Taxes for Expats: A Review

As a US citizen, I have the honor and privilege of filing for US taxes no matter where I live or how long I’ve been away from the US. Isn’t that nice? Also, as a resident and self-employed worker in Czech Republic, I pay Czech taxes. I pay the Czech government both on my income and into social security (as well as health insurance), so I was very worried that I would have to pay US taxes as well. Double taxation did not sound fun. I read a lot of information online that led to me being very confused and very stressed out because I got a lot of contradictory information about who might have to pay, and who might not.

Last year, I filed using a free service whose name I’ve honestly already forgotten – one of the computer programs where you input the info, and it spits out your return. Because I live overseas and I earned hardly any money last year, it worked fine and I didn’t owe the IRS anything. But 2017 was different for me – in 2017 I earned a lot more (yay!), and I had a new job (yay!) that registered me as “Self Employed” with the IRS back home (…yay?) and boy, that changed things. I attempted to go through the same process as I had last year, but this time the computer program calculated that I owed $2700. $2700. $2700?! That’s a lot of money for someone who considers it splurging to buy the 70kč frozen pizza instead of the 39kč pizza. I did not think I should owe such a huge amount when I already pay Czech taxes, so I didn’t file then (thank god).

After that, I did a bunch of reading and research on my own, some on the IRS website itself, some on blogs, some on facebook groups. The IRS articles about totalization agreements seemed basic enough – they are in place to prevent double taxation. I should not have to pay taxes in two countries. Right? But every time I tried to tackle the self-employed section of the tax return, I was less and less sure and my anxiety began to grow. Reading messages in facebook groups was the opposite of helpful because everyone is confident they’ve got it figured out, and there always seem to be two very confident people with completely opposite, contradictory information. My anxiety began to take root and it got to the point where anytime any one would mention taxes I felt a twist in my guts and a visceral repulsion as the ghostly image of $2700 floated across my mind.

Fortunately for me… tax professionals exist! Brave, foolhardy souls who go into the dragon’s den day after day and emerge unscathed, save for remnants of red tape and ink on their fingertips. Or so I presume. I can say for sure that they can answer all your questions and do most of the terrible tedious paperwork for you. Yes, you still have to fill out a bit of paperwork, and you have to pay them. But good news – it’s a lot less than $2700!

Review of Taxes for Expats – online tax preparation professionals serving US citizens living abroad

A summary:

What: US tax prep service for expats

Who: IRS authorized Enrolled Agents based in the US specializing in US expat taxes

When: Whenever, but expat returns are due June 15th. You can file an extension to October 15 (see bottom of page)

Where: Anywhere in the world! (with internet)

Why: Because filing taxes is a nightmare

How much: $350 for federal return (of income under $100k/year, $450 for over$100k/year)
$100 for state returns
**Save $25 if you sign up with this link here

My Experience: Overall – positive!

I entered the process pretty stressed out and anxious, but I left feeling satisfied everything was taken care of, and relieved to have had help in the process. That said, I had few hiccups navigating the website, as I think it is not as streamlined as it could be. I did manage to do everything I needed, but there were several times where I found myself unsure of what I should be doing next and where – Taxes for Expats is great in that they have tons and tons of information available to their customers in their articles and FAQ, but the downside is it can be hard to find the particular bit of information you are looking for in the deluge. The questionnaire is simple in its format, but US tax law is so complicated it can still be hard to tell if you’re doing it right.

I’ve outlined the steps you’ll need to take when you file with Taxes for Expats, so you can how the process operates for yourself: Review Part II: The Process

Luckily, the Enrolled Agent part of the process went very well. Enrolled Agents are certified by the IRS to handle tax preparation – see here for more information. I was assigned a polite, professional agent named Lynn and she answered all of my questions, asked for clarification when needed, and finished my return and then a revision of my return all in a timely manner. So for me, Lynn was really the part worth paying for. Everything else was preamble.

If you are self-employed abroad, or a VIPkid or online teacher like I am, I’ve also written up more of the dirty details on how the filing process went for me as a VIPkid teacher and expat: Review Part III: The Self-Employed/VIPkid Angle

Afterwards I stumbled into their Articles sections and may come back here again next year at tax time – so much information is here! Definitely check it out if you have questions, along with their FAQ (it’s very detailed).

Will I use their service again? Yes. $350 is a lot of money to me, but since I know about it a year in advance I can put a little aside every few months and it won’t break the bank. Knowing how to deal with this for the future will be a load off my mind. In the end, my tax return was 22 pages long, and thats 21 more than I’m prepared to deal with on my own. So yeah, I will be coming back next year.

