Does Turbo Tax support the self employment tax exemption( not foreign earned income exclusion) because of a Social Security Totalization Treaty with a foreign country?

[Reson]

does turbo tax support the self employment tax exemption because of a Social Security Totalization Treaty with a foreign country? Will TurboTax support this exemption and allow self-employment income to be reported on form 1040 without computing a liability to pay self-employment tax?I am not asking a question about foreign earned income exclusion.

[pk · Accepted solution]

Yes  it does.  

[Reson]

Where have you entered this in turbo tax so that SE tax is zero because you are exempt.

[Clgordo]

did you solve this issue? I have same problem

[KES90]

I have this problem as well.  My foreign self-employment earnings are exempt (US has social security agreement with my country of residence).  My Schedule C income automatically transfers to Part II, line 1a of the Schedule SE Adjustments Worksheet. In order to show that I have no SE liability, I enter that same amount in Part II, line 7, which results in line 8 ("Total for Schedule SE, line 2) being zero.  Therefore, as should be the case, no Schedule SE is generated.  However, according to the IRS, I should complete Schedule 4 (Other Taxes), and on line 57, I should enter "Exempt, see attached statement".  I have not been able to do this through Turbo Tax.  Surely, there must be some workaround that I have missed.  Help, please.  I would love to get this filed electronically.

[jhonnyconv]

where is this ''solution'' in the original post? I can't find it 😕

[jhonnyconv]

I am not sure I understand what I need to do .... can you let me know ?

[jhonnyconv]

uhmmm actually my Schedule ''SE ''Adjustments Worksheet last year was very very simple . I am not sure I follow you here but it seems very hard to find a way in TurboTax

[jhonnyconv]

see here https://ttlc.intuit.com/community/taxes/discussion/is-there-a-way-to-reduce-self-employment-taxes-to...

but I end up using a CPA... I have a very complex case and TurboTax is not flexible at all so CPA security is worth every penny! 

[levon90]

You can manually adjust the foreign SE tax-related business income using negative values losses under: 
Other tax situations -> Business Taxes -> SE tax 

At the same time, mind that IRS will require you to have a 'foreign certificate of coverage' for such SE tax payment avoidance + leave notes under your SE form (wherever you find appropriate in TurboTax). 

I don't think reporting losses in such a way is how it is supposed to be done oficcilly, but this is the only technical way if you still want to e-file using the free TurboTax version.

[CCrytter]

I had a CPA work on this one before and this time as I did my own taxes I went back to my previous one and found a solution:

Since Turbo Tax does NOT print schedule SE (or schedule 2) if you owe 0 taxes, the instruction that says to write “Exempt See attached" does not work. 

The workaround based on what my CPA had done was under Schedule 1 part II line 15 “Deductible part of self-employment tax. Attach Schedule SE" write “Exempt, See attached statement" with  a certificate of coverage letter attached.

[mcook]

@CCrytter 

Hi, 

How did the cpa change this for you on the form in the online version?

I can zero out schedule SE but what are the instructions to modify line 15, deductible part of self -employment?

Thank you in advance!

[DaveF1006]

It depends.  You may try this to offset  the adjustment on Line 15.

1. Log into your account
2. Select Wages and income>other income
3. Miscellaneous Income, 1099-A, 1099>start
4. Scroll to the bottom of the page to Other Reportable Income
5. Other taxable income, answer yes
6. Then give a brief description of the income and the amount listed.
7. For the description, you may enter something like "Offset Deductible Part of Self Employment Tax" and then the amount.

After you perform this task, the deduction will still show on line 15, but the offset will appear in Line 8Z of your Schedule 1 negating the deduction.

@mcook