Do I owe U.S. self-employment tax in my country?

1How does U.S. self-employment tax work abroad?

If you're a U.S. citizen or resident working for yourself, you owe self-employment tax once your net earnings reach $400 a year, wherever you live. It's 15.3%: 12.4% for Social Security on net earnings up to $184,500 for 2026, and 2.9% for Medicare with no cap, worked out on 92.35% of your profit.

The foreign earned income exclusion doesn't touch it, since it only lowers income tax, and foreign taxes can't be credited against it. So without an agreement, a freelancer abroad can owe U.S. self-employment tax and no U.S. income tax at all. More in self-employment tax abroad.

2What does a social security agreement do?

Social security agreements, also called totalization agreements, stop you paying into two systems for the same work. Each one puts your self-employment in one country's system, and you pay only there. Credits from both countries can also count toward a benefit.

They don't all use the same rule for the self-employed:

• Where you live: 18 agreements, including Canada, the U.K., Spain, the Netherlands and Switzerland.
• Where you work: 10, including Germany, France, Japan and Austria.
• Italy: U.S. citizens stay in the U.S. system and pay U.S. self-employment tax instead of Italian contributions.
• Australia and Chile: self-employed U.S. citizens who live there don't pay U.S. self-employment tax.

Many also have a rule for temporary moves: move your business from the U.S. for a set time, often five years or less, and you stay in the U.S. system. The tool shows the rule for your country.

3Which countries have an agreement?

All 31, with the rule each uses for the self-employed and the year it took effect:

4What proof do you need?

The exemption isn't automatic. You need proof from the system that covers you, and a copy goes with your U.S. return every year:

• If the other country covers you, a certificate of coverage from its social security agency.
• If the U.S. covers you, as in Italy or during a temporary move, a U.S. certificate of coverage from the Social Security Administration, which you show the other country.
• In Australia and Chile, a letter of exemption from the Social Security Administration.

Self-employed people request their own. A certificate covers the period shown on it, so check that it matches the years you're claiming.

5What if there's no agreement?

Then U.S. self-employment tax applies in full, along with anything you owe locally. That's the case in Mexico, Thailand, the UAE, Singapore, Israel and New Zealand, among others. Working through a company can change the picture, but it brings its own U.S. forms, like Form 5471.

Behind on U.S. returns? Self-employment tax goes on the catch-up returns, and under the Streamlined Foreign Offshore Procedures the penalties are waived if you qualify.

Common questions

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