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For the Expat Panicking Over Taxes – You have until June 15th!

For those that live overseas, you have until June 15th to file. If you don’t think that you can get everything sorted by then, you can file an extension and then you will have until October 15th. Taxes for Expats offers to file that extension for you for free, if you put down a $50 retainer towards their tax preparation service fee. The link to file for an extension is found in their Client Home Page – they make it pretty big and hard to miss!

If you don’t want tax preparation service with Taxes for Expats, no need to pay $50 – you can file for an extension for free here.

Everyone: You can save $25, credited against your total fee with Taxes for Expats if you sign up with my referral link right here.

Taxes for Expats: the Process

This article is a part of a review of an online tax preparation service for expats, called Taxes for Expats

Using Taxes for Expats is fairly straightforward, though of course it is still tax preparation so don’t expect it to be buckets of fun. That said, I’ve outlined the steps you need to take to file via their service.

1. Make an account  Sign up with email, make a password, you know the drill.

2. Fill out the Tax Questionnaire

The TQ has five sections:

Main – covers the bulk of the Questionnaire, from your Basic Info (name/bday/address/ss/etc), to physical presence (were you in the US or abroad throughout the year?), all sources of income, did you pay taxes to a foreign nation, and deductions.

Foreign Accounts – all about non-US financial accounts

Supplemental – covers additional details only if prompted by your answers from the Main section

Text Entry/Notes – here you can let your Tax expert know anything else you want to tell them

Document Checklist – shows documents they may needs from you (based on your responses in the questionnaire)

Skip any questions if you don’t know how to answer – it most likely doesn’t apply to you. If you have any doubts, skip it but address the concern in the “Notes” section. And/Or you can bring it up via email with your tax specialist after you’ve signed the Engagement Letter (the next step after the questionnaire). Your questionnaire needn’t be 100% complete at the end – mine was 86% completed, that was fine.

The Questionnaire is fairly simple – but that said – expat taxes are not easily simplified, and a lot can end up left out so I highly suggest list any concerns or questions in the Notes section for your tax preparer to read. If you have questions about how the questionnaire works, you can schedule a call with a Taxes for Expats representative and they will help you as well – but this is not an Enrolled Agent, so they won’t be able to answer questions about your specific situation, only more general questions about the website, the questionnaire, and how the company operates.

When done, submit!

3. Engagement Letter Not long after you submit your Questionnaire, you will receive your Engagement Letter. This spells out the service your assigned Enrolled Agent will provide and how much the service will cost. This is not where you pay but it is the agreement so once you approve, you will be billed. The Agent will prepare your return in 1-3 days.

4. Review the return They will send you a PDF of the completed return for review, and you can ask questions via email if you have any doubts/concerns or corrections. Be thorough as the Enrolled Agent will only revise the return one time for free, after that there is a fee. That said, you can exchange several emails discussing an issue/s before they will begin the revision (I did this).

5. Approve & Pay Once you’re happy with the return, submit your approval and they will e-file the return for you, and you pay the fee you agreed to in the Engagement Letter. 

And done!

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For the Expat Panicking Over Taxes – You have until June 15th!

For those that live overseas, you have until June 15th to file. If you don’t think that you can get everything sorted by then, you can file an extension and then you will have until October 15th. Taxes for Expats offers to file that extension for you for free, if you put down a $50 retainer towards their tax preparation service fee. The link to file for an extension is found in their Client Home Page – they make it pretty big and hard to miss!

If you don’t want tax preparation service with Taxes for Expats, no need to pay $50 – you can file for an extension for free here.

Everyone: You can save $25, credited against your total fee with Taxes for Expats if you sign up with my referral link right here.

The Self-Employed/VIPkid Expat Tax Angle

This article is a part of a review of an online tax preparation service for expats, called Taxes for Expats

I teach online with a foreign-based company called VIPkid. They are based China, but they have primarily US-based contracted teachers, and so they filed a 1099 form with the IRS upon my hire in 2017. This form essentially declares that I am an independent contractor and obligated to abide my self-employment taxation laws in the US. This is the primary reason for me seeking professional help when it came to filing my taxes this year, as self-employment taxation is considerably more complicated than the usual filing, doubly so from overseas.

I did not see anywhere in the Tax Questionnaire where to include info about the 1099 (which is certainly possibly due to my own ignorance, but it stands to reason if I missed it, others will too). In the end I emailed my Enrolled Agent asking her about it and she sent the following response.

