Filing US Taxes While Studying for a Degree Abroad

You Still File a US Tax Return

Studying at a university outside the US does not end your obligation to file federal taxes if you are a US citizen or green card holder. The IRS taxes US citizens on worldwide income, wherever you earn it, so you report wages, taxable scholarship amounts, and foreign investment income on your regular Form 1040, the same form you file living in the US.

The filing deadline stays April 15, but Americans living outside the US on that date get an automatic 2-month extension to June 15 without requesting it. Interest still accrues on unpaid tax from April 15, so paying by the original deadline avoids extra cost even if you file later using the extension.

The Foreign Earned Income Exclusion Applies to Work, Not Study

If you work part time or on a paid placement while studying abroad, the Foreign Earned Income Exclusion lets you exclude foreign wages up to $130,000 for tax year 2025, an amount the IRS adjusts for inflation most years. To qualify you need a foreign tax home and you must pass either the bona fide residence test or the physical presence test, which requires being physically present in a foreign country for at least 330 full days during any 12 consecutive months.

Scholarships, fellowships, and stipends generally do not count as earned income for the FEIE, since the exclusion covers wages and self-employment income, not financial aid. Whether a scholarship itself counts as taxable income follows a separate rule under IRS Publication 970 : amounts that pay for tuition, required fees, books, and required course supplies stay tax-free, while amounts covering room, board, travel, or a living stipend count as taxable income.

No 1098-T From a Foreign School

US colleges send Form 1098-T to report tuition payments, which helps you claim the American Opportunity Credit or Lifetime Learning Credit. Foreign universities do not issue this form. Publication 970 defines an eligible educational institution for these credits as one whose primary function is formal instruction, with a regular faculty, curriculum, and a regularly enrolled student body attending in person. A foreign school meets this definition in many cases, but confirm it with your school and keep your own tuition receipts and enrollment records, since you have no 1098-T to fall back on if the IRS asks for support.

Foreign Bank Interest and Investment Income

Interest and dividends from a foreign bank account or investment count as taxable income the same way US-source interest does, and you report them on Schedule B along with any US accounts. This is separate from FBAR and FATCA reporting, which disclose the existence of the accounts rather than tax the income directly. Opening a foreign account for tuition or living costs while abroad triggers both an income reporting requirement and a separate disclosure requirement, depending on the balance.

Tax Treaties Reduce Double Taxation

The US holds income tax treaties with many countries that reduce or remove double taxation on specific income types, including some student and scholarship income. Treaty benefits depend on the specific country and the type of income involved, so check the treaty text or IRS Publication 901 for your host country instead of assuming a treaty covers your situation the same way it covers someone else's.

Foreign Tax Credit as an Alternative

If your host country taxes your income at a higher effective rate than the US would, the Foreign Tax Credit sometimes works better than the FEIE, since it credits US tax dollar for dollar against tax you already paid abroad rather than excluding income outright. The FEIE and the Foreign Tax Credit do not apply to the same dollar of income at the same time, so compare which one lowers your US tax bill more before you file. This decision usually benefits from a tax preparer who works with Americans abroad, since switching between the two in later years carries its own rules.

State Taxes Do Not End When You Leave

Moving abroad for school does not automatically end your state tax residency. States without an income tax, such as Texas, Florida, and Washington, have nothing to track here. States that do tax income, especially ones with strict domicile rules like California and Virginia, sometimes keep taxing former residents studying abroad until they file specific paperwork proving they moved their domicile elsewhere.

Practical Steps

• File Form 1040 every year you are abroad, even with no US-source income.

• Track the days you spend in the US and other countries if you plan to claim the FEIE through the physical presence test.

• Ask your foreign school's registrar whether it meets the eligible educational institution definition in Publication 970 before you count on an education credit.

• Work with a tax preparer experienced with Americans abroad if you hold foreign bank accounts or investments, since those add separate reporting requirements.

• Report interest or dividends earned on any foreign account on Schedule B, even small amounts, since there is no minimum threshold for reporting foreign-source income.