@Pooja Singhi good morning
1. Self-employment taxes are for all US persons ( citizen / GreenCard / Resident for Tax Purposes ) no matter where earned ( active income ). If you are required to pay Social Security in another country that has a totalization agreement with US, then you generally end up paying one of the two countries not both ( depends on what , how etc )
2. If you choose to use the foreign tax credit, then when you tell TurboTax you have foreign tax credit --- under deduction and credits, it will walk you through filling out form 1116 to claim & then compute allowable credit for the year ( my earlier comments on this apply ). Since you will be entering the foreign income as Self-employed income, TurboTax may not be able to divine the quantum of the foreign income ( gross foreign income ) and therefore you may have to enter the income in US$ as foreign income.
3. You may have to work out different scenarios ( MFJ with FEI exclusion ; , MFJ with Foreign Tax credit ; MFS with Foreign Tax Credit etc. ) to see which gets you the most benefit for this tax year --- I am assuming here that you will not have any significant foreign income next year.
4. Note that Foreign Capital gain are taxed different in US than in India ( indexed basis vs. acquisition basis)
5. Interest earnings are taxed as normal
6. To take foreign Tax credit of passive income ( Interest / Dividend / Capital gain ) you have to use a separate 1116 ( Passive Income ) and you still have to recognize these incomes for US tax purposes. There is also safe harbor on such .
Does this help? Is there more I can do for you ?
Namaste
pk
