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US expat tax for Americans in Sudan

US federal tax, FBAR, and FATCA obligations for citizens and green-card holders living in Sudan, prepared through Expat Tax.

For U.S. citizens and residents in Sudan, U.S. tax compliance relies on domestic rules, as there is no U.S.-Sudan income tax treaty. The Foreign Earned Income Exclusion (FEIE) does most of the work, because Sudan is a sanctioned country for IRC Section 901(j) purposes and income taxes paid or accrued to Sudan do not qualify for the Foreign Tax Credit. 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 reduce double taxation are the Foreign Earned Income Exclusion (FEIE, up to $130,000 for 2025 under IRC §911) and the Foreign Tax Credit. Neither is automatic. The FEIE requires a tax home in a foreign country plus either the bona fide residence test or 330 full days abroad in a 12-month period, and it reaches earned income only. The Foreign Tax Credit is figured separately for each income category under IRC §904 and is capped at the US tax on the foreign income in that category, so it reduces double taxation without guaranteeing that none remains.

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 path back for non-willful taxpayers. They run on two tracks: the foreign track carries no offshore penalty but requires meeting the program's non-residency test, and the domestic track carries a 5% offshore penalty but works through amended returns, so it does not fit someone who never filed at all. Tax and interest on the catch-up years are owed whichever route applies.

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, and in practice that means the Foreign Earned Income Exclusion. Sudan is listed as a sanctioned country for IRC Section 901(j) purposes, so no foreign tax credit is allowed for income taxes paid or accrued to Sudan; an itemized deduction for those taxes may be available instead.

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, any Sudanese tax on the gain does not produce a U.S. foreign tax credit. Sudan is a sanctioned country for IRC Section 901(j) purposes, so income taxes paid or accrued to Sudan do not qualify for the credit, income from Sudan sits in its own separate Form 1116 category, and an itemized deduction is the remaining option. The gain itself is still fully taxable on the U.S. return.

Self-employment and companies in Sudan

If you own a Sudanese business, such as a Limited Liability Company (LLC), it is a Controlled Foreign Corporation (CFC) if U.S. shareholders who each own 10% or more collectively own more than 50% of it by vote or value. 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 U.S. self-employment tax once net earnings from self-employment are $400 or more (IRC Section 1402(b)(2)): 15.3% on 92.35% of net earnings, with the 12.4% Social Security portion stopping at the annual wage base ($176,100 for 2025) and the 2.9% Medicare portion uncapped, plus a further 0.9% Additional Medicare Tax on combined Medicare-taxed wages and self-employment income above $200,000 for a single, head-of-household or qualifying-surviving-spouse filer, $250,000 for a joint return, and $125,000 for married filing separately. 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. Her income is below the 2025 Foreign Earned Income Exclusion (FEIE) limit of $130,000, and she has a foreign tax home and meets the 330-day physical presence test, so 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): she is a U.S. shareholder owning 10% or more, and U.S. shareholders in aggregate own more than 50% of the company by vote or value, which here is her single 100% stake. 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. A Section 962 election to be taxed at corporate rates is the usual route to a deemed-paid credit for corporate taxes the company paid, but that route is closed here: Section 901(j) denies the credit for taxes paid or accrued to Sudan.

Common mistakes for Americans in Sudan

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. The Foreign Earned Income Exclusion (FEIE) is the main tool, because Sudan is a sanctioned country for IRC Section 901(j) purposes and income taxes paid or accrued to Sudan do not qualify for the Foreign Tax Credit.

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 liable for U.S. self-employment tax once your net earnings from self-employment are $400 or more (IRC Section 1402(b)(2)): 15.3% on 92.35% of net earnings, with the 12.4% Social Security portion stopping at the annual wage base ($176,100 for 2025) and the 2.9% Medicare portion uncapped. 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?

The main tool is the Foreign Earned Income Exclusion (FEIE) on Form 2555, which can exclude up to $130,000 (for tax year 2025) of your salary from U.S. income tax if you have a foreign tax home and meet either the 330-day physical presence test or the bona fide residence test. The Foreign Tax Credit is not an alternative here. Sudan is a sanctioned country for IRC Section 901(j) purposes, so income taxes paid or accrued to Sudan do not qualify for the credit, and an itemized deduction for those taxes may be available instead.

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 cannot claim a Foreign Tax Credit for any Sudanese tax on the gain, because Sudan is a sanctioned country for IRC Section 901(j) purposes and income taxes paid or accrued to Sudan do not qualify for the credit. An itemized deduction for the foreign tax may be available instead.

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

Reviewed by Ilya Fayerman, Esq. (NY Bar) on

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:

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