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December 2, 2014

Self Employment Taxes (social security and medicare) for US expatriates working abroad.

The US has social security agreements with the countries listed below. These agreements provide that if a US Expatriate in working in a treaty country, in many instances (it can vary by the country) they may elect coverage under US social security or the social security program of the country in which they live and work. This only applies if the expatriate is self employed.  If the US expat is an "bonafide employee" of a foreign corporation subject to all the normal tax withholding and employment laws of that country they do not need to pay US social security.

If the country you work in DOES NOT have a social security agreement with the US, you must pay US self employment tax (social security plus medicare tax) on your net self employment income (after deducting expenses) whether or not you are paying social security or its equivalent in your country of employment.

The foreign earned income exclusion does not apply to US self employment taxes and does not reduce the self employment tax you owe even though it does reduce you income subject to US income taxes.

Social Security Handout on International  Social Security Agreements Benefits

Countries with Social Security Agreements
CountryEntry into Force
ItalyNovember 1, 1978
GermanyDecember 1, 1979
SwitzerlandNovember 1, 1980
BelgiumJuly 1, 1984
NorwayJuly 1, 1984
CanadaAugust 1, 1984
United KingdomJanuary 1, 1985
SwedenJanuary 1, 1987
SpainApril 1, 1988
FranceJuly 1, 1988
PortugalAugust 1, 1989
NetherlandsNovember 1, 1990
AustriaNovember 1, 1991
FinlandNovember 1, 1992
IrelandSeptember 1, 1993
LuxembourgNovember 1, 1993
GreeceSeptember 1, 1994
South KoreaApril 1, 2001
ChileDecember 1, 2001
AustraliaOctober 1, 2002
JapanOctober 1, 2005
DenmarkOctober 1, 2008
Czech RepublicJanuary 1, 2009
PolandMarch 1, 2009
Slovak RepublicMay 1, 2014

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