Moving Abroad as a Student: Your U.S. Tax Guide
Yes, American students moving abroad must file U.S. tax returns, but here’s the good news: you’ll likely owe zero in U.S. taxes. According to the latest IRS data, 280,716 U.S. students studied abroad for academic credit in 2022/23, a 49% increase from the prior year, and most who work part-time while studying end up with no U.S. tax liability when they file correctly.
Here’s Exactly What You Need to Know as a Student Moving Abroad:
You must file annual U.S. tax returns and report all worldwide income, including part-time work, internships, and taxable scholarship portions. However, two powerful tax benefits will likely eliminate your entire U.S. tax bill: the Foreign Earned Income Exclusion (FEIE) lets you exclude up to $130,000 of foreign earned income from U.S. taxation (2025 tax year), and the Foreign Tax Credit (FTC) provides dollar-for-dollar credits for foreign taxes paid.
Since most students earn far less than $130,000 annually, the FEIE typically covers their entire income. Even students earning $30,000-40,000 from internships and part-time work usually owe $0 in U.S. taxes after applying these benefits. The key is filing your return with the right forms and claiming these exclusions from the start.
Do American Students Living Abroad Pay U.S. Taxes?
Yes, as a U.S. citizen, you must file annual tax returns regardless of where you live or study. The IRS requires all U.S. citizens to report their worldwide income, including:
- Part-time work income while studying
- Internship payments
- Fellowship or scholarship amounts (beyond tuition and required fees)
- Any other earned income
The key difference is that “filing required” doesn’t mean “taxes owed.” Students abroad have access to the same expat tax benefits as other Americans living overseas, often resulting in zero U.S. tax liability.
Your Available Tax Benefits:
- Foreign Earned Income Exclusion (FEIE): Exclude up to $130,000 of foreign earned income (2025 tax year)
- Foreign Tax Credit (FTC): Dollar-for-dollar credit for foreign taxes paid
Since most students earn far less than $130,000 annually, the FEIE often covers their entire income, resulting in zero U.S. tax liability.
When Do Students Qualify for the Foreign Earned Income Exclusion?
The FEIE requires meeting either the Physical Presence Test or the Bona Fide Residence Test. For students, the Physical Presence Test is typically easier to meet.
Physical Presence Test for Students
You must be physically present in a foreign country for at least 330 full days during any 12-month period. This doesn’t have to align with the calendar year.
Student-Friendly Aspects:
- Holiday trips home don’t disqualify you if you stay under the 35-day limit
- The 12-month period can start on any date
- Time spent in international waters or airspace doesn’t count
Example: Sarah moved to Germany in August 2024 for university. She spent 340 days in Germany from August 2024 to July 2025, with two short trips home. She qualifies for the FEIE for her 2025 tax return.
Bona Fide Residence Test
This requires establishing genuine residence in a foreign country with no definite plans to return to the U.S. For students, this is harder to prove since most plan to eventually return.
Your student visa status doesn’t disqualify you from either test. The IRS focuses on your actual presence and intentions, not your visa category.
How Much Can Students Save with Expat Tax Benefits?
The savings depend on your income level and the foreign country’s tax rates.
Low-Income Students in Low-Tax Countries
Scenario: Alex studies in Thailand, earning $15,000 annually from part-time work.
- Thai tax owed: $0 (below threshold)
- U.S. tax before FEIE: $600
- U.S. tax after FEIE: $0
- Total savings: $600
Higher-Income Students in High-Tax Countries
Scenario: Emma studies in Germany, earning $35,000 from internships and part-time work.
- German tax paid: $8,500
- U.S. tax before credits: $3,200
- U.S. tax after Foreign Tax Credit: $0
- Total savings: $3,200
Pro Tip: Students in high-tax countries often benefit more from the Foreign Tax Credit than the FEIE, especially with modest income levels.
Students in high-tax countries often benefit more from the Foreign Tax Credit than the FEIE, especially with modest income levels.
What Income Must Students Report?
