Being self-employed can be confusing in any country, but it becomes even more complicated when you are earning freelance or business income in the U.S. while on an F-1 or J-1 visa.
Many international students, researchers, and exchange visitors are surprised to learn that special tax rules apply to nonresidents, and these rules differ significantly from those that apply to U.S. residents or employees paid through payroll.
If you are a freelancer, contractor, gig worker, or small business owner, understanding how self-employment tax, income tax, and residency status work is essential.
This guide explains everything nonresident self-employed individuals need to know – including how F-1 OPT students can be self-employed, which expenses you can deduct, and how Sprintax can help you stay fully compliant.
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Who is considered a self-employed individual in the U.S.?
Well, the IRS will view you as self-employed if you are a freelancer, independent contractor, or you own your own business.
This includes anyone who:
- Operates as a sole proprietor or independent contractor of a business;
- Is a partner in a business partnership;
- Runs their own business on a full-time or part-time basis, including gig work.
An example of a sole proprietor is an artist, freelance writer, or IT consultant.
Residency status
As someone on an F-1 or J-1 visa, you will more than likely be considered a nonresident.
There are exceptions to this, of course, for example if you pass the Substantial Presence Test. It is used to determine if a non-U.S. citizen qualifies as a resident alien for tax purposes based on the number of days they have been physically present in the U.S. over a three-year period.
With this test, you’ll need to be present in the U.S. on at least:
- 31 days during the current tax year, AND
- 183 days over the last three years, using the following weighted formula:
- All days in the current year count as 1 full day each
- Days in the previous year count as 1/3 of a day each
- Days in the second previous year count as 1/6 of a day each
Note: F-1 and J-1 students are considered nonresidents for tax purposes (and do not count their days toward the Substantial Presence Test) for their first five calendar years in the U.S. Generally, J-1 scholars and researchers are nonresidents for tax purposes for their first two calendar years.
You can find out more about your residency status here.
What is self-employment tax?
Self-employment tax is the tax that freelancers and independent workers pay to fund Social Security and Medicare.
Unlike employees who have these taxes automatically taken out of their paycheck, self-employed people must calculate and pay this tax on their own.
Self-employment tax rates for 2025-2026
The self-employment tax rate for the 2025 tax year is 15.3%.
This tax rate is made up of two parts:
- 12.4% for Social Security
- 2.9% for Medicare.
While most nonresident payroll employees will not be taxed on Social Security and Medicare, this is different for self-employed workers.
The Social Security wage cap is set at $176,100 for 2025 tax year and $184,500 in 2026. Essentially, this means you won’t pay any Social Security tax after the first $176,100 of your income.
You’ll have to pay income tax as well as self-employed tax if your business has a net profit of over $400.
Do nonresidents have to pay self-employment tax?
Yes. If you are a nonresident alien and earn $400 or more in net self-employment income, you must pay self-employment tax at 15.3%. This applies even if you are normally exempt from Social Security and Medicare taxes as an employee.
Estimated tax payments
The method used to pay Social Security and Medicare taxes and income tax is known as Estimated Tax, and Form 1040-ES, Estimated Tax for Individuals is used to figure out these taxes.
This form will contain a worksheet that is quite similar to Form 1040NR. You’ll need your tax return from the year before to be able to fill out Form 1040-ES.
The worksheet in Form 1040-ES, Estimated Tax for Individuals will help you figure out if you are required to pay quarterly estimated tax payments.
How is self-employment tax different from income tax?
Self-employment tax (15.3%) is paid entirely by the self-employed individual. In contrast, for employees, these specific payroll taxes are split: the employee pays half, and the employer pays the other half.
Both groups are still responsible for paying their own federal and state income taxes.
How do I calculate my self-employment tax?
To calculate the amount of self-employment tax that you will pay, you should start by finding your net earnings from self-employment. Remember, if these are less than $400, you won’t be taxed.
Net earnings are calculated simply by subtracting business expenses from your business income. To do this, you should file a Schedule C as part of IRS Form 1040NR, your nonresident tax return.
