When you are in the Forms mode (click on Forms in the upper right) scroll to the SE Adj worksheet. You will need to hover over the income field, then right click to override. Once the field is red, clear the field and enter zero for the income. This will eliminate the social security and Medicare tax.
This will likely eliminate the ability to e-file as noted by @KarenJ2. You should see that Schedule 2 is either gone from your file or line 4 is blank.
There should be no SE tax included on the return.
See the image below. Once completed you can return to Step-by-Step mode to finish your return. You will file by mail because the return will not pass e-file check.
Here's a bit more info about my situation. I live and work in Brazil. We have a new Totalization Agreement between the US and Brazil. I use the online Self-employed version of TurboTax. I have been told that I need to show that I will pay zero Social Security tax, and send a copy of my official social security tax coverage from Brazil together with my return.
That is an unusual situation, I assume you have self-employment income?
I would suggest you complete your return as normal, and then delete the sch SE and/or sch SE adj wks to remove the self employment tax as follows:
1. Find the Tax Tools option on your left menu bar and click on it
2. Click on Tools
3. Find Delete a Form and click on it
4. Look for schedule in the list of forms and click on the option to delete it
Thank you Thomas125 for the help.I do have a couple of questions before I continue with my taxes:
1. What does sch SE refer to?
2. What does sch SE adj wks refer to?
3. Once I get my filing finished, I will need to send what is called a Certificate of Coverage together with my tax filing. The certificate is a digital file. Can I attach a digital file if I efile? If not, can I print my tax return and just add my printed Certificate of Coverage?
I use the TurboTax Self-employed Online version of the program.
Thank you once again for the help.
You would need to overwrite the value for the SE taxes with Zero. You can only do that with the CD/desktop version of Turbotax in the Forms mode.. However,you will not be able to e-file your return.
Schedule SE is the form that calculates your self-employment tax.
Schedule SE adj is the worksheet for Schedule SE
OK. So I have just confirmed that the IRS is not processing paper tax returns. This being the case, I would need to e-file my return. Here are two questions:
1. Using the CD/desktop version of Self-employed, can I set the SS tax amount owed to zero? And...
2. Can I attach my Certificate of coverage from Brazil to my e-filed Tax return?
Thank you all for your help. I really do appreciate the help with this.
Hi. This is a new post now in 2021 but regarding the same subject. KarenJ2 I could use your help. I am using the desktop version for Self employed. How do I know what form I need to delete. I've looked for it but really have not been able to find the form to delete so that I can put zero for SS tax owed. Thanks for the help. All the best to you.
When you are in the Forms mode (click on Forms in the upper right) scroll to the SE Adj worksheet. You will need to hover over the income field, then right click to override. Once the field is red, clear the field and enter zero for the income. This will eliminate the social security and Medicare tax.
This will likely eliminate the ability to e-file as noted by @KarenJ2. You should see that Schedule 2 is either gone from your file or line 4 is blank.
There should be no SE tax included on the return.
See the image below. Once completed you can return to Step-by-Step mode to finish your return. You will file by mail because the return will not pass e-file check.
Thank you @DianeW777 . Your answer was very clear and the images are a big help. Thank you so much. I owe you a coconut water at the beach the next time you are down here. I really appreciate your help. All the best.
Here's another question for you all. I live in Brazil and will now only pay into the Brazilian Social Security system. Our income in very low, under USD20,000.00 . In 2018, we paid no income tax and only paid SS self-employed tax. Now that we will be only paying into the Brazilian SS, am I correct in assuming we won't owe anything to the IRS? The reason I am asking is that I used to be very careful with home office expenses, documenting everything to be able to pay the least in SS tax. But now it doesn't seem to matter. So I am wondering if it's OK to just not do such a detailed report of all our business expenses because it won't make any difference in what we owe.
Sorry this is not so clear. Any ideas would be helpful.
OK @DianeW777 . I the help you gave works great. So now my return shows I owe zero federal taxes. Thank you. You should be a teacher.
Regarding the question above: I think a better question is this... does it matter to the IRS if from now on, I don't document all my business expenses, since for me, it doesn't matter for my bottom line?
Thank again for the help.
