It depends. This is how you will enter the information in the return.
- When you complete the foreign income exclusion section. You would enter the full Gross amount of the foreign income. You wouldn't deduct 1/2 of self-employment tax. Just enter the full, gross amount of self-employment income and farm income. Don't deduct business or farm expenses in this section.
- Next, you will prepare Schedule C and Schedule F. After this is prepared, you will exclude the net income generated by both returns by the order of steps I have prescribed. After the income is excluded, the only remains is the self-employment tax and 1/2 of the self-employment tax.
@kruthika
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