Not all money received abroad counts as taxable income. Here’s what you need to know:
Taxable Income for Students Abroad
- Wages from part-time jobs
- Internship compensation
- Fellowship amounts exceeding tuition and required fees
- Freelance or consulting income
- Teaching assistant stipends
Non-Taxable Income
- Qualified scholarships covering tuition and required fees
- Gifts from family
- Student loans
- Expense reimbursements from your university
Scholarship Complications
The taxable portion of scholarships can be tricky. If your scholarship covers room, board, or living expenses beyond tuition and required fees, that portion becomes taxable income.
Example: Your German university scholarship provides $20,000 total: $15,000 for tuition and $5,000 for living expenses. Only the $5,000 living allowance is taxable.
Stop guessing. Download the expert guide now.
How Do Students File Taxes from Abroad?
Required Forms for Student Expats
- Form 1040: Your standard tax return
- Form 2555: To claim the Foreign Earned Income Exclusion
- Form 1116: To claim the Foreign Tax Credit
- FinCEN Form 114 (FBAR): If foreign bank accounts exceed $10,000 at any time during the year
Important Deadlines
- April 15: Standard filing deadline
- June 15: Automatic extension for Americans abroad (extended from June 15 because it falls on a Sunday)
- October 15: Final deadline with extension
- April 15: FBAR deadline (automatic extension to October 15)
Common Student Filing Mistakes
- Not claiming available exclusions: Missing out on FEIE or FTC benefits
- Incorrect scholarship reporting: Treating all scholarship money as non-taxable
- Missing FBAR requirements: Not reporting foreign bank accounts
- Wrong residency test: Choosing the wrong test for FEIE qualification
What About Parents and Dependents?
Whether your parents can still claim you as a dependent while you study abroad depends on several factors. Our guide details this in claiming children as dependents while studying abroad.
The key factors include your age, income level, and how much support your parents provide. Our comprehensive guide for families with children studying abroad covers additional considerations around education credits and tax planning.
Are There Education Credits Available?
Yes, American students may qualify for education credits even while studying abroad. The American Opportunity Credit and Lifetime Learning Credit can provide significant tax benefits if you meet the requirements.
Additionally, if your family has been saving for your education, 529 plans can often be used for foreign universities that meet specific criteria.
Getting Started: Your Action Plan
Before You Leave
- Research the tax rates in your destination country
- Determine which test (Physical Presence or Bona Fide Residence) you’re likely to meet
- Set up a system for tracking your time abroad
- Gather documentation for any scholarships or financial aid
During Your First Year Abroad
- Keep detailed records of all income sources
- Track your days in foreign countries vs. the U.S.
- Save receipts for any tax-related expenses.
- Consider the June extension if you need more time to meet physical presence requirement.s
Filing Your First Return
- Determine your FEIE eligibility using Form 2555
- Calculate whether FEIE or Foreign Tax Credit provides better benefits
- File all required forms by the deadline
- Consider professional help if your situation is complex
When Professional Help Makes Sense
While many student situations are straightforward, consider professional help if you:
- Have multiple income sources across different countries
- Received substantial scholarship money with complex terms
- Are unsure about your residency test qualification
- Have significant bank accounts abroad requiring FBAR filing
The Bottom Line
Most American students abroad will owe little to no U.S. taxes when they file correctly and claim available benefits. The key is filing your return and claiming the appropriate exclusions or credits from the start.
Moving abroad for education is an incredible opportunity that tax concerns shouldn’t overshadow. With the proper knowledge and planning, you can stay compliant while maximizing your available benefits.
Your Next Steps:
- Determine if you qualify for the Physical Presence Test or Bona Fide Residence Test
- Calculate your potential FEIE benefit
- Set up proper record-keeping systems
- File your return with the appropriate forms
If you’re feeling overwhelmed by the complexity of expat tax filing as a student, you’re not alone. No matter how complicated your situation may seem, proper planning and professional guidance can help you stay compliant while maximizing your tax benefits.
Have questions about your specific situation as a student abroad? Contact us, and one of our customer champions will gladly help. If you need specific advice on your tax situation, click below to get a consultation with one of our expat tax experts.
This article provides general information about U.S. tax obligations for students abroad. Individual circumstances vary, and tax laws change frequently. Always consult with a qualified tax professional for advice specific to your situation.