I would suggest that you keep a record of most of your expenses, with the exception of the home office, in case something changes in the future. A bank account for your activity would greatly reduce record keeping because it would show all of the income coming in and the expenses that are going out.
Thank you for your kind words.
Thank you for the quick response. Do you think it a problem if we now stop listing all our expenses? The TurboTax program told me that I am not eligible for home office this year. No problem. Most of our online expenses do go through our US bank account. For our teaching now our only expense is our internet. thanks for your thoughts. All the best to you.
If you don't qualify for the home office deduction, you don't have to report those expenses. You only need to keep records for the deductions and credits you claim on your tax return.
Hi there. We have never filed state tax return since we live out of the country. If we don't owe any state taxes and we have never filed in that state, is there any reason to file our state taxes?
It depends. You want to check on the filing requirements for the state you claim as your home state in the US.
That would be at a minimum a state that you have drivers license in and may be registered to vote in.
Just to be sure, you want to make sure you are satisfying any filing requirements that state may have.
Also make sure you are aware of filing requirements of FBAR reports for any accounts you may have over $10K at any time during the year.
Hi!
Thanks for this information! My question is that I did the adjusting in the SE worksheet, and now it allows me to e-file. However, do I still need to print and mail it along with my certificate?
I spoke with H&R Block before and they told me that they never mail in certificates, they just "write self employed under totalization on top of return".
Yes, you should still print and mail the worksheet along with a copy of your certificate. Be sure that you are stating that these items are COPY items and not original. Your e-filed return will obviously hit their system first, but just to be on the safe side, it is always best to either "red stamp COPY" on these items or clearly print "COPY" on them. Also, you should (I always highly recommend this) mail USPS Certified Mail/Return Receipt Requested as this will be your receipt of sending as well as receipt of the IRS and State receiving of your documents.
Hi!
I have the same situation, except that I was in the US for 11 months before moving to Canada, so I know I qualify for the EITC. However, whenever I convert my SE income to zero (through loss of profit line, or just override), it also removes my EITC amount because then obviously my income would be zero. Is there any way around that?
To qualify for the EITC, you must:
This is not an unusual situation. There are 9 million Americans living abroad and many of them live in countries with totalization agreements. I have friends who have complained that this is beyond the scope Turbotax to deal with and choose not to use Turbotax because of this. The general rule, according to the IRS, if you live in a foreign country for 5 or more years, you should pay into your host country's system. Filing with Turbotax allows the US government to double tax me. Please fix this problem Turbotax!
Hi there, which version of the CD/desktop do I need for this? Is the basic one good enough or do I need the "home and business" version?
Also
When I delete the schedule SE on the online portal it just won't go, is this why I need the desktop version?
Many thanks!
@Hooktrunk Do you know what tax software handles this problem better than TurboTax? I am living abroad and now my wife has started a consulting business, so she has self-employment income. We are trying to benefit from the social security totalization agreement but TurboTax doesn't make that easy at all. I am ready to find better tax software.
TurboTax does not handle entries for Totalization Agreements in its step-by-step section. Thus, and as suggested in prior posts from @DianeW777 and @ThomasM125, you will have to search for Schedule SE whether you are using TurboTax online or TurboTax CD/download and delete such form. Deleting Schedule SE will prevent you from e-filing your return and therefore, you will have to print it out and mail it.
If you are using TurboTax online, you can delete Schedule SE as follows:
If you are using TurboTax CD/download, then select Forms in the upper right of your screen. In the left margin, find the Schedule SE Worksheet. You will need to hover over the income field, then right click to override. Once the field is red, clear the field and enter zero for the income. This will eliminate the social security and Medicare tax.
Thanks for your reply @GeorgeM777 . I am using TurboTax Online. I just tried deleting the Schedule SE and the Schedule SE Adjustments Worksheet. It said they were deleted successfully, but they are actually still there. I know that I can delete some forms in the TurboTax Online version because I successfully deleted Form 2555 that keeps getting created even when I choose in the interview not to exclude any foreign earned income so that I can take Foreign Tax Credits instead. But the Schedule SE won't delete. I suppose I can try and switch to the TurboTax download version so I can edit the Schedule SE Adjustments Worksheet. Will I have to pay extra to upgrade from the Self-Employed online version of TurboTax to the more expensive Home & Business Download version?