The self-employment income is handled differently than wages earned from an employer with regards to earned income exclusion.
The rules for paying self-employment tax is generally the same whether you are living in the U.S. or abroad. The self-employment tax is a social security and Medicare tax on your net earnings from self-employment, and you must pay self-employment tax if your net earnings are at least $400.
This is the reason for the Schedule C, to see what your profit and loss from your business is.
Follow what the IRS is requesting and provide the schedules necessary to figure what taxes may be owed.
