Czech rates are low enough that the exclusion usually beats the credit.
There is a US–Czech income tax treaty and a totalization agreement, both in force. Czech personal rates are 15% and 23%, which is the important number: at those rates the foreign tax credit frequently fails to cover the US liability, so the Foreign Earned Income Exclusion is often the better election — the opposite of the Nordic and Western European pattern.
Tax snapshot — Czechia
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Sources: IRS Publication 54; IRS Publication 901; US–Czech Republic income tax treaty (1993); US–Czech totalization agreement (in force 2009); Rev. Proc. 2025-32. Checked 1 September 2026.
What that means on your return
Low local rates change the arithmetic. In a 45% country the credit almost always wins; at 15% and 23% it often does not, and claiming the credit can leave US tax owing that the exclusion would have removed.
Czech social security and health insurance contributions are not creditable income taxes. The totalization agreement handles that side, with a certificate of coverage.
The treaty dates from 1993 and applies to Czechia as successor to Czechoslovakia. Slovakia has its own separate treaty — worth stating because clients who moved between the two sometimes assume one document covers both.
Prague housing costs support a meaningful foreign housing exclusion where the exclusion route is taken, and it needs the lease to compute.
If you are in Czechia as a…
Questions I get about Czechia
Should I claim the exclusion or the credit in Czechia?
Usually the exclusion, because Czech rates of 15% and 23% often leave the credit short of the US liability. It is computed on your figures — but the presumption here runs the opposite way from Western Europe.
Do I pay US self-employment tax in Czechia?
Not usually. The totalization agreement is in force, so with a certificate of coverage self-employment is subject to one country's system rather than both.
I already pay high tax in Czechia. Do I still file a US return?
Yes, every year. Citizenship-based taxation does not care what you pay locally. The foreign tax credit usually removes the US liability, but the filing obligation stands, and FBAR and FATCA reporting stand with it.
When is my return due?
15 June, under the automatic extension for filers living abroad. Form 4868 moves it to 15 October, and I file the extension free.
Do I have to file an FBAR for my Czech bank account?
If your foreign accounts together passed $10,000 at any point in the year, yes. You can file it free through FinCEN's own system. The non-willful penalty for not filing is $16,536.
I have not filed for several years. What now?
The Streamlined Foreign Offshore Procedures: three returns, six FBARs and Form 14653 certifying non-willfulness. Penalties are waived. Note that the IRS terminated the separate Delinquent FBAR Submission Procedures around 1 July 2026.
Filing from Czechia this year?
Twenty minutes with the Enrolled Agent who will prepare and sign it. Complete return, $599.
An IRS Enrolled Agent working only on US tax for Americans living abroad. I prepare and sign every return myself — 17 years in practice, 12 of them as an Enrolled Agent.