A self-employed U.S. citizen, who is subject only to Icelandic social security taxes
and contributions under the agreement and is exempt from paying Self-Employment Contributions
Act (SECA) tax must still file a U.S. tax return every year. To show that the self-employment
earnings are exempt from U.S. Social Security self-employment tax, the individual
must do the following:
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indicate on Schedule SE that the earnings are exempt under the agreement;
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request a certificate of coverage from the Icelandic authorities; and
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attach a photocopy of the Icelandic certificate of coverage to his or her U.S. tax
return every year (see RS 02002.550) as proof of the exemption.
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