Can an American work remote for a foreign company?

The short answer

Yes — a US resident can work remote for a foreign company. The structure matters, though. In almost every case the arrangement is: the American is a self-employed contractor who invoices the foreign company in USD (or their currency, converted). The American reports the income on their US tax return and pays US federal tax, state tax, and self-employment tax on it. Foreign employers rarely hire Americans as W-2 equivalents because US citizenship-based taxation, FATCA, and state-level payroll compliance create burdens they don't want to take on.

This is the standard model and it has been for years.

The two structures (and why one dominates)

1. Contractor (common)

You set up as self-employed in the US — sole proprietor, single-member LLC, or S-corporation. You sign an independent contractor agreement with the foreign company. You invoice them monthly, typically in USD to avoid exchange-rate disputes. The foreign company pays you directly; you are responsible for all US tax compliance. No 1099 will be issued — foreign payers don't file US information returns — so you track and report the income yourself on Schedule C.

This is how most Americans working for non-US remote companies are structured. It is well-trodden and manageable once the first year is set up.

2. W-2 equivalent (rare)

For a foreign company to hire you as a W-2 employee while you live in the US, they have to register with the IRS, get an EIN, withhold federal and state income tax, pay the employer share of FICA, remit unemployment insurance in your state, and in many cases file state-level corporate registrations. Almost no small or mid-sized foreign employer will do this unless they already have a US subsidiary — which usually means they're large enough to have in-country presence.

The practical outcome: if you see a foreign remote role that says "employee only, local contracts," the employer almost certainly will not make an exception for an American. Move on.

What the contractor arrangement actually looks like

1. Form the entity. Sole proprietor if you expect under roughly $60K profit in the first year. Single-member LLC for liability protection. S-corp election once profit is reliably over $80K — see llc vs s-corp for remote americans.
2. Get an EIN. Free from the IRS. Required for an LLC or S-corp; useful for a sole proprietor to avoid giving out your SSN.
3. Open a business bank account. Wise, Mercury, and most US banks accept international wires. A USD account avoids conversion fees on inbound payments.
4. Sign the contractor agreement. Watch for governing-law clauses, IP assignment, and non-compete language enforceable in the foreign jurisdiction.
5. Invoice monthly. Track revenue and expenses in bookkeeping software. Keep every receipt.
6. Pay quarterly estimated taxes. Form 1040-ES. Federal and state. Miss these and the IRS charges an underpayment penalty.
7. File your annual return. Schedule C for sole prop/single-member LLC. Form 1120-S for S-corp. Schedule SE for self-employment tax (15.3% up to the Social Security wage base).

Taxes, plainly

• You pay US federal income tax on the gross income.
• You pay state income tax unless you live in a no-income-tax state (AK, FL, NV, SD, TN, TX, WA, WY, plus NH on wages).
• You pay the full self-employment tax: 15.3% on the first ~$168,600 (2024 Social Security wage base), 2.9% after.
• If the foreign country withheld tax on the payment, you may claim a Foreign Tax Credit (Form 1116) to avoid double taxation — check the US tax treaty with that country.
• If your foreign bank account ever holds more than $10,000 at any point in the year, you must file an FBAR (FinCEN 114).

Get an accountant who has handled foreign-source self-employment income. The fee is worth it, and the structure then runs on autopilot in later years.

What to watch out for

• IRS worker-classification rules. If you work full-time for one foreign client with set hours and their direction, the IRS is unlikely to reclassify you — foreign employers rarely have US nexus — but your state may still scrutinize the arrangement.
• Contract clauses governed by foreign law. A UK or German agreement may include terms you'd never see in a US contract. Read carefully.
• Currency risk. If you're paid in EUR or GBP, exchange-rate moves affect your real income. Invoice in USD where possible.
• Getting paid on time. European companies often pay net-30 or net-45. Plan cash flow.
• Health insurance. You are self-employed. You pay for a marketplace plan or through a spouse's employer. Factor this into your rate.

Rate expectations

Foreign companies typically benchmark to their local salary scale, not the US market. A London fintech may offer USD rates that look solid for a UK employee but 20–30% below what a US employer would pay. European employers, in particular, expect to pay less than US companies and will say so.

That said, many senior operators, engineers, and designers still find foreign remote work worthwhile — especially with clients in Australia, Singapore, or Switzerland where pay scales are closer to US levels.

The bottom line

Working remote for a foreign company from the US is a well-established arrangement. Set up as a contractor, form an LLC or S-corp if scale warrants it, pay quarterly estimated taxes, track every dollar. Get an accountant the first year. After that it's a spreadsheet.