The International Schools Review Forum

I'm wondering if anyone who knows about American taxes for expat teachers can help. This is not our first rodeo, but this is the first time half the family will live in the U.S. and the other half will work in China. My wife will pay taxes on her Chinese salary in China, but we're not used to paying U.S. taxes on our foreign income! I think we won't be able to declare the bonafide residence tax exclusion that we did in the past because I and one child will be living in our primary residence in the U.S. I'm guessing she could be exempt from U.S. taxes on her salary based on the "physical presence" test, but we don't want to have to be away from each other all but 29 days a year.

Any ideas?

The 29 day a year thing only applies in your first year overseas. If you keep up your status as living overseas, you can spend as much time as you want in the US. I've been overseas continually (from a tax perspective) since my first posting almost 30 years ago. I come and go from the US freely.

Not a tax professional, but could you just MFS and that way her income still wouldn't be taxable in the US?

Can you clarify for us that your spouse will be the only income earner, and that income will be solely based on foreign income earned in China? Will you not be working in the US or anywhere else or have any other source of income?

Why does this particular scenario need to exist? In the past the issues have been:

1) Custody issues with children (I noticed you said "one child" as opposed to "our child").
2) Current job, one spouse cant or wont leave whatever there current job.
3) Family or property obligations. Mainly what to do with the house or elderly parents that require more complex care obligations.
4) Medical issues. Chronic medical conditions requiring expensive or unusual treatment that cant be accommodated in the foreign location (possible language barrier complications).