Foreign earned income exclusion

[Pooja Singhi]

I have a foreign earned income of $30,000 from salary in Foreign country. I meet the Physical presence test and Turbo tax says I qualify for the Foreign Income earned exclusion. However after putting the foreign earned income amount my tax liability has increased by $3000.. I do not know the reason as ideally the entire amount should have been excluded and my tax liability should have remained intact as my income is less than $100,000?

[ThomasM125]

If the foreign earned income is self-employment income, it is subject to self-employment tax, which would not be excluded as foreign earned income. In other words, the income may have been excluded for income tax purposes, but not for self-employment tax purposes. 

You can look on Form 1040, schedule 2, line 4 to see if you are paying self-employment tax. You can view your form 1040 and schedules 1 to 3 while working in the online version of TurboTax by following these steps:

1. Click on Tax Tools in the left menu bar
2. Click on Tools
3. Look under Other Helpful links….
4. Choose View Tax Summary
5. Look in the left menu bar and choose Preview my 1040
6. Scroll down the page to see form 1040 and schedules 1 to 3