U.S. TAX GUIDE IN SAUDI ARABIA
What should I know about self-employment income in Saudi Arabia?
As a US expat in Saudi Arabia, being self-employed means you must pay a 15.3% self-employment tax on your net income due to the lack of a totalization agreement between the US and Saudi Arabia.
How are federal taxes different from self-employment tax?
- Federal Income Tax: This tax varies based on income level and filing status, with brackets ranging from 10% to 37% for 2024.
- Self-Employment Tax: A flat 15.3% on net self-employment income, which covers 12.4% for Social Security and 2.9% for Medicare.
Does my business structure affect my taxes?
Yes, it does. As a sole proprietor, you pay self-employment tax. If you set up a corporation or LLC, you might draw a salary, which can alter your tax liabilities and potentially reduce self-employment tax.
Should I reconsider self-employment in Saudi Arabia?
Due to the 15.3% self-employment tax, reconsidering self-employment in Saudi Arabia might be wise. With proper planning and advice from a tax professional, you can manage or minimize your tax obligations effectively.
