topic How do I report foreign consulting income on schedule C? It is foreign income but it is related to my business. in Deductions & credits

How do I report foreign consulting income on schedule C? It is foreign income but it is related to my business.

Eckel53 — Sat, 01 Jun 2019 00:37:01 GMT

if the foreign income was taxed in a foreign country, the...

pk — Sat, 01 Jun 2019 00:37:03 GMT

if the foreign income was taxed in a foreign country, then you need to be able to show this income against foreign taxes paid -- form 1116. If on the other hand , you consulted, got paid by a foreign client but did NOT pay any foreign taxes, then just convert the amount in US dollars ( using exchange rate when exchanged or anual average exchange published by the treasury, whichever is more apropo) and include in your gross income on schedule-C

Re: if the foreign income was taxed in a foreign country, the...

bilsteint — Fri, 06 Nov 2020 12:07:46 GMT

This does not answer the question of how you both claim the Foreign Earned Income Exclusion (form 2555) and report the same income on Schedule C as Self-Employment income.

Re: if the foreign income was taxed in a foreign country, the...

Critter-3 — Fri, 06 Nov 2020 12:56:53 GMT

Review the following however this is not a simple subject to explain or complete ...I highly recommend you seek professional assistance for the first time you try this.

https://turbotax.intuit.com/tax-tips/general/filing-taxes-while-overseas/L8bP9GN5p

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/how-to-properly-enter-foreign-earned-income-and-foreign-salary-taxes-paid/00/756945

https://ttlc.intuit.com/community/taxes/discussion/foreign-earned-income-exclusion-and-foreign-tax-credit/00/1311209

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

https://www.irs.gov/individuals/international-taxpayers/figuring-the-foreign-earned-income-exclusion

Re: if the foreign income was taxed in a foreign country, the...

pk — Fri, 06 Nov 2020 16:51:05 GMT

@bilsteint agreeing with @Critter-3 and the suggestions thereof, especially this is your first time with filing for foreign earned income exclusion while self-employed, i.e. seek professional help.

However, and not knowing the full scenario ( your immigration status, where is tax home, when did you arrive at the foreign land, etc. etc. ) here is the general lay of the process:

(a) you file a schedule-C as part of your return ( tell TurboTax that you have self-employed income but do not have a 1099-C . You have to input your gross income and allowable expenses using recognized/published or actual exchange rate -- TurboTax assumes everything entered is in US$. This should result in net income and schedule-SE ( Self-Employment Tax ) which items will be shown on form 1040.

(b) you tell TurboTax that you have foreign earned income and exclusion -- this will then take you through form 2555 qualifying you for the exclusion and entering the exclusion amount as a negative number on proper schedule to affect the form 1040.

The reason for the suggestion to seek professional help is that you need to watch the froms to make sure that the amounts are not double entered --- you can also do this in the "forms" mode using the CD/Downloaded version of the software.

A small point -- since this thread was from 2019, perhaps it would have been better to start a new thread

Re: if the foreign income was taxed in a foreign country, the...

roykelly — Fri, 05 Apr 2024 17:36:30 GMT

But what if the foreign county did withhold income taxes on the consulting income. Then how does one enter it into the Schedule C and into the Turbo Tax system? I know you need a Form 1116 but the entry in Form 1116 seem to be a derivative of other information so assume there must be a way to put this withholding foreign tax into Schedule C and have it linked to Form 1116. Any suggestions?

Re: if the foreign income was taxed in a foreign country, the...

AmyC — Fri, 05 Apr 2024 18:14:03 GMT

It does not go on sch C. If you are excluding the income on Form 2555, then you would not receive credit for tax paid on Form 1116.

If you are including the income on Sch C, no fomr 2555, then just add the Form 1116. Follow these steps:

Open your return and jump to foreign tax credit - enter exactly that way
Answer/ continue
Deduction or credit - most claim the credit
continue
simplified limitation may be offered to you- select your answer, continue
continue to Choose the Income Type
Select General category income for your sch C business, continue
Enter the country
continue
description of income and gross amount in USD
enter expenses and amount and deduct from gross income
continue
explain relation of expenses to income
continue, continue
select no, enter foreign taxes paid on Other Income
continue
done

@roykelly