But then later on, she sent another email saying,

“Was [your USD income] reported to you on a 1099-MISC? If yes, then I need you to upload the 1099-MISC form(s) and I will need to revise your tax return. If not, then your return is correct as is. Please advise.

Kind Regards,
Lynn”

So if you are a VIPkid teacher reading this – make sure that you submit your 1099-MISC from VIPkid along with the other documents when filing the return! I will note that even after submitting the 1099-MISC, I still owed no federal tax.

The totalization agreement between the US and Czech Republic ended up saving me from a double-taxed fate, in the end. You can read all about what they are here and find a list of countries that have an agreement with the US here.

A note – make sure to account for different currencies when reporting your income. Several times in the Tax Questionnaire I was entering dollar or crown amounts that I had gotten by using conversions that I had used in March of 2018 (during my tax preparation for Czech taxes). Things got complicated, as I earned income in multiple currencies and my Enrolled Agent and I were using different exchange rates when converting to USD, and ended up with different numbers. To clarify I sent an email to her with my income in the original currencies, and she used the most favorable exchange rate from 2017 to submit my return with. So be aware when using any currency amount that you yourself converted, that you might not be using the best rate, and let your Enrolled Agent know.

An article the VIPkid teachers living abroad may find informative about their tax situation: Digital Nomad Taxes

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For the Expat Panicking Over Taxes – You have until June 15th!

For those that live overseas, you have until June 15th to file. If you don’t think that you can get everything sorted by then, you can file an extension and then you will have until October 15th. Taxes for Expats offers to file that extension for you for free, if you put down a $50 retainer towards their tax preparation service fee. The link to file for an extension is found in their Client Home Page – they make it pretty big and hard to miss!

If you don’t want tax preparation service with Taxes for Expats, no need to pay $50 – you can file for an extension for free here.

Everyone: You can save $25, credited against your total fee with Taxes for Expats if you sign up with my referral link right here.

Downsides to VIPkid

No job I’ve ever had is perfect, and though overall VIPkid is a great gig and honestly has improved my quality of life, it’s still no exception. Here are some of the most prominent downsides I’ve found… though obviously, in my opinion, the good outweighs the bad.

Hiring process is arduous: “Non-negotiable” requirements (degree + North American citizenship/residency), classroom or ESL experience is highly preferred, there is an interview and demo lesson, and then two mock lessons as well as a background check.

Being Independent Contractor: Self employment is a double edged sword – you get to be your own boss… and you have to be your boss. Sorting our your taxes (potentially for more than one country), making a schedule that suits your financial needs and also your well-being, making sure you don’t isolate yourself from the world – it can take some adjusting to.

Constant change: VIPkid is swiftly growing and if you don’t keep up to date you may miss crucial changes to their curriculum or policies. If you do end up hired, reading their official weekly newsletter as well as joining informal Facebook groups can help you from getting left behind when they’re rolling out new incentives or key changes.

Push to Promote on Social Media: Maybe it’s easy for some folks, but I dislike the tendency of VIPkid to push it’s teachers so frequently to recruit for them. Ironically I say this in a series of articles which, essentially recommends them – but my compromise to myself is to be totally forthright. The company uses it’s considerable legion of teachers as a pool of potential sometimes-unpaid marketers. It’s the unpaid portion that gets to me, which is why I’m pursuing referrals – I’ve already helped people get hired and given out lots of advice and recommendation for free. I might as well get something in return.

It’s Still Teaching!: Only a downside if you don’t like teaching – don’t think because it’s online that the pitfalls of being a teacher are somehow avoided! You will get a huge variety of students, and some of them will inevitably cause a headache or two. But overall the students are very sweet and I’ve become quite fond of my regulars – luckily, the ones that are difficult tend not to become your regulars.

Is VIPkid a Scam (/MLM)?

Quick answer: Nope!

VIPkid is not a scam or an MLM.  I don’t know of anyone making a living off of referral bonuses. We all teach, and many teachers don’t do referrals at all. If you work for VIPkid, you can choose to never mention it to anyone ever and that’s fine. Or you can post flyers telling everyone how great it is and spend your nights fielding questions from applicants about the arduous interview process – your call. Teaching classes is a much easier, quicker, and more reliable way to make a paycheck. But as a bonus incentive, the referral system is pretty generous.

Referring a new teacher can be a lot of work and the bonus sweetens that enough for some, but not for everyone. The bonus amount is always changing, and at the moment it increasing exponentially depending on your number of successful referees, so the more people you bring in, the more you get for each one.

