Hello,
In 2020 I was self-employed and living overseas for the entire year. The country has a totalization agreement with the united states and I paid all taxes and social contributions in that country and as such I am not required to pay self-employment tax in the United State. I seem to be unable to suppress this in Turbotax. It wants me to either pay the full amount, or if I exclude the net profit, at least tax the deductions.
My prior year return was done at an expensive expat tax agency and they simply excluded schedule schedule 2 and its dependent forms from the return and "Other taxes, including self-employment tax, from Schedule 2, line 1" on the 1040 is reported as blank.
I have tried pulling up the forms and entering 0 or deleting them. They just reappear instantly. I am going to have to paper file this anyway, so I can just ditch unnecessary forms, but the numbers are forcing their way into every calculation.
How can I finish this return?
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edit: for reference, here is the information from the IRS:
https://www.irs.gov/individuals/international-taxpayers/self-employment-tax-for-businesses-abroad
Scroll to "International Social Security Agreements"
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One option is to increase your estimated tax payments by the amount of the self-employment tax you are being required to pay. The estimated tax payment entry will essentially cancel out your self-employment tax.
It is not clear whether this will cause an e-file reject because your estimated tax payments on your return will not match what the IRS has on file for you. However, it is does work, you may receive correspondence from the IRS requesting information about your estimated tax payment entries. That will be your opportunity to explain what you have included in your post. Moreover, if you are not required to pay self-employment tax given the tax treaty between the U.S. and your foreign jurisdiction, the IRS will not be receiving any more nor anything less than what you are required to pay.
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