The United States has social security agreements with a number of countries, including Australia, to eliminate dual taxes under two social security systems. Under these agreements, you generally must pay social security and Medicare taxes to only the country in which you live. This means that your self-employment income in Australia is exempt from U.S. self-employment tax if you paid the equivalent Australian social security tax on your self-employment income. You have to get a statement from the Australian government agency that handles the tax, verifying that your self-employment income was subject to the Australian tax.
TurboTax doesn't really handle this situation. There is a way handle it using forms mode, but forms mode is available only in the CD/Download TurboTax software, not in TurboTax Online. So in TurboTax Online there is no way exclude the self-employment tax. Post back if you want detailed instructions for doing it in the CD/Download TurboTax software. If you do it this way, you will not be able to e-file your U.S. tax return. You'll have to print it and file it by mail.
Even if you are exempt from self-employment tax, you still have to include Schedule C to report your self-employment income. The exemption only eliminates Schedule SE.
