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US self-employment tax for freelancers abroad
Gross receipts minus business expenses — the Schedule C bottom line.
Wages use up the Social Security wage base first, which reduces the OASDI part below.
Your result
Preliminary US self-employment tax: $9,891
- SE tax by default
- $9,891
- Your exposure
- $9,891
- Half-SE income-tax deduction
- $4,945
The FEIE does not remove this. Section 911 excludes foreign earned income from income tax. Self-employment tax is computed on 92.35% of your net earnings before any exclusion, so you can exclude every dollar of income and still owe the amount above. It is the most expensive assumption freelancers abroad make.
Assumptions used
- • Schedule SE at 12.4% OASDI (to the 2026 wage base) + 2.9% Medicare on 92.35% of net earnings.
- • Any W-2 wages entered consume the OASDI wage base first.
- • You are otherwise covered by US social security unless a certificate says otherwise.
Still to confirm
- • Whether your work is genuinely self-employment rather than foreign employment.
- • Whether a foreign entity (and Form 5471) changes the analysis.
- • The 0.9% Additional Medicare Tax at higher income levels.
- • Quarterly estimated payments, which SE tax usually triggers.
Email me this result
The requested report is transactional. Educational follow-ups are sent only if you check the optional box.
How this calculation works
Self-employment tax under §1401 has two parts, applied to 92.35% of your net self-employment income (§1402(a)(12)):
- OASDI, 12.4%, up to the Social Security wage base for the year. Any W-2 wages consume that base first.
- Medicare, 2.9%, with no ceiling.
One-half of the resulting tax is deductible against income tax under §164(f), which the result reports separately.
This uses the same function as the paid Atamatax package — computeSelfEmploymentTax in the tax engine — rather than a second copy of the rates and wage-base table. A free tool that quotes a different number than the product it feeds is worse than no tool.
Where the totalization result comes from
The country list records agreements the Social Security Administration reports as in force, and distinguishes them from agreements merely signed. Mexico is the case that matters: an agreement was signed in 2004 and has never entered into force, so it provides no relief today. Verify your own position against SSA's agreement overview.
Limitations
- The 0.9% Additional Medicare Tax (Form 8959) above the filing-status threshold is not included.
- Church employee income, optional methods and farm income are not modelled.
- Income earned through a foreign corporation follows different rules and may bring Form 5471 into scope.
- This does not decide whether your engagement is self-employment or foreign employment — a question your contract and local law answer.
Sources
- IRC §1401, §1402(a)(12), §164(f) — self-employment tax and the deductible half.
- SSA annual OASDI contribution and benefit base.
- SSA, U.S. International Social Security Agreements.
Common questions
Does the Foreign Earned Income Exclusion remove self-employment tax?
No. Section 911 excludes foreign earned income from income tax only. Self-employment tax under Schedule SE is computed on 92.35% of your net self-employment earnings before the exclusion is applied, so a freelancer abroad can exclude every dollar of income from income tax and still owe roughly 15.3% in self-employment tax.
What is a certificate of coverage?
It is a document issued by the social security authority of the country whose system covers you, stating that you contribute there. It is the evidence that the totalization agreement assigns your coverage away from the United States. The agreement existing is not enough on its own — without the certificate the IRS default is that US self-employment tax applies.
What if my country has no totalization agreement?
US self-employment tax generally applies in full on your net earnings, and you may also be liable into the local system. That double charge is precisely what agreements exist to prevent, and there is no substitute relief: the foreign tax credit does not offset self-employment tax, because self-employment tax is not an income tax.
Do I have to make quarterly estimated payments?
Usually yes. Self-employment tax is not withheld by anyone, so it typically has to be paid through quarterly 1040-ES estimated payments. Underpayment penalties apply even when the annual return is filed on time under the automatic expat extension.
Next steps
How Atamatax calculations are produced — the tests applied, statutory sources and review cadence — is documented in the methodology, and what is and is not reviewed in accuracy & review. Calculation fixes are recorded in the changelog.
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