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amahendir
New Member

I am an independent contractor abroad. Do I need to enter a 1099 in addition to the 2555, and how?

I have been working in Japan as an independent contractor since 2015. My income is well below the threshold for the Foreign Earned Income Exclusion (so I should owe $0), and I have entered all of it as such on a 2555. I went to submit this, but it said that the following lines of the 1040 have a zero value:
 
Line 7b - Total income
Line 8b - Adjusted gross income
Line 12a - Tax
Line 12b - Total Tax Before Credits And Other Taxes
Line 13b - Total credits
Line 16 - Total tax
Line 19 - Total payments

This is not correct--my total and adjusted gross income, at the very lease should ABSOLUTELY NOT be 0 on the 1040! So I tried to go back and enter it as self-employment income. Here, I have no form 1099-MISC because the companies I contract with are not based in the US--I just have the Japanese equivalent!--so I tried to enter it as "Other self-employed income". When I did this, it said I owed a ridiculous amount in taxes, presumably because I cannot count this in the system as the income I earned overseas and payed Japanese taxes on and it thinks it's all yet-untaxed income in the US! So this is obviously not correct either. I have no idea what I'm supposed to do here. Please help.
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3 Replies
MaryK4
Expert Alumni

I am an independent contractor abroad. Do I need to enter a 1099 in addition to the 2555, and how?

The foreign earned income exclusion only applies to income taxes, you still would owe EMPLOYMENT TAXES on net business income.  You would only receive 1099s from U.S. citizens so  it is unlikely anyone in Japan would give you one, but if you worked for a U.S. business, you may have some to report.

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amahendir
New Member

I am an independent contractor abroad. Do I need to enter a 1099 in addition to the 2555, and how?

Sorry, I think my question must have been unclear? Basically, I can't figure out how to use TurboTax to report my income on the 1040, while also applying the FEIE.

KarenJ2
Expert Alumni

I am an independent contractor abroad. Do I need to enter a 1099 in addition to the 2555, and how?

If you are self-employed, you need to use the Self-Employed or Home & Business version of TurboTax.  You need to first enter your self-employment income and expenses in the business section of TurboTax, just like you would if you were living in the US.

 

After reporting your business information:

 

  1. Enter your income and expenses in the Business section, 

  2. Then you should go to the foreign earned income exclusion section 

  3. On the first screen, check box Form 1099-MISC or other self-employment income.  

  4. Then on the next screen enter your Gross Profit from her business 

  5. When you get to the screen Deductions Related to your foreign earned income you need to enter your business expenses that relate to her foreign income (probably all of her expenses) 

  6. Go through the screens answering the questions all the way to the end of that section. 

  Please note that the foreign earned income exclusion is only to exclude income tax.  It cannot exclude self-employment tax. 

 

Stay safe!

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