@jiawen , sorry to say it is a bit more complicated.
Assuming that she has been paying Chinese Social Security Equivalent for the year 2023 :
(a) show her income -- it is domestic because the work was performed in the USA -- as "self-employed" i.e. use Schedule-C showing the gross income in US$, and deduct all allowable expenses associated with this income stream ";
(b) the net income will flow on to Schedule-SE ( SECA at 15.3% of most of the net income and equivalent to FICA -- Social Security & Medicare taxes ) and compute that SE tax. If she was covered for the year by the chin ese equivalent, then she will need to get a "certificate of participation " from China so that she is not paying twice.
(c) As far as foreign tax goes -- thin k you should talk to her employer to see if they can refund that to you because per the treaty it should not have been taxable income in China. But the usual red tape may negate that hope.
I don't know if you would be successful in using form 1116, , resource the income by treaty and take the foreign tax credit -- because that usually requires a foreign tax home. IRS will probably argue that as a resident of US, this treaty assertion is not viable. That is why I am suggesting discussion with the employer.
Is there more I can do for you ?
