Why Overseas Teachers Can’t Claim the Educator Expense Deduction on Their U.S. Taxes

By: Richard Williams, B.S., E.A, PA

Every year, eligible teachers who file a U.S. federal tax return can claim the Educator Expense Deduction, which allows them to deduct up to $300 for out-of-pocket classroom expenses on their federal income tax return (2025)[1]. However, this tax benefit is not available to teachers working overseas, even if they are U.S. citizens or residents filing taxes.

This restriction often comes as a surprise to expatriate educators who assume they qualify. In this article, we’ll explore the reasons behind this limitation, the tax rules that apply to overseas teachers, and potential alternative deductions they may use.

Understanding the Educator Expense Deduction

The Educator Expense Deduction (IRS §62(a)(2)(D))[2] allows eligible teachers, instructors, counselors, and principals to deduct up to 300 (or 600 for married couples filing jointly if both are educators) for unreimbursed classroom expenses. These expenses may include:

  • School supplies
  • Books
  • Classroom materials
  • Professional development courses

To be eligible for the deduction, the educator must work in a qualified school at least 900 hours per school in a school year[3]. For educators hoping to claim the valuable Educator Expense Deduction, understanding the IRS's specific definition of a "qualified school" is crucial, especially the strict geographic qualification of the school.

What Counts as a "Qualified School" for the Educator Expense Deduction?

The IRS defines a qualified school as a school that provides elementary or secondary education “as determined under state law[4].” The school can be public, private, or religious, but it must serve students in kindergarten through grade 12.

The phrase, “under state law,” is the specific defining factor for claiming the deduction.

This phrase, as defined by the IRS, means that the school must be recognized and defined by a state's educational regulations or statutes. In other words, the school must be officially acknowledged (regulated) by a state in the U.S. as serving kindergarten through grade 12 education.

States generally recognize and acknowledge schools located within their specific geographic boundaries, which are established as part of their jurisdiction. Each state has authority over the education system within its borders, including defining school districts and recognizing schools according to local and state laws.

Because international schools are not geographically located in a state and in the US, they are not considered qualified schools and educators working in them cannot claim the Educator Expense Deduction.

In addition to international schools, the IRS uses this state law definition to distinguish qualified schools from settings like preschools, homeschooling, or post-secondary institutions, which do not qualify for the deduction.

Are There Any Exceptions?

In rare cases, a teacher working for a U.S. Department of Defense school (DoDEA) overseas might qualify because these schools are considered U.S.-based government institutions. However, most international school teachers do not qualify.

If an educator cannot claim the Educator Expense Deduction, what other deductions can they claim while working overseas?

Why Overseas Teachers Are Ineligible

Overseas educators who claim the Foreign-Earned Income Exclusion, which allows them to exclude up to ~$130,000 (2025 amount)[5] of foreign income from U.S. taxes. However, the IRS does not allow "double-dipping"—meaning if you exclude your foreign income, you generally cannot also claim deductions tied to that income.

Even if a teacher doesn’t use the FEIE, the school location restriction still applies.

Alternative Tax Deductions for Overseas Teachers

While the Educator Expense Deduction is off the table, expatriate teachers may still benefit from:

1. Foreign Tax Credit (FTC)

  • If you pay income taxes to a foreign country, you may claim a credit to reduce U.S. tax liability.

2. Foreign Housing Exclusion

  • Allows exclusion of certain housing expenses if you meet FEIE requirements.

Conclusion

The Educator Expense Deduction is strictly limited to U.S.-based K-12 educators, leaving overseas teachers ineligible due to IRS school location requirements and potential conflicts with the FEIE. While this may seem unfair, expat teachers can use other tax benefits like the Foreign Tax Credit (FTC) or Housing Exclusion to minimize their tax burden.

For now, unless tax laws change, American teachers abroad will have to forgo this particular deduction—a reminder that the U.S. tax system prioritizes domestic education incentives over international teaching commitments.

 

[1] Rev. Proc. 2024-40

[2] https://www.law.cornell.edu/uscode/text/26/62

[3] Topic no. 458, Educator expense deduction: https://www.irs.gov/taxtopics/tc458

 

[4] https://www.irs.gov/newsroom/the-educator-expense-deduction-can-help-offset-out-of-pocket-classroom-costs#:~:text=school%20that%20provides%20elementary%20or%20secondary%20education

[5] Rev. Proc. 2024-40 (https://www.irs.gov/pub/irs-drop/rp-24-40.pdf)


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