Per IRS, a qualifying individual may claim the foreign earned income exclusion on foreign earned self-employment income. The excluded amount will reduce the individual’s regular income tax, but will not reduce the individual’s self-employment tax.
To enter your foreign self employed income in TurboTax online program, you need to enter the information in two places. First go to:
1. Sign into your account and
select Take me to my return
2. At the right upper corner, in the search box , type in schedule C and Enter
3. Select Jump to schedule C
4. On screen, Did you have any self employment income or expenses? Answer Yes, continue through step-by- step interview questions about your business
5. On screen, Can we help you report any other income for business?, select Additional Income and continue to follow the prompts
Then you will need to enter as a foreign income, here are the steps:
1. After sign into your account, select Take me to my return
2. At the right upper corner, in the search box , type in foreign income and Enter
3. Select Jump to foreign income
4. Next screen, Did You Make Any Money Outside the United States? answer Yes
5. On screen, What Form(s) Was Foreign Income Reported On ? select A Form 1099-MISC or other self- employment income and Continue
[Edited 2/24/2017]
Actually you would enter it twice. Once as self employment income, so it populates schedule C and then as income as TTLina described to exclude it.
What is very important is, that you do not need to pay into both social security systems, as Germany and the US entered into a Totalization agreement. As a self emplozed person in Germany, you are only required to pay into the German System. You can get a certificate of coverage from them and avoiud paying SE taxes in the US. See here> https://www.ssa.gov/international/Agreement_Pamphlets/germany.html
Hi @bine22 , how can we activate the actual deduction in TurboTax? After I enter my income in both Self-Employment (Schedule C) and the Foreign Income section, the tax I owe doesn't change. Thanks
About entering it twice, after I am done with schedule c business expenses, you would also have to enter it for foreign earned income exclusion. Here, it says to enter Gross Profit. 1) Would this be what the schedule C refer to as Income? 2) It also asks for deductions to be entered just like you entered in schedule C. My questions is do I have to enter exactly all items of business expenses that I have gone through in schedule C to the deductions field in the foreign earned income exclusion? I think that would be a lot of repetition work. Can you advise on this?