Almost every country taxes people because they live there. The United States also taxes people because they are US citizens or green card holders. An American who lives in the Czech Republic is therefore taxed by both countries on the same income, and the two systems have to be made to fit: Czech tax first, then the US return that gives credit for it.
The Czech side: you are taxed like everyone else
If you live here (see tax residency), the Czech Republic taxes your worldwide income: your salary, freelance income, US rental income, dividends, interest and investment gains. Czech income tax is 15%, and 23% on the part above 1,762,812 CZK a year.
Being a US citizen does not change this. The US–Czech tax treaty has a "saving clause" that lets the US tax its citizens as if the treaty did not exist, and the Czech tax office treats an American as Czech resident unless they really still live in the US: a substantial presence, a permanent home or habitual abode there. A US passport and a US address on file are not enough.
The US side: two ways to avoid double tax
On your US return (Form 1040) you report the same worldwide income, in dollars, and then avoid paying twice with one of two tools, or a combination:
- Foreign earned income exclusion (FEIE, Form 2555): you exclude salary or self-employment income earned abroad up to $132,900 for 2026 ($130,000 for 2025), if you pass the bona fide residence test or the physical presence test (330 full days abroad in 12 months). Extra exclusion is possible for housing costs. It does not cover investment income, rent or pensions.
- Foreign tax credit (FTC, Form 1116): you subtract the Czech income tax you paid from the US tax on the same income. Because Czech tax on salaries is usually as high as or higher than US federal tax, the credit often brings the US tax on your salary to zero, and unused credits can be carried forward up to 10 years.
Which one works better depends on your income, your family and whether you want to contribute to a US retirement account; the FEIE also stops you from claiming some US credits. Once you choose to stop using the FEIE, you can't go back to it for five years without IRS approval.
Investments: where Americans get caught
- European funds and ETFs (including Czech ones) are usually PFICs for the US: they are reported on Form 8621 and can be taxed harshly. Most Americans abroad keep their funds in US brokerage accounts with US-domiciled funds.
- A US brokerage account is a foreign account for the Czech tax office: dividends, interest and sales go in your Czech return, with US withholding credited under the treaty. Czech tax exemptions for long-held shares can apply, while the US may still tax the same gain. See investments, ETFs, crypto and RSUs.
- Keep the history of every position. Dividends and sales are taxed differently in the Czech return, so they cannot simply be added together: dividends are capital income, while a sale can be tax-free after 3 years. For each sale you need the purchase date and price, worked out first in, first out or at the average price. Shares you inherited need their own records. The US tax shown on your forms is what was withheld, which is not always the tax you finally paid.
- US retirement accounts (401(k), IRA, Roth IRA) and Czech pension products are treated differently by each country. This is specialist work: get advice before you withdraw or contribute.
- Renting out your US home: taxed in the US where the property is, and declared in your Czech return too, with the treaty avoiding double tax. See foreign income and double tax treaties.
US reporting of your Czech accounts
- FBAR (FinCEN Form 114): required if your non-US accounts together were above $10,000 at any time in the year. Your Czech current account, savings and pension savings can all count. Due April 15, automatically extended to October 15.
- FATCA (Form 8938), with your tax return, for Americans living abroad when foreign financial assets are above $200,000 at year end or $300,000 at any time ($400,000 / $600,000 for married filing jointly).
- Czech banks ask US citizens for their US tax number (SSN) because of FATCA; that is normal.
Deadlines in both countries
| Czech Republic | United States | |
|---|---|---|
| Tax year | Calendar year | Calendar year |
| Return due | 1 April; 1 May electronically; 1 July with a tax advisor | April 15; automatically June 15 when you live abroad (interest still runs from April 15); October 15 with an extension |
| Order | Usually first | After the Czech return, so the Czech tax can be credited |
The Czech return comes first in practice, because the US return needs the Czech tax figure for the foreign tax credit.
Social security and health insurance
A US–Czech social security agreement has applied since 2009, so you pay social security in one country only. Usually that is where you work: an employee in Prague pays Czech social security, and a self-employed American living here pays Czech contributions. Periods in both countries are added together for a pension later, so Czech contributions are not lost.
The agreement has one exception. An employee sent here by a US employer can stay in US Social Security for up to five years with a certificate of coverage. In practice, US companies rarely open a Czech entity or Czech payroll for one or two people, especially when the person will return to the US. A common, simpler solution is a Czech trade license: you invoice the US company, pay Czech contributions as a self-employed person and are in Czech public health insurance. See the trade license guides on tradelicense.cz.
Want to keep paying in the US instead? The Czech Social Security Administration (ČSSZ) asks for proof from the US side, a certificate of coverage, and checks it very closely. In practice this can take months, and it often ends with paying in Czechia anyway. Our advice: pay Czech contributions. Because the periods count in both countries, that is usually the simpler and safer choice.
Americans who work or do business here are part of Czech public health insurance, like Czech residents. That is a real advantage over most non-EU nationalities, who have to buy commercial insurance. Self-employed? See visas and residence and the trade license guides on tradelicense.cz.
Checklist for Americans in the Czech Republic
- File your Czech return with all worldwide income, converted to CZK.
- File your US return after it, choosing the FEIE, the foreign tax credit or both.
- File the FBAR for your Czech accounts, and Form 8938 when you are above the limits.
- Avoid European funds in a Czech or EU account unless you accept the PFIC reporting.
- Keep proof of Czech tax paid and of your days in and outside the US.
We prepare the Czech return and coordinate with your US preparer, who files the US return. Quick general questions: ask Taxbot.
Related
- Tax residency: why the 183-day rule is not the whole story
- Foreign income and double tax treaties
- Investments, ETFs, crypto and RSUs in your Czech tax return
- Working remotely for a foreign employer
- Your Czech personal income tax return
This guide is general information, not advice on your own situation. For the US return, work with a US tax preparer.
Official sources: Convention between the Czech Republic and the United States for the avoidance of double taxation (1993); Act No. 586/1992 Coll. on income taxes; IRS, Form 8938 and FBAR requirements and the 2026 inflation adjustments; SSA, U.S.–Czech Republic Social Security Agreement; Financial Administration, methodological information on tax residency (2026).
