Small Business Tax Return Preparation

You may need to make estimated tax payments to the IRS if you are filing as a self-employed individual (including a sole proprietor, partner, or S Corp shareholder) and you expect to owe $1000 or more. If you have a US-based corporation and you expect to owe more than $500, then you should make estimated payments. Also, if you had a tax liability for the previous year, you may be required to make estimated payments during the current year.

It will depend on how your company is structured and where you are located. If you are a sole proprietorship (i.e. no business entity) or have a US-based business entity, you will most likely need to pay US FICA taxes. This would be 15.3% of your income and would apply before you can use the Foreign Earned Income Exclusion, so you may have a cash expense. If you have a foreign-based business entity, you will probably not be liable for US Social Security or FICA taxes. However, if you are in a country that has a tax treaty with the US, you need to consult the tax treaty to see how and to whom these taxes would apply. Generally, these payments would need to be made quarterly throughout the year.

Unfortunately, for those who are self-employed and living in a country without a US totalization agreement, double taxation is quite common. This is due to the fact that many have to pay self-employment taxes to the US, even if they have already paid them to their host country.

If you are in a situation like this, speaking to an expat accountant is imperative. Their expertise will ensure that you are taking all possible deductions, which will limit your tax liability as much as possible.