US Tax Filing for Self-Employed Americans and Freelancers Living Abroad
Self-employed Americans living abroad face a double layer of tax complexity: not only do you have the standard expat obligations (FEIE, FBAR, foreign bank accounts), but you also owe US self-employment tax on your net profit — even if your income tax is zero due to the FEIE. Understanding the interplay between the FEIE, Schedule C, and self-employment tax is essential to avoiding costly over- or under-payment. We handle the full picture for freelancers, consultants, and sole proprietors living outside the US.
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What this filing may involve
Every situation is different. The forms below commonly apply — your specific filing may vary.
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- ✓Automatic online filing
- ✓One federal + one state return
- ✓W-2, 1099 and basic deductions
- ✓Everything in Standard
- ✓Schedule C & SE for self-employment
- ✓Multiple income sources and currencies
- ✓Everything in Premier
- ✓Foreign Earned Income Exclusion (Form 2555)
- ✓Foreign Tax Credit (Form 1116)
- ✓FBAR filing (FinCEN 114) included
Frequently asked questions about US Tax Filing for Self-Employed Americans and Freelancers Living Abroad
Do I still owe self-employment tax if I use the FEIE?
Yes. The Foreign Earned Income Exclusion reduces your federal income tax, but self-employment tax (Social Security and Medicare) is calculated on net self-employment income before the FEIE. Most self-employed expats owe SE tax even when their income tax is zero. For tax year 2026, SE tax is 15.3% on the first $176,100 of net earnings (the Social Security wage base for 2026), and 2.9% above that.
What business expenses can I deduct on Schedule C as an expat?
The same rules apply as for US-based freelancers: business software, equipment, professional development, advertising, contractor payments, business travel (not personal travel), and a home office deduction if you use a dedicated space regularly and exclusively for work. Currency conversion is handled automatically using the average annual exchange rate.
I work for clients all over the world — do I need separate reporting for each country?
Your US return aggregates all worldwide self-employment income on a single Schedule C regardless of where clients are located. However, bank accounts in each country may require separate FBAR disclosure, and local tax obligations in each country are separate from your US filing.
I've been freelancing abroad for three years and haven't filed — what should I do?
The IRS Streamlined Foreign Offshore Procedures allow most non-wilful non-filers to catch up by filing three years of back returns and six years of FBARs with reduced penalties. We specialise in catching up freelancers and self-employed expats who are behind on their US filings.
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