Self-Employment Taxes

January 18, 2024 | | 2 minute read
Expat Tax Guide | Everything you need to know about filing taxes abroad in 2024

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Self-Employment Taxes for US Expats in 2024

If you are your own boss and have control over the services you provide, you are considered self-employed, and the income earned from these particular services is liable to self-employment taxes. Unsure if you are self-employed, check out what it means to be self-employed.

Self-employment tax is essentially Social Security and Medicare taxes. It does not include any other taxes you, as a self-employed individual, may be have a requirement to file.

Social Security taxes help pay for retirement, disability, and survivorship. Medicare helps pay for health insurance and benefits you, as a US expat, can receive when you become a senior.

Filing Taxes as a Self-Employed Person

The threshold for filing US taxes as a self-employed person is very low. Therefore, if your net earnings met or exceeded $400 in tax year 2023 you must file your taxes. Additionally, you’ll need to file a Schedule C form, which is a form that reports your profits and/or losses from your company to the IRS.

You are both employer and employee and must pay tax separately after calculating your net profit. The process is similar to what wage earners in the US do to withhold their pay.

To file your self-employment taxes, use Schedule SE on Form 1040 or 1040-SR. Our app also has these forms, which you can quickly and online in no time. You can also deduct any employer-equivalent portion from your self-employment tax. 

Foreign Corporation

If you own a foreign corporation, you’ll need to fill out Form 5471. If you have involvement in a foreign partnership, you’ll have to file Form 8865.

These forms can be pretty complex and incur high penalties. This is why we offer them as additional services to our DIY Tax Software.

Paying for Social Security and Medicare Taxes

In 2024, for the tax year 2023, the IRS states that US expats who are self-employed will be taxed at 12.4% for social security, which can be offset through tax provisions. After that, there is an additional tax of 2.9% on all earnings to take care of the Medicare portion. Therefore, we suggest you budget for about 15.3% of self-employment tax from your net profit.

You can calculate your net profit through Schedule C, and then continue with Schedule SE (or let MyExpatTaxes do it for you!).

Other Important Info

The host country that you live in as an American abroad has its laws regarding social security, health, and other fees. It’s imperative you check if your country is on the tax treaty Totalization Agreement list. You’ll have to see what other legal measures you need to take to make sure your foreign taxes are properly handled.

Self-Employed expat woman in her studio abroad not thinking about taxes.

Are you subject to US self-employment tax?

  • If you are living in a Totalization treaty country, are self-employed, AND are registered in that social security system = NO.
  • If living in a Non-Totalization country and self-employed = YES.

Reduce your Self-Employment Taxes

It’s possible to reduce your self-employment taxes by deducting all your business expenses. How to do it? Many different ways, for example:

  • For business meetings and events you commute to
  • Section 179 deduction for specific fixed assets from your business
  • Home office expenses

…and more. Our software includes all common self-employment business expense categories.

Written by Michelle H.

January 18, 2024 | | 2 minute read

Tax Guide Topics

MyExpatTaxes 2024 US Expat Tax Guide

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