Disclaimer: When I lived in Turkey, reputable tax advice never came from the local FB group of expats. What is true for one expat is different for another. I am not an accountant or a lawyer. Consult one. See the recommendations below to get on the right track.
“So I finally got a hold of my accountant and it turns out that for me, there’s a really simple tax situation for me as an online teacher,” my friend told me.
“That’s fantastic!” I said. A few weeks before, she had committed more fully to becoming an online ESL teacher, but her lingering fear was about the tax situation. Obviously. It was something I myself got tangled up on for months but with my advice, she got complete resolution in just three weeks.
“So, how are you feeling now?”
“Oh! It’s like a total weight has been lifted.”
I can totally relate to the feeling of relief when you find out that your crazy, out-of-the-box, adventurer lifestyle actually meshes up with categories that are acknowledged by your government.
Not to mention that being legit and above-board gives you confidence and also forces you to take yourself — and the online English lessons you give — more seriously. The more you step into being a real business entity (albeit a business entity of one) which pays taxes and plays by the rules, the less likely you are to haggle your prices or put up with students who don’t value you.
What the heck are we doing online anyway?
One of the reasons I struggled for so long with tax advice is that I literally didn’t even know the words I needed to explain my situation. Can I save you the clunky explanations and awkward pauses? Drop the bold italicized terms to sound pro.
If you’re teaching online, there’s a good chance that you are not an employee (it’s too complicated for tax purposes). You’ll be self-employed and do freelance. In other words, you’ll be an independent contractor (FYI, this means that you pay for your own computer and equipment to work on, set your schedule, and take responsibility for your own insurance, etc — but it also means that, if it’s an American company, then the school cannot actually train you because “training” is what employees get).
Your source of income is digital / online — so you need an adviser who likes that and isn’t daunted by words like “Skype.” Depending on what you do exactly, you provide services (lessons), and/or products (like books, self-study video programs, downloadable stuff that people pay for).
Questions You Want to Ask to Interview Potential Accountants:
Unfortunately, not all accountants are up to speed on modern day business. I once called someone (using my Skype phone number) and when she said I needed to come in, and I said I couldn’t because I was physically overseas and calling her from my computer, her response was complete and utter consternation. That was a giant burning red flag. “Thank you…” Click. On to another accountant.
If you don’t use anyone from my list below, then at least make sure to ask the following questions to open a conversation and find out if the firm is right for you:
- How much experience do you have with filing taxes for expatriates? [Depending on the answer, explain a bit about your situation with living abroad.]
- How much experience do you have with online businesses? [Depending on the answer, explain what you want to do.]
- Explain a bit about what you want to do online. NB: You are a freelance English teacher and you want to earn money in local currency into your bank account in your home country. In other words, you’re an “independent contractor” or “self-employed” online. Some accountants offer free consultations; others require a flat-fee to meet with you and give advice. In either case, expect them to ask about where you’re living now, how much time you spend in your home country each year, and the last time you paid taxes.
- If necessary, pay for a consultation and proceed to get relevant, trustworthy advice. You may also want to pay them to file your tax returns for you. The peace of mind is priceless.
Get advice! Contact an accountant.
Below you’ll find a brief list of accountants that I (or people who I trust) have used.
- Danny Fink, Premier Tax Consulting. Danny has taken extra courses to keep updated on e-commerce and expat tax issues.
- Greenback Expat Tax Services.