Self-Employed Abroad? Here’s What You Need to Know About U.S. Taxes
If you’re a U.S. citizen working for yourself while living overseas, whether you’re a freelancer, consultant, or small business owner you still have U.S. tax obligations. In fact, being self-employed abroad comes with unique challenges and opportunities.
🧾 You’re Still Taxed on Worldwide Income
The IRS requires all U.S. citizens to report worldwide income, no matter where they live. That means if you earn income as a self-employed individual while living abroad, it must be reported on Schedule C of your U.S. tax return.
💸 Self-Employment Tax Still Applies
Even if you’re paying into another country’s social security system, you may still owe self-employment tax (15.3%) to the U.S. unless a totalization agreement between the U.S. and your host country applies.
✅ What You Can Deduct
Self-employed expats can reduce taxable income by deducting:
- Home office expenses
- Business-related travel
- Office supplies
- Internet and phone costs
- Software and subscriptions
🌍 Don’t Forget the FEIE and FTC
You may also be eligible for:
- Foreign Earned Income Exclusion (FEIE) – up to $126,500 (2024 limit)
- Foreign Tax Credit (FTC) – offset foreign taxes paid
📅 Key Forms to File:
- Form 1040 + Schedule C
- Schedule SE (for self-employment tax)
- Form 2555 (FEIE) or 1116 (FTC)
- FBAR (FinCEN 114) if applicable
Need help navigating it all? Reach out to Expatriate Tax Returns to ensure you’re filing accurately and maximizing your deductions.