Only income effectively connected with that U.S. trade or business is subject to self-employment tax.
Sprintax can help you calculate how much tax you’ll pay!
By calculating how much self-employed tax you’ll pay, you will not be in for a shock come tax season!
What kind of expenses can a nonresident self-employed worker claim?
There are plenty of self-employed tax deductions available to nonresidents in the U.S.
General business expenses
Did you make business purchases on your credit card? If so, you may be able to deduct credit card interest on your federal tax return!
That is because the IRS considers any qualified business purchases as being “ordinary and necessary” for the running of said business.
Included in this can be your phone and internet bills, meals, salaries and wages.
IMPORTANT: In order to be self-employed you will need off campus work authorization from your school’s international office.
Self-employment without your international office’s authorization can be a violation of your visa status – therefore it is vital to talk to your school’s offices before undertaking any self-employed work.
Expenses on education and training
These will need to be in line with education that maintains or improves your skills in your current field.
For example, if you are paying for coding/networking classes in computer science or social media training in marketing, this will be deductible as it improves or maintains these skills.
Potentially eligible things include tuition, books and supplies, fees paid, and transportation – among others.
Mileage for business
Use your car for work? You could deduct your mileage on your yearly tax return!
It should be noted that personal trips cannot be claimed for this.
You’ll need receipts as evidence of your trips too.
Also, in order to be eligible to claim the standard mileage rate of 70 cents per mile (in 2025), you’ll need to meet the following criteria:
- You need to own or lease the car you are claiming for
- You cannot operate more than five cars
- No depreciation can be claimed on any of the cars
Are nonresident freelancers taxed the same as self-employed nonresidents?
Yes, freelancers will be taxed at a rate of 15.3%, the same as self-employed nonresidents.
This also represents the 12.4% Social Security and 2.9% Medicare tax rates.
Can F-1 students on OPT be self-employed?
F-1 OPT self-employment can be a tricky area for nonresidents to navigate.
Essentially, yes, F-1 OPT students can be self-employed.
However, the role they undertake must be specifically related to their field of study.
F-1/J-1 visa holders must obtain off-campus work authorization (OPT, CPT, Academic Training, or school approval) before engaging in any self-employed activity. Unauthorized work can violate your visa status.
Information returns
You may be required to file an information return with the IRS – this is what third parties such as universities use to notify how much someone was paid during a tax year.
You’ll do this by completing a 1099-MISC or a 1099-NEC if you made payments of over $600.
You can find a guide to reporting information returns on the IRS website.
When is the tax deadline for nonresident self-employed individuals?
The deadline for filing your federal tax return is generally around 15 April each year.
It is important to file your tax return on time. Failing to do so may lead to fines and penalties on top of any money you owe as well as potential Green Card and visa problems in the future.
How Sprintax Returns helps nonresidents at tax time
It’s true, you can always file your tax return by yourself.
This can be tricky for nonresidents though, as many are not used to the tax forms in the U.S.
Filing with your nonresident alien tax return with Sprintax Returns is the easiest way to complete your tax affairs!
Sprintax Returns can help you in preparing both Federal and State tax returns. This will ensure you are on the right side of the tax authorities and will receive your maximum legal U.S. tax refund!
Remember, by not filing your tax return properly, you’re putting yourself at risk of being penalized by the IRS.
These penalties can range from cash fines to future Green Card/visa problems.
We will ensure you are 100% compliant with your tax obligations.
What’s more, if you did receive income in the U.S. without having an ITIN or SSN, we can assist you in obtaining an ITIN and file your federal tax return!
We offer a 24/7 Live Chat service and our team is happy to assist you with your tax questions at any time.
With Sprintax Returns you will:
- Save time
- Easily find out your residency status
- Prepare a fully compliant U.S. tax return
- Avail of our 24/7 Vita Qualified Live Chat facility
Prepare your U.S. nonresident tax return with Sprintax Returns!
