Does US-China income tax treaty article 20(c) apply to self employment tax?

[nikki_lalalalala]

I got a 1099-Misc from my employer, which means I was considered as a self-employed contractor instead of their employee. I am a international student from China, and in article 20(c) US-China income tax treaty, it looks like I can claim it no matter whether I'm a employee or self-employed. 

So, I followed the instruction online and entered (-5000) under Fedural Taxed/Less Common Income/Miscellaneous Income 1099A, 1099C/Other Reportable Income. However that did not change the amount of tax due at all. It's because my gross receipt didn't change and therefore the self employment tax didn't change either. 

Should I just deduct this $5000 from my gross receipt? Like, if my actual income was $8000, should I just say my gross receipt was $3000? Or should I enter this -$5000 as something else? 

[KarenW]

The $5,000 is exempt from tax. It is not clear if it is exempt from self-employment tax.  If you are a student and will return to China you may never qualify for Social Security benefits. You should report the Gross amount on the 1099-Misc as your income and deduct the $5,000 as Misc expenses and use 'Article 20(c) US-China income tax treaty' as the description. 

[4theluvofgod]

Hello! I'm facing the same issue. How did you solve it? @nikki_lalalalala 

[MikeLi8]

Hi 4theluvofgod, I'm facing the same issue right now, did you solve it?

[AmyC]

The income is exempt from taxes- see article 2 as backup to article 20. The 1099-MISC needs to be entered as other 1099-MISC income, not as self-employment income. Enter like this:

1. Log into your return
2. Federal
3. Click on Income
4. Scroll to the bottom section,  Less Common Income
5. Select Miscellaneous income, 1099-A, 1099-C, start
6. Select other income not reported on w2 or 1099
7. Other wages, select Yes
8. Continue, continue, continue
9. Earn other wages? select Yes
10. Continue
11. Select Other
12. Continue
13.  Description 1099 MISC box xx (enter correct box number for income) and amount
14. Description US-China Treaty, enter negative amount

You can do this by filing Form 8833- Treaty Based Return Position Disclosure.  TurboTax does not directly support this form, but you can use TurboTax to prepare your tax return to print and mail with Form 8833 attached.  You can access the form HERE.

@4theluvofgod

@MikeLi8