax is owed it’s still due by April 15. The June automatic extension applies to the filing and will help avoid incurring late filing penalties. However if any tax due is not paid by April 15 interest will accrue on the liability.
There is another pattern worth noting. The June 15 automatic extension often creates a false sense of comfort. Many staff leave everything to the last minute and then panic. The expats who have the smoothest filing season are usually the ones who start organizing earlier in the year.
The Foreign Earned Income Exclusion is Powerful
Most US citizens living abroad have heard of the Foreign Earned Income Exclusion, or FEIE. It allows them to exclude a significant portion of foreign earnings from US tax. For 2026, the allowable exclusion is $132,900 and depending on their location and expenditure, potential additional foreign housing costs may also be excluded. For many teachers, this can reduce their US tax bill to zero.
But it comes with conditions. To qualify, your employee needs to either have been physically present outside of the US for 330 full days within a 12 month period - known as the Physical Presence Test or PPT. Long summer trips home, can quickly push someone below that threshold. Or your employee would need to show the IRS that they are a bona fide tax resident in the foreign jurisdiction where they are based and have been living and working outside the US for a complete calendar year, known as the Bona Fide Residence Test or BFR.
There are ways to structure the relevant period. But the key point is that this is not automatic. It requires the right advice. And sometimes, depending on where the employee is based, and on their individual situation, claiming foreign tax credits may be the better tax answer.
Foreign Bank Accounts Come With Reporting Obligations
Separate from the tax return, US citizens are required to report their foreign financial accounts if the combined balance exceeded $10,000 at any point during the year, even for a single day. This is known as the FBAR, and the penalties for missing it can be serious.
Many of your US staff will have a local bank account or be enrolled in a local foreign pension. Many will not know the FBAR filing obligation exists or will assume it does not apply to them.
What This Means For You As A School
You are not expected to give tax advice, and you should not try. But you are in a position to prevent a known and recurring source of staff stress by doing one simple thing, pointing US citizen employees in the right direction early.
Schools that handle this well tend to treat it like any other staff support issue. They include it in onboarding and send a brief internal reminder in April. They ensure employees are easily able to access the necessary compensation documents needed to file a tax return, especially if that staff member left the school part way through the calendar year.
They make it easy for US staff to access specialist guidance without having to go searching for it themselves. The alternative, of leaving every US employee to figure it out independently, often leads to mistakes, stress, and the occasional HR conversation that could easily have been avoided.
The Window To Act Is Now
We are in the window between April and June when expat tax filings are in full swing and specialist capacity is tightening. The schools that make a real difference to their US staff are the ones that send a simple, well timed nudge now, not in mid June when the scramble has already started.
US tax compliance is not complicated for your team to support. It simply requires knowing the basics, recognizing it as a real and recurring need, and knowing where to direct people. In many schools, that small investment of attention is all it takes to fix a stress point that shows up year after year.
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