For U.S. citizens and residents in Sudan, U.S. tax compliance relies on domestic rules like the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC), as there is no U.S.-Sudan income tax treaty. Key considerations include the mandatory U.S. self-employment tax for freelancers and the complex reporting for those owning a local business.
US filing basics every American abroad must know
US citizens and green-card holders are taxed on worldwide income wherever they live, and usually must file Form 1040 once gross income exceeds the IRS threshold ($15,750 for single filers, $31,500 for married filing jointly, and $23,625 for head of household for 2025), even when no tax is ultimately due. The tools that prevent double taxation are the Foreign Earned Income Exclusion (FEIE, up to $130,000 for 2025 under IRC §911) and the Foreign Tax Credit.
Two reporting rules catch most filers in Sudan: the FBAR (FinCEN Form 114), required when foreign financial accounts exceed $10,000 in aggregate at any point in the year, and Form 8938 (FATCA) for specified foreign assets above the applicable threshold. Both can carry penalties even when no tax is owed. If you are behind, the Streamlined Filing Compliance Procedures are the usual penalty-free path back for non-willful taxpayers.
US tax treaty with Sudan
There is no income tax treaty between the United States and Sudan. Consequently, U.S. expatriates cannot use treaty provisions to reduce withholding taxes or assign taxing rights for specific income types. Double taxation is instead managed unilaterally through U.S. tax provisions, primarily the Foreign Earned Income Exclusion and the Foreign Tax Credit for taxes paid to Sudan.
Sudanese Social Insurance and U.S. Tax
Sudan has a mandatory social insurance system managed by the National Pension and Social Insurance Fund (NPSIF), covering most employees, including expatriates. For U.S. tax purposes, the NPSIF is not considered a qualified retirement plan. Contributions are made to a foreign government social security system, which generally means the plan is not treated as a foreign grantor trust requiring Form 3520 reporting. An interest in a foreign social security system like the NPSIF is also typically exempt from FBAR (FinCEN 114) and Form 8938 reporting. However, any privately held retirement or investment accounts are subject to these reporting rules if the value thresholds are met.
Investments, property, and capital gains in Sudan
Any investment in a Sudanese or other non-U.S. pooled investment fund, such as a mutual fund, is likely a Passive Foreign Investment Company (PFIC). This triggers complex reporting on Form 8621 and can lead to a punitive default tax regime. When selling assets in Sudan, be aware that Sudan imposes a capital gains tax, for example, at a rate of 10% on property disposals. These taxes paid to Sudan are generally creditable against U.S. tax on the same gain, using Form 1116, which helps prevent double taxation on the sale of property or securities.
Self-employment and companies in Sudan
If you own a Sudanese business, such as a Limited Liability Company (LLC), it may be classified as a Controlled Foreign Corporation (CFC) if U.S. persons who each own 10% or more collectively own over 50% of it. As a U.S. shareholder (owning 10% or more), you would be required to file Form 5471. This can lead to including the company's undistributed income, such as GILTI or Subpart F income, on your personal U.S. tax return. For self-employed individuals, a critical fact is the absence of a U.S.-Sudan totalization agreement. This means you must pay the full 15.3% U.S. self-employment tax on all net earnings if they are $400 or more (IRC Section 1402(b)(2)), and you cannot obtain a Certificate of Coverage to avoid this obligation, potentially resulting in paying into both the U.S. and Sudanese social security systems.
Worked examples
NGO worker in Khartoum on a local contract (2025)
Amelia is a U.S. citizen working for an NGO in Khartoum, earning a salary of $90,000 in 2025. Because her income is below the 2025 Foreign Earned Income Exclusion (FEIE) threshold of $130,000, she can use Form 2555 to exclude her entire salary from U.S. income tax. As a result, her U.S. income tax liability on her salary is zero. She must still file a U.S. tax return to claim the exclusion and must also file an FBAR (FinCEN Form 114) if the total value of her Sudanese bank accounts exceeds $10,000 at any point during the year.
Freelance consultant in Port Sudan (2025)
David is a self-employed U.S. citizen working as a freelance IT consultant in Port Sudan. In 2025, he has net earnings from self-employment of $120,000. He can use the FEIE to exclude this income from U.S. income tax. However, the FEIE does not apply to self-employment tax. Because there is no totalization agreement between the U.S. and Sudan, he must pay U.S. self-employment tax on his earnings. His self-employment tax is calculated on 92.35% of his net earnings, so he owes 15.3% on $110,820 ($120,000 * 0.9235), resulting in a U.S. tax bill of approximately $16,956, in addition to any local taxes or social contributions required in Sudan.
Entrepreneur with a Sudanese LLC (2025)
Fatima, a U.S. citizen, is the sole owner of a Sudanese Limited Liability Company (LLC) that provides logistics services. The company is a Controlled Foreign Corporation (CFC) because she owns more than 50% of it. In 2025, the company earns $80,000 in net profit, which is considered Global Intangible Low-Taxed Income (GILTI) and is not distributed to her. As a U.S. shareholder of a CFC, Fatima must file Form 5471. She must also include her share of the GILTI in her personal U.S. income, potentially creating a U.S. tax liability even though she received no dividend. She can, however, claim a credit for a portion of the corporate taxes paid by her LLC in Sudan to offset this U.S. tax only if she makes a Section 962 election to be taxed as a corporation.
