Tax Planning

Studying Abroad? Make Sure You Know These Tax Implications

Written by TurboTaxBlogTeam
Published Aug 10, 2023 - [Updated May 11, 2026]
5 min read
Reviewed by Jotika Teli, CPA Lena Hanna, CPA

Key takeaway

Tuition at FSA-eligible schools may still qualify for U.S. education credits.
The foreign earned income exclusion and foreign tax credit can help limit double taxation.
Students abroad get until June 15 to file, but any tax owed is still due April 15.

Studying abroad comes with a lot of firsts. That may include earning a stipend or working abroad. But while taxes may not be the first thing on your mind, it’s smart to think about how your time overseas affects your U.S. tax return. Knowing the rules before you go can save you money and stress later.

U.S. citizens owe taxes on income earned abroad

You read that correctly. If you earn money while you’re out of the country, you have to report that income on a U.S. tax return. So unless you are doing an internship on Mars, your worldwide income is taxable, and you have to report your income earned abroad to the U.S. government.

If you are a U.S. citizen or resident alien living and working abroad, you may be able to exclude all or part of your foreign salary or wages from your income when filing your U.S. federal tax return. The foreign-earned income exclusion allows qualifying U.S. taxpayers to exclude a set portion of foreign income each year, provided they meet specific residence or physical presence requirements.

If you have income that is earned abroad which is taxed in the foreign country and in the United States, you’ll get a foreign tax credit on your U.S. tax return for foreign taxes paid. The U.S. recognizes that it’s the same income which is being taxed twice, once in the foreign country and once in the United States. That’s why you are allowed to claim a foreign tax credit on your U.S. tax return for taxes you paid to a foreign government on income you also reported on your U.S. tax return.

Tuition at FSA-eligible schools may qualify for an education credit

If the foreign educational institution participates in the U.S. Department of Education’s Federal Student Aid (FSA) programs, your eligible costs of attending may qualify for an education tax benefit when you file your U.S. taxes, assuming you have U.S. income to report and meet the filing threshold requirements. Money you earn in your host country is generally taxable by that country, and you may need to file a local return and pay foreign taxes on that income.

Your filing deadline is June 15 if you are living abroad

If you are living in a foreign country when your tax return is due in April, you are generally allowed an automatic two-month extension until June 15 to file your tax return. If you owe taxes, interest and penalties can still apply and are due by the April 15th deadline, so it is wise to estimate and pay what you owe by then even if you extend your return. You can still file your taxes online using U.S. tax software.

Don’t worry about knowing these tax rules. Meet with a TurboTax Full Service expert who can prepare, sign and file your taxes, so you can be 100% confident your taxes are done right. Start TurboTax Expert Full Service today, in English or Spanish, and get your taxes done and off your mind.

FAQ

Scholarships and grants are usually tax‑free when you use them for qualified education expenses such as tuition and required fees or course materials. Amounts used for room and board, travel, optional fees, or stipends for living expenses are generally taxable and need to be reported as income on your U.S. return.

Most personal expenses related to studying abroad, such as airfare, housing, meals, and sightseeing, are not deductible as education expenses on your U.S. return. Education tax benefits usually apply only to tuition and required fees and materials at an eligible institution, even if your program requires you to live overseas.

Some countries have tax treaties with the United States that provide special rules or exemptions for students and trainees, which can affect how much income is taxed locally or in the United States. Your tax residency status in the host country and how long you stay there can also change whether you must file a local return, so it is important to review the treaty with that country or use software or a tax pro if you earn income abroad.

Being outside the United States does not exempt you from U.S. tax filing requirements if your income is high enough to require a return. If you do not file when you are supposed to, you may face penalties and interest, and you could miss out on exclusions or credits that would have reduced the tax you owe.

Some families with students overseas also send money to support parents or other relatives who live in another country, which can raise separate questions about dependents and possible deductions on the supporter’s U.S. return. If your parents or other family members are in this situation, you can share this guide on financially supporting family living abroad so they can see whether they qualify for any tax benefits on their own return.