Discussion:Foreign Earned Income - SE nightmare
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Discussion Forum Index --> Advanced Tax Questions --> Foreign Earned Income - SE nightmare
Discussion Forum Index --> Tax Questions --> Foreign Earned Income - SE nightmare
HannaClare (talk|edits) said: | 16 October 2008 |
| FACTS: Clients, married filing jointly w/3 dependent children. One is a US resident alien, the other a US citizen. The family lived in the Dominican Republic from 01/2005 - 08/2007.
For 2007 they have $52k in foreign earned income from a 1099-Misc. After Sch. C expenses and the exclusion, they owe $7k in SE tax. Question: Does anyone know if the foreign earned income can be excluded from Sch. C to avoid SE tax? | |
| 16 October 2008 | |
| It is subject to SE tax. The foreign earned income exclusion applies only to income tax. | |
| 16 October 2008 | |
| Are you certain this is self-employment? What is the employment law position under Dominican Republic law? Are they employed or self-employed under local law? Is there a totalisation agreement?
Can you get a better answer by claiming FTC & refundable child credits instead of the 911 exclusion? | |
Tsaccounting (talk|edits) said: | 16 October 2008 |
| Foreign Earned Income Exclusion: A qualifying individual who works abroad may elect to exclude from gross income a certain amount of foreign earned income attributable to his/her residence in foreign country during the tax year. For 2007 max amt of foregin earned income that can be excluded is $87,500 and for 2008 it is $87,600. The exclusion is computed on a daily basis. Therefor the max limit must be reduced ratably for each day during the calendar year that the taxpayer does not qualify for the exclusion. | |
Death&Taxes (talk|edits) said: | 16 October 2008 |
| Guya raises a good point even if there is a 1099-MISC. Not enough facts to render a decision. | |
| 16 October 2008 | |
| Agree with d and t that Guya's points are on point. Tsaccounting - I believe the exclusion does not apply to SE taxes.
Need to find out if there are any treaties covering this. | |
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