"AngelSpiritUnite" <angelspiritunite[at]aol.com> wrote:

- quote -

The foreign earned income exclusion (FEIE) you refer to
above applies only to income tax. Whether you must pay
social security tax depends on the type of business entity
under which you set up your restaurant. If you do business
as a sole proprietor, your net income will be subject to
U.S. self-employment (SE) tax. If you incorporate your
restaurant, your compensation will be reported as wages and
wages earned while working for a foreign corporation are not
subject to U.S. social security tax (Revenue Ruling 92-106).
Depending on what country you're in, the wages may very
well be subject to their employment taxes.

http://www.taxlinks.com/rulings/1992/revrul92-106.htm

Barney Byrd

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AngelSpiritUnite wrote:

- quote -

The answer to your question is not as simple as it might
seem. Actually, it depends on how you set up your business.
If you are self-employed, you will owe social security taxes
on the income from the business. On the other hand, if you
work for a foreign entity, you would not owe these taxes.

In addition, if you work in a foreign country, you can
exclude up to $80,000 but this is not automatic. Also, the
exclusion applies to Gross Income, not net. So, if you are
self-employed, you could still wind up owing income taxes.
You should consult a qualified professional -- who is
experienced in foreign taxatation, before you start.

Lanny Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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I plan to put a restaurant and live in a foreign country.
My question is that I become a bonafide resident. Do I
have to pay social security tax. I know that I would be
exempt for 80,000 in gross income from taxes. But what about social security taxes.

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