South Africa and US Taxes: What American Expats Need to Know

South Africa taxes residents on worldwide income at rates up to 45%, and the US-South Africa tax treaty provides a framework for avoiding double taxation on wages, dividends, pensions, and other income types. The Foreign Tax Credit typically covers most of the US tax on South African wages given the high marginal rates. South Africa changed its rules in 2020: South African tax residents working abroad for more than 183 days in any 12-month period (with at least 60 days being continuous) are now taxed on foreign employment income in South Africa, which has changed the tax calculus for many expats with ties to both countries. There is no US-South Africa totalization agreement, so self-employed US citizens in South Africa may owe both US self-employment tax and South African social contributions on the same earnings. South African Retirement Annuities and Tax-Free Savings Accounts are not recognized as tax-advantaged by the IRS, and US citizens holding these accounts face annual US tax on their earnings and must report them on FBAR.