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Get your taxes done using TurboTax
Thanks @JohnB5677 for your reply. Viewing my 1040 preview clarified both scenarios. Note that I do not have any expenses/deductions.
- Entering $11,000 as Self-Employment income, the following happens:
- The 15.3% self-employment tax applies to 92.35% of that amount (source), which yields ~$1,555 tax owed.
- This income qualifies for an Earned Income Credit of $479, reducing my tax owed to $1,076.
- I owe a $39 tax penalty (I assume for lack of pre-payments), bringing the total to $1,115.
- Entering $11,000 as Foreign Earned Income and nothing else:
- Self-employment tax does not apply.
- An Earned Income Credit also applies, but for $417 this time, representing the total refund.
I am left with having to choose which method to use. Can I report this income only as Foreign Earned Income by way of having worked for a foreign company while abroad? Evidently that approach is beneficial to me, but I am wanting to pick the correct one.
‎January 31, 2023
10:43 AM