Andrew Mitchel LLC

International Tax Blog - New and Interesting International Tax Issues


FICA and Self-Employment Tax For Salaries Paid By a Foreign DRE

2024-11-17

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This past Friday, Phil Hodgen of HodgenLaw PC published an interesting blog post titled "Check-the-Box Election and Self-Employment Tax". His post discusses the U.S. self-employment tax of a U.S. citizen who owns a foreign disregarded entity. Under the facts posited by Phil:

A foreign company is owned by Wife. Husband is an employee of the company.

The company is classified as a corporation for foreign country tax purposes and as a disregarded entity for U.S. tax purposes.

For foreign country tax purposes, both H and W are paid wages. They pay income tax and the foreign country equivalent of Social Security tax on the wages.

Phil’s post inspired me to create a chart of the structure he described.

 

Tags: 7701-3 Check-the-Box Elections, Charts - Situational Charts