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I have the Foreign Earned Income Exclusion for all my wages and self-employment - so why is TurboTax showing I still owe Federal Tax??

 
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4 Replies
DanaB
Expert Alumni

I have the Foreign Earned Income Exclusion for all my wages and self-employment - so why is TurboTax showing I still owe Federal Tax??

It is most likely caused by the self-employment tax, check Schedule 4, line 57.  If you are self-employed you still have to pay the self-employment tax even if that income is excluded. 

You can preview your 1040:

  1. On the left side of your screen, select Tax Tools, then Tools.
  2. Under Tool Center, select View Tax Summary.
  3. On the left side of your screen, select Preview my 1040.

I have the Foreign Earned Income Exclusion for all my wages and self-employment - so why is TurboTax showing I still owe Federal Tax??

Thanks but that’s  that’s wrong - we have a tax totalization treaty with the US so no s/e tax is due. I think Turbo’s algorithm can’t handle it.
DanaB
Expert Alumni

I have the Foreign Earned Income Exclusion for all my wages and self-employment - so why is TurboTax showing I still owe Federal Tax??

Sorry that this wasn't helpful but generally US citizens will have to still pay self-employment taxes. You did not mention in your question that you were exempt.

I have the Foreign Earned Income Exclusion for all my wages and self-employment - so why is TurboTax showing I still owe Federal Tax??

No worries, appreciate your reply and it's not your fault at all.  Their form is not sophisticated enough to recognize that someone filing the Foreign Earned Income Exclusion is likely to live in a country where the exemption exists.  I probably can't continue with TurboTax unfortunately.

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