How to show I will pay zero SS taxes due to totalization agreement using self-employed online?

[JeffreyR77]

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.

[shirinjnk]

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".

[WendyN2]

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.

[shirinjnk]

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?

[JeffreyR77]

To qualify for the EITC, you must:

• Show proof of earned income
• Have investment income below $3,650 in the tax year you claim the credit
• Have a valid Social Security number
• Claim a certain filing status 
• Be a U.S. citizen or a resident alien all year.

[Hooktrunk]

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!

[chrisjames1]

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!

[Dom19]

@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.

[GeorgeM777]

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:

1. Open or continue your return in TurboTax.
2. In the left menu, select Tax Tools and then Tools.
3. In the pop-up window Tool Center, choose Delete a form.
4. Select Delete next to the form/schedule/worksheet in the list and follow the instructions.

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.

@Dom19 

[Dom19]

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?

[Hooktrunk]

Dom19,  Expatfile does it.  expatfile dot tax or dot com.  Good luck.

[ErnieS0]

You do not have to switch to TurboTax Home & Business. You can make a self-employment tax adjustment in TurboTax Self-Employed.

You will not be able to delete Schedule SE if you are filing a Schedule C self-employment form. I ‘m assuming you are a self-employed U.S. citizen or resident living abroad.

Remove your SE tax by making an adjustment.

1. Type sch se in Search (magnifying glass) in the top right corner
2. Select Jump to sch se
3. On the screen “Self-Employment Tax,” tap Make Adjustments
4. On “Enter Income Adjustments” enter a negative value equal to your SE income on Other SE NonFarm Profit (Loss), then Continue.
5. On “Self-Employment Tax” you should see the following message, “That’s all we need for our calculation of self-employment tax, and you don’t owe self-employment tax for 2022.

You will also need to print and mail your 1040.  Write Exempt, see attached statement on Schedule 2, Part II, line 4 (Self-employment tax) and attach your exemption certificate.

How do I print and mail my return in TurboTax Online?

@Dom19 

[Hooktrunk]

Sure you can delete the form, but it won't go back and recalculate the amount for you.  I gave up with Turbo.  