Self-employed & Business owners

SELF-EMPLOYED PERSONS ABROAD (Zivnost)

You must file a U.S. income tax return if you had $400 or more of net earnings from selfemployment, 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.

However in case USA has Social Security Totalization Agreements with foreign country (with Czech Republic has) and you prove, you pay social security abroad, you do not have to pay it again in USA as self-employment tax.

BUSINESS OWNERS

Foreign corporate returns (form 5471) are required for all US persons who own 10% or more of a corporation overseas. This applies to all owners of s.r.o. or a.s. in Czech Republic. To fill 5471 you need to have finalised czech financial statements of the company. Form 5471 is only informational and you do not pay tax in USA on profit of the company. However IRS is threathening with penalty 10 000usd for not filed 5471 for each company.