4theluvofgod
Returning Member

Can I use US-China Tax Treaty 20 (c) on self-employment tax?

Hello! I am a Chinese and a resident alien.  I worked as an independent contractor last year and received 1099-NEC. I would like to claim the US-China Tax Treaty 20 (c), but am unsure if it could be applied to self-employment (FICA) tax. I've read a couple of posts and most people put the tax treaty in schedule 1 other income. It did work out for income tax, but not self-employment tax. If I could claim this tax treaty, which line should I put this under to reduce self-employment tax?  I have tried to put it under Schedule C Part I Income: Other income, but the software won't allow me to enter a negative number (-5000) in that line. Should I put it under Schedule C Expenses: other expenses? Thanks in advance to anyone who replies!

pk
Level 15
Level 15

Deductions & credits

@4theluvofgod , what is your immigration status  ( F-1 or H-1 or ? ); what do you mean by self-employed -- business or providing independent service to somebody or what?  Are you a citizen of China?  When did you enter the USA on F-1 ?  Have you taken any steps to become a resident of the USA  ( Green Card application etc. ) ?

 

4theluvofgod
Returning Member

Deductions & credits

@pk Hi, I'm on F1-OPT. I provide independent consulting service to a company. I am a Chinese citizen, entered the States in 2012. I have not taken any steps to become a permanent resident.

pk
Level 15
Level 15

Deductions & credits

@4theluvofgod , this independent consulting service  is not part of your OPT or is the OPT employer is paying you using a 1099-NEC ?  Is your total earnings  including this 1099-NEC more than US$5000 ?

Generally whereas the 20(c)  does not  stipulate what kind of earning , just the first US$5000  can be excluded, the  FICA exclusion is  really for the  "required training" such as  residency for doctors  and by extension to all students whom are getting paid during the training period i.e. earnings due to training/employment.   Thus I would opine ( absent  answers from you to my questions ) that  you should be able to take advantage of the 20(c) via  schedule-1 with note  explaining  why and also attaching the  proper form  ( I don't think TurboTax supports  that ) but you probably cannot exclude paying the FICA  ( absent showing that   this  employment is part of the OPT training etc. )

Does that make sense  and/or do you need more help/explanation

Stay safe   Nee how ( I don't know how to spell  this ) but I do know what it means