Common mistakes for Americans in Sudan
- Assuming a U.S.-Sudan tax treaty exists and incorrectly searching for treaty benefits or withholding rates.
- Forgetting to file a U.S. tax return because all income was earned in Sudan and falls below the FEIE threshold; a return is still required to claim the exclusion.
- Self-employed individuals using the FEIE and incorrectly thinking it also eliminates their U.S. self-employment tax liability.
- Failing to file an FBAR (FinCEN Form 114) for Sudanese bank or investment accounts when the aggregate value exceeds $10,000.
- Ignoring Passive Foreign Investment Company (PFIC) rules for investments in non-U.S. funds, leading to missed Form 8621 filings and potential punitive taxes.
- Owners of Sudanese companies failing to file Form 5471 for their Controlled Foreign Corporation (CFC), which can lead to significant penalties.
- Attempting to claim an exemption from U.S. self-employment tax by citing a non-existent totalization agreement or seeking a Certificate of Coverage.
- Assuming the Foreign Tax Credit is not useful because Sudan's top income tax rate (15%) is relatively low; it can still partially offset U.S. tax on income not covered by the FEIE. (IRC Section 911(f) / IRC Section 904)
Sudan tax FAQ
Is there a U.S.-Sudan tax treaty?
No. There is no income tax treaty between the United States and Sudan. U.S. expatriates must rely on domestic U.S. law, such as the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC), to mitigate or eliminate double taxation.
As a self-employed American in Sudan, do I have to pay U.S. Social Security and Medicare taxes?
Yes, absolutely. Because there is no social security totalization agreement between the U.S. and Sudan, you are fully liable for the 15.3% U.S. self-employment tax on all your net earnings if they meet the $400 threshold (IRC Section 1402(b)(2)). The Foreign Earned Income Exclusion does not reduce this tax, and you cannot obtain a Certificate of Coverage to claim an exemption.
How do I avoid being taxed twice on my salary from a Sudanese employer?
You have two primary tools. You can use the Foreign Earned Income Exclusion (FEIE) on Form 2555 to exclude up to $130,000 (for tax year 2025) of your salary from U.S. income tax. Alternatively, you can use the Foreign Tax Credit (FTC) on Form 1116 to claim a dollar-for-dollar credit for income taxes you paid to Sudan, which offsets your U.S. tax liability on the same income.
Do I need to report my Sudanese bank account to the U.S. government?
Yes, most likely. If the combined total of all your foreign financial accounts (including those in Sudan) exceeds $10,000 at any point during the year, you must file a Report of Foreign Bank and Financial Accounts (FBAR) with the Financial Crimes Enforcement Network (FinCEN). If your foreign assets are substantial, you may also need to file IRS Form 8938 with your tax return.
What happens if I own a local company in Sudan?
If you are a U.S. person who owns 10% or more of a Sudanese company that is over 50% owned by U.S. persons who each own 10% or more, it is a Controlled Foreign Corporation (CFC). This classification requires you to file Form 5471 annually. It may also require you to pay U.S. tax on the company's undistributed profits under the GILTI or Subpart F income rules.
Is my pension from the Sudanese National Pension and Social Insurance Fund (NPSIF) taxable in the U.S.?
Distributions from a foreign government social security system like the NPSIF are generally treated as pension income and are reportable on your U.S. tax return. The ultimate U.S. tax treatment of distributions depends on various factors, including whether your contributions were made with pre-tax or post-tax money and the specifics of the plan.
I sold my apartment in Khartoum. How is that taxed by the U.S.?
The U.S. taxes its citizens on worldwide capital gains. You must report the sale on your U.S. tax return (Schedule D and Form 8949). You can, however, claim a Foreign Tax Credit on Form 1116 for the 10% capital gains tax you paid to the Sudanese government, which will reduce or eliminate any U.S. tax owed on that same gain.
Are there any special U.S. sanctions I need to worry about with Sudan?
While broad economic sanctions on Sudan were revoked, the country remains subject to certain restrictions, and the U.S. Treasury's Office of Foreign Assets Control (OFAC) maintains a list of Specially Designated Nationals (SDNs) with whom U.S. persons are prohibited from transacting. It is crucial to perform due diligence to ensure any financial or business dealings do not involve sanctioned individuals or entities.
Sources and last reviewed
- IRS, Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad (verified 2026-06-07)
- IRS, U.S. citizens and residents abroad filing requirements (verified 2026-06-07)
- SSA, Social Security Programs Throughout the World: Africa, 2019 (Sudan) (verified 2026-06-07)
- Sudan's National Investment Encouragement Act (via U.S. State Dept.) (verified 2026-06-07)
Last reviewed .
Common services needed by expats in Sudan
Most Americans abroad in Sudan need help with at least one of the following core compliance areas, which frequently interact:
- US expat tax returns, Form 1040 with FEIE, FTC, treaty positions, and any required state returns.
- FBAR reporting, FinCEN Form 114 for foreign financial accounts exceeding $10,000 aggregate at any time during the year.
- Form 8938 (FATCA), IRS disclosure of specified foreign financial assets when thresholds are met.
- Streamlined catch-up filing, For eligible non-willful taxpayers with prior unfiled years.