Pakistan has one of the oldest US tax treaties still in force, and no totalization agreement.
The US–Pakistan income tax treaty dates from 1957 and remains in force, so Pakistani income tax is creditable. There is no totalization agreement, so US self-employment tax at 15.3% applies with no relief. The treaty's age matters: it lacks several provisions a modern treaty would carry, so a position that works elsewhere may have no basis here.
Tax snapshot — Pakistan
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Sources: IRS Publication 54; IRS Publication 901; US–Pakistan income tax treaty (1957); SSA totalization agreement list; Rev. Proc. 2025-32. Checked 1 September 2026.
What that means on your return
A 1957 treaty is not a modern one. It has no comprehensive limitation-on-benefits article and its provisions on pensions and independent services are thin. Do not assume a position that works under a 1990s treaty transfers.
Pakistani rates reach 35%, above the point where the foreign tax credit usually beats the exclusion on employment income. That comparison is worth running properly rather than defaulting to Form 2555.
Dual nationals with property or inherited assets in Pakistan should expect Form 8938 questions, and possibly Form 3520 where an inheritance or a family arrangement is involved.
Where income is remitted rather than earned locally, the source question drives the whole return. Establish where the work was physically performed before deciding which election to make.
Questions I get about Pakistan
Is the US–Pakistan treaty still in force?
Yes. It dates from 1957 and remains in force, so Pakistani income tax is creditable. Because it predates most modern treaty language, positions available under newer treaties may simply not exist in it.
Do I owe US self-employment tax in Pakistan?
Yes, at 15.3% on net self-employment income. There is no totalization agreement between the two countries, so the treaty's income tax relief does not extend to social security.
Which election is better at Pakistani rates?
At rates reaching 35% the foreign tax credit often produces the better result on employment income, but revoking the exclusion binds you for five years. It is compared on your figures before anything is filed.
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 Pakistani 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 Pakistan 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.