# tax free?



## Melinda58 (Oct 28, 2012)

Does anyone know, if a country pays "tax-free dollars," will I still be expected to pay income tax to the IRS when I return to the States?
Thanks!


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## Bevdeforges (Nov 16, 2007)

Not when you return - but while you are living there.

You are required to file income tax returns with the US no matter where in the world you are living and working. The good news is that you can "exclude" the first $92K (rough figure - it's adjusted each year) of earned income on form 2555. Normally, if you're making more than that, you credit local income taxes paid against the rest. However, in a "tax free" country, there's nothing to offset, so you wind up paying US taxes on the additional amount. (Not only in "tax free" countries, but also those in the International Civil Service - working for various UN and other international agencies in countries that exempt those salaries from local income tax.)

But do keep those US tax returns coming on a regular basis while you're working overseas!
Cheers,
Bev


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## Melinda58 (Oct 28, 2012)

Bevdeforges said:


> Not when you return - but while you are living there.
> 
> You are required to file income tax returns with the US no matter where in the world you are living and working. The good news is that you can "exclude" the first $92K (rough figure - it's adjusted each year) of earned income on form 2555. Normally, if you're making more than that, you credit local income taxes paid against the rest. However, in a "tax free" country, there's nothing to offset, so you wind up paying US taxes on the additional amount. (Not only in "tax free" countries, but also those in the International Civil Service - working for various UN and other international agencies in countries that exempt those salaries from local income tax.)
> 
> ...


Of course the good news is, as we all know in the US, teachers never make $92,000 a year, regardless of what country they are in!


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