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mrkita-reece
Returning Member

Should I input all of my self-employed deductions on the "Deductions Related to Your Foreign Earned Income" page also?

 
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KarenJ2
Expert Alumni

Should I input all of my self-employed deductions on the "Deductions Related to Your Foreign Earned Income" page also?

Yes,you should enter your deductions on the page "Deductions Related to Your Foreign Earned Income Exclusion".

 

TurboTax  will allocate your expenses as follows: (Form IRS page 25,, Example 2)

 

You are a US citizen have a tax home in home in Spain, and meet the physical presence test. You are self-employed and personal services produce the business income. Your gross income was $121,842, business expenses were $67,695, and net income (profit) was $54,147. You choose the foreign earned income exclusion and exclude $105,900 of your gross income. Since your excluded income is 86.92% of your total income, 86.92% of your business expenses are not deductible. Report your total income and expenses on Schedule C (Form 1040 or 1040-SR). On Form 2555, you will show the following

  • : Line 20a, $121,842, gross income
  •    Lines 42 and 43, $105,900, foreign earned income exclusion, and • Line 44, $58,840 (86.92% (0.8692) × $67,695), business expenses attributable to the exclusion. 

US Guide for US Citizens and Resident Aliens Abroad

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