Self-employment tax for U.S. citizens abroad

Mar 23, 2017

Americans who work for themselves must pay their own version of Social Security. It is called ” the Self-Employment Tax”. This tax applies no matter where in the world the work was performed!

Thus, we have put together a few facts in infographic below to show what the Self-Employment Tax is about. As well as, which circumstances allow you to avoid paying it. Tax can be a complicated thing to understand but at 1040 Abroad we are passionate to guide you through the entire process and help with your tax situation.

Enjoy reading!


You fall under different filing threshold category if you are self-employed US person who resides abroad. Earning USD$400 in a year already triggers a filing requirement for a tax return. Hence, the Self-Employment Tax. As the US is one of the two countries which practice citizen-based taxation, it’s necessary to take care of US tax obligations even while living abroad. Who does the IRS consider to be self-employed and eligible for the Self-Employment Tax? If you belong to any of the following categories:

  • A member in a LLC, depending on how the LLC elects to be treated for tax purposes
  • Independent contractor
  • Sole proprietor 
  • Partner in a business partnership
  • Freelancing etc.

The self-employment tax rate is 15.3% of net earnings up to a base amount. The base amounts are US$128,400 in 2018 and US$132,900 in 2019. The rate consists of 2 parts: 12.4% goes toward Social Security (old age, survivors and disability insurance) and 2.9% covers Medicare hospital insurance). That means the Social Security portion applies only to the first $128,400 of self-employment income (for 2018 tax year).  And Medicare applies to any amount thereafter. 

Learn more here.

U.S. Taxes For American Expats E-book

FREE U.S. Tax Guide for Americans Abroad

The only e-book about U.S. Expat Taxes you need to read! Covers

1. Foreign Tax Credit vs. Foreign Earned Income Exclusion

2. The Additional Child Tax Credit. Get a $1,400 refund!

3.  What happens if I don't file?

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