Tax
Self-Employment Tax (US Expats)
Also known as: SE Tax, Self-Employment Tax Abroad, FICA for Self-Employed
US self-employment tax is the parallel to FICA (Federal Insurance Contributions Act) for the self-employed. While employees and employers each pay 7.65% (combined 15.3%, of which 12.4% is OASDI / Social Security and 2.9% is Medicare), self-employed individuals pay both halves themselves on Schedule SE filed with Form 1040. The 2026 Social Security wage base is $168,600 (12.4% capped above this); the Medicare 2.9% has no cap, plus an Additional Medicare Tax of 0.9% on net SE earnings above $200,000 single / $250,000 joint.
The critical point for expats: FEIE does NOT exclude self-employment income from SE tax. A US freelancer earning $130,000 abroad and excluding all of it under FEIE pays $0 federal income tax on that income — but still owes SE tax of $19,890 (computed on 92.35% of the gross). This catches many expats by surprise.
The only legitimate way to avoid US SE tax on foreign self-employment income is a Totalization Agreement (Bilateral Social Security Agreement). The US has Totalization Agreements with about 30 countries: Australia, Austria, Belgium, Brazil, Canada, Chile, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Netherlands, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom, Uruguay. Notably absent: New Zealand, Singapore, Mexico (despite efforts), most of Latin America, and most of Africa and Asia.
Under a Totalization Agreement, a US self-employed expat in (say) Spain can obtain a Certificate of Coverage from the host country's Social Security authority confirming they're paying into the host system. The Certificate is filed with US tax returns to claim Totalization-Agreement exemption from US SE tax. The expat then pays Spanish social-security contributions (typically lower than US SE tax for self-employed individuals; Spanish autónomo monthly contributions are €230-€300+).
For expats in countries WITHOUT a Totalization Agreement (UAE, Singapore, Hong Kong, most of Latin America), there is no formal escape from US SE tax on foreign self-employment income. Some expats incorporate a foreign company and pay themselves a salary (avoiding SE tax on the salary portion), but this triggers extensive complexity: GILTI (Global Intangible Low-Taxed Income), Subpart F, Form 5471, and PFIC (Passive Foreign Investment Company) rules. Competent international-tax advice is essential.
Form 4361 election (ministerial / religious order exemption) is the only other narrow exemption from SE tax — not relevant for most expats.
Sources
Last factual review: 2026-05-08.
Related terms
FEIE (Foreign Earned Income Exclusion)
FEIE lets US citizens and resident aliens exclude up to $132,900 (2026) of foreign-earned income from US federal income tax — but not from Social Security/self-employment tax. To qualify, the taxpayer must meet either the Bona Fide Residence Test (full-year tax residence in a foreign country) or the Physical Presence Test (330 full days abroad in any 12-month period). Claimed on IRS Form 2555 attached to Form 1040.
Foreign Tax Credit (FTC)
The Foreign Tax Credit lets US citizens and resident aliens reduce their US tax liability dollar-for-dollar by income taxes already paid to foreign governments on the same income. Claimed on IRS Form 1116, it prevents double taxation on income above the FEIE ceiling and on passive income that FEIE doesn't cover. The credit is per-category, capped at the US tax otherwise due on the foreign-source income, with 10-year carryforward and 1-year carryback for unused credits.
Tax Residency
Tax residency determines which country has primary right to tax your worldwide income. Each country sets its own tests — typically based on physical presence (often 183+ days/year), domicile, primary economic interests, or family ties. Holding a residence permit does not automatically establish tax residency, and tax residency does not require a residence permit. Dual tax residency is resolved by tax-treaty tie-breaker rules.
FBAR
FBAR is the Foreign Bank Account Report (FinCEN Form 114) that US persons file annually if the aggregate value of their foreign financial accounts exceeded $10,000 at any point during the year. Filed electronically with the Treasury Department's FinCEN (not the IRS), separate from Form 1040. Penalties for wilful non-filing can reach 50% of the account balance per year. Due date: 15 April with automatic 6-month extension.
Deeper guides
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FBAR & FATCA 2026: Complete Compliance Guide for US Expats (Penalties, Deadlines, Banking)
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US State Taxes After Moving Abroad: Which States Follow You (and How to Break Free)
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US Expat Tax Guide 2026: FEIE $132,900, FTC, and Zero-Tax Strategies
Comprehensive 2026 US expat tax guide. FEIE exclusion: $132,900 (single) / $265,800 (married). Combined with standard deduction: $149,000 zero-tax threshold. FTC, self-employment tax, Totalization Agreements, and destination tax regimes (Beckham Law, Impatriate, IFICI) explained.
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Legal tax optimization for US expats — FEIE ($126,500), Foreign Tax Credit, tax treaties, state exit strategies.