Expat Self-Employment Income

You are required to file a U.S. income tax return if you had $400 or more of net earnings from self-employment, regardless of your age. You must pay self-employment tax on your self-employment income even if it is excludable as foreign earned income in figuring your income tax.

Net earnings from self-employment include the income earned both in a foreign country and in the United States. If the money was earned partially in the U.S. and partially in another country, you’ll still need to pay a self-employment tax on foreign earned income.

While there are exemptions for those who make a living overseas, most notably the foreign earned income exclusion policy, self-employment income is treated differently. You’ll still need to pay self-employment tax on income earned as a self-employed individual. However, the United States has entered into agreements, called Totalization Agreements, with several nations for the purpose of avoiding double taxation of income with respect to social security taxes. These agreements must be considered when determining whether an alien is subject to the U.S. Social Security/Medicare tax, or whether any U.S. citizen or resident alien is subject to the social security taxes of a foreign country.  The Netherlands has signed a totalization agreement hence anyone paying social security tax in the Netherlands is exempt to pay Social security tax in the U.S.