You teach abroad, your school pays for the apartment, and no one has claimed the housing exclusion.
Employer-provided housing is income, and it is also a qualified housing expense. Claimed on Form 2555, the foreign housing exclusion removes most of it from tax. Software rarely asks the question, so the apartment gets taxed and the return looks fine.
The three things a teacher's return gets wrong
The foreign housing exclusion is skipped
School-provided housing is reported as compensation and then left in taxable income, because nobody computed the housing amount on Form 2555.
Dependent tuition is misreported
Free places for your children are compensation. They belong in foreign earned income — and they raise the amount the exclusion has to cover.
A mid-year school move breaks the day-count
The 330-day physical presence test runs over a rolling 12 months. Change schools in July and the qualifying period has to be chosen, not assumed.
One more, worth saying: the educator expense deduction is above the line on Schedule 1. It is not a Schedule A itemised deduction, and you do not have to itemise to take it.
A worked example, tax year 2025
A teacher in Kuwait, single, on a 12-month contract, qualifying under the physical presence test. Variables named, arithmetic shown.
Questions teachers ask
My school pays for the apartment. Is that taxable?
Its value is foreign earned income, so it goes on the return. It is also a qualified housing expense, which is what the foreign housing exclusion on Form 2555 is for. Reported without the exclusion claimed, you pay tax on an apartment you never chose.
Do free school places for my children count as income?
Yes. Dependent tuition benefits are compensation, they belong in foreign earned income, and they increase the amount the exclusion has to cover.
I changed schools in July. Does that break the exclusion?
Not automatically. The 330-day physical presence test runs over any rolling twelve months, so in a year with a mid-year move the qualifying period has to be chosen deliberately rather than assumed to be the calendar year.
Can I claim the educator expense deduction from abroad?
It is an above-the-line deduction on Schedule 1, so you do not have to itemise to take it. It is not a Schedule A itemised deduction, which is where it often gets put by mistake.
Which package do teachers usually need?
The Complete Return at $599 — federal, one state, FBAR, FATCA and the housing exclusion computed from your lease or employer statement.
Bring your contract to the call.
Salary, housing, tuition benefits and your travel dates. That is enough to tell you what your return should look like.