How are U.S. self-employment taxes calculated when I work as a freelancer or creative professional abroad?

U.S. citizens and green card holders working as freelancers or creative professionals abroad owe self-employment (SE) tax at 15.3% on net earnings of $400 or more, even when all income is earned outside the United States. The tax covers Social Security (12.4% up to the annual Social Security wage base) and Medicare (2.9%, uncapped).

SE tax applies to your net earnings from self-employment, calculated as gross income minus deductible business expenses, multiplied by 92.35%. You then apply the 15.3% rate. You can also deduct half the SE tax on your Form 1040 as an adjustment to income.

The Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC) do not reduce SE tax. Both only shield you from U.S. income tax. This is one of the most painful surprises for freelancers abroad who assumed the FEIE covered everything.

You can avoid SE tax only when:

• Your country has a totalization agreement with the U.S., and you obtain a certificate of coverage from the foreign social security authority
• You operate through a foreign corporation that classifies you as an employee (with its own tax trade-offs)
• Your net self-employment earnings are under $400 for the year

File SE tax on Schedule SE, attached to Form 1040. Quarterly estimated payments (Form 1040-ES) are often required since no employer is withholding.

For strategies to reduce SE tax through totalization agreements or entity structure, see our self-employment tax guide for expats.