I am including my referral link in this series of articles, so clearly I am interested in that bonus. But I’d like to clarify to anyone thinking I’m pushing VIPkid dishonestly – it is not a prefect job, and I’m more than happy to tell anyone the downsides (see here). And if you do choose to use my referral link, please know you are welcome to send me an email or leave a comment asking any questions you may have! And if you haven’t used it, leave your questions anyhow! I’ve helped friends through the interview and mock lessons in real life, and I don’t mind helping you out either 🙂

At the moment of writing this article, I’ve helped two friends get hired on at VIPkid, and due to the twists of fate, I didn’t receive the bonus for either of them. One had already promised her referral to another person (in theory I helped her in exchange for some cat-sitting, but I intend to pay her for that anyway so really it’s free help, which is what friends are for!). The other accidentally clicked on someone else’s link and VIPkid told me they could not change who received the bonus, which was frustrating, but I am still glad my good friend is now my coworker. My point is, though I’d like to get a referral bonus, it’s still just that – a bonus. I’m writing this article for a few reasons, and the bonus is only one of them. I miss blogging, I want to update the Czechlist more often, to be able to look back through it and see all the changes I’ve made while here. And the other reason – I want to find (or create!) more VIPkid coworkers here in Prague – the more, the merrier! I would love to just have some more folks in town that I can connect with and discuss tips, or maybe we can have a prop-making party! I’ll bring the laminator 🙂

Teaching & Traveling with VIPkid

Traveling and teaching is absolutely possible, and there is a whole community of travelling/digital nomad VIPkid teachers on Facebook with loads of useful advice. Additionally VIPkid offers workshops for teachers, and I attended the ‘Digital Nomad’ workshop – twice! Some top tips I gleaned:

– International SIM cards are best if you frequently change countries
– Backup internet connection is essential: either SIM card, or a roaming device like skyroam – or both
– Always arrange a private room, and Air Bnbs are suggested over hostels. Message hosts beforehand to explain your working needs, and ask for a screenshot of their wifi’s speed/ping test
-Carry a USB desk lamp, minimal classroom basics (whiteboard, ABC cards, 2D props), and a felt or paper background to put up behind you for a consistent classroom look (use command strips so as not to ruin any walls).
-Never schedule classes for your travel days, and give yourself a semi-consistent schedule to keep regular students (ex: never travel Tues-Thurs, try to arrive Sundays so if there are issues with your place/setup you can fix it on Monday).

VIPkid in Prague/Czech Rep

The VIPkid recruitment website does not list CZ as ‘approved’ nation, but myself and many others have applied and work from there. I never once hedged or lied about my location, and it’s never been an issue.

As far as legality, it depends on your personal situation of course, and I am not an authority on anything! But as far as I know, this work is covered under the Zivnostensky, as you are self-employed. If you want a monthly invoice to prove your income for a visa, you’ll have to submit a ticket to the company and ask for one, as it’s not something they normally provide.

Pay in USD

VIPkid pays in USD (which has it benefits), and you can still get paid to a Czech bank account as well – but be ready for fees. Once again, depends on your personal situation, but using my koruna-only Raiffeisen account I paid about 30Euros in fees (foreign transfer + exchange fee) for a single paycheck. So I switched back to getting paid to a US account as soon as possible, where there was no fee. It is cheaper for me to simply withdraw cash from an ATM, pay a minimal exchange fee, and then deposit that into my Czech account to pay bills. Other people I’ve talked to use sites like transferwise.com as well.

Europe Hours

Your hours here are pretty regular – Peak hours are 10AM – 3PM in our timezone, so that’s when the booking is hot (especially 1-3pm, also called “peak peak” times). You are able to schedule your availability from 2AM (China’s morning) to 4PM (China’s late evening). Though the earlier slots might not fill up (as students are usually in school), I open my schedule from 9AM-4PM and never have any issues filling up now that I have regular students.

VIPkid Requirements & Equipment

Basic Requirements

To teach for VIPkid, you have to be a citizen or a resident of the US or Canada, have a bachelor’s degree (in any field), a minimum of one year’s teaching experience. If you don’t fulfill those (as far as I know), you don’t qualify. But don’t lose heart, as VIPkid is far from the only online teaching platform out there. I have heard of a few with differing requirements (such as ABCDada, 51Talk, iTalki, Cambly, PalFish, NiceTalk… and more!), so do some research and find out what’s possible!

And of course to teach online, you need…

Equipment

A computer: desktop or laptop are fine, and recently an app has been released to teach on some tablets as well. What I use: my 2015 Macbook Pro (Retina Display) laptop
A webcam: built-in ones often suffice, but external ones can be purchased as well. What I use: the built-in webcam on my laptop
Internet: a stable connection is key! Speed is somewhat important, but a fast connection is no good if it’s unstable. What I use: UPC is my IPS, I have 100mb/s
Headset: You’ll need a microphone that cuts out most background noise, and earphones to prevent hellish soundscapes caused by the feedback of your students setup hearing itself (you’ll find a lot of students don’t have headphones). Comfy is a big plus if you teach longer than an hour or so at a time. A mute button is super useful as well! What I use: Logitech USB Headset H540
Classroom Basics: A quiet well-lit room, a plain or classroom-esque background, whiteboards and pens, ABC flashcards, and a handful of 2D printed/drawn props. That is the bare bones, but many teachers do a great job with no more. Some teachers go all out on the background and props, but you don’t have to. I also have a handful of props and lots of realia that I like to use, but it would be a whole other blog post to get into it all, so I’ll just mention my favorite: a handful of small stuffed animals – super versatile and kids of all ages like them.

What is VIPkid? Why is it so crazy popular?

VIPkid is an online ESL program for Chinese kids ages 4-12. Lessons are taught by North American classroom/ESL teachers in one-on-one lessons that last 25 minutes each. It is crazy popular for a number of reasons:

– PAY. This is obvious if you’ve spoken to any VIPkid teacher – the pay is a living wage if you work full time (especially CZ, as they pay a US living wage). You earn $7-9 per lesson (determined in your interview, based off a demo lesson and your credentials), with up to $2 per lesson in bonuses. Those bonuses are pretty easy to get (one is for showing up on time and following policies, the other is for teaching +45 lessons a month). So, at a minimum people earn $14/hour, and at a maximum, $22. 
-Pre-planned lessons/curriculum Teachers don’t have to lesson plan! Lessons are made by a dedicated curriculum team – teachers prepare in advance by reviewing the slides and the student’s history (notes left by previous teachers). It is easy to get used to the lesson format and prep time is pretty quick. 
– Flexible scheduling You make your schedule two weeks in advance, opening up slots for parents to book. You can work as little or as much as you like. If you want to take time off, you schedule it in and if it’s more than 7 days send the company a note of when you’ll return, just so they know you haven’t quit and can reassure any parents who ask “Where is my favorite teacher?”
– Work from Anywhere That is, anywhere with a quiet room and an internet connection 🙂 Your working hours will change depending on your time zone, but work is possible 8am-10pm BJT (Beijing time), and peak hours are 4pm-8pm BJT.
– Growth & Referrals VIPkid is growing at a crazy fast rate – when I started on in December, there were 10,000 teachers. That has doubled and it hasn’t even been a year yet! There are rumors of them expanding in the future to markets outside of China as well, though for now it seems there is no end to the legion of Chinese kiddos willing to sit down and sing “Hello, How are you, I am fine fine fine!” with you. Because of VIPkid‘s growth ambitions, they offer generous referral bonuses to teachers who bring in new teachers – myself included. I’ll talk more about this in another post (here), because I have some thoughts I’d like to share.

Online Teaching & VIPkid in Czech Republic

Last I updated this blog, I was working through finding my stride teaching ESL in classrooms across Czech Republic and Slovakia. And now – I’m teaching a nearly dozen lessons a day (well, some days) from my basement flat in Prague. I decided to move my cat overseas to be here in Prague with me, and with that decision came the one to quit my last job – I couldn’t have a pet, travel 6 days a week for work, and have a clear conscience as a pet owner. (Yes, I am the kind of person who will change jobs in order to have their cat, apparently!)

My new gig is with the online company VIPkid, which is getting more and more popular these days – at the time of writing this, they recently announced a milestone, 20,000 teachers and 200,000 students!. More and more often I’m running into people in my little ESL community who are coworkers, and there is good reason for it’s popularity, I can confirm.. though of course, it’s not perfect and there are downsides (which I will talk about as well). But every job I’ve ever had so far has had some sort of downside, so no big surprise there. Let’s get into it – I want to share my experience, thoughts, and tips if you decide to pursue teaching online or applying at VIPkid.

What is VIPkid? Why is it so crazy popular?

Basic Requirements & Equipment

What’s it like teaching in Prague/Czech Rep with VIPkid?

Can I travel and teach?

Referrals: Is VIPkid a Scam/MLM? Why are so many people suggesting it?  

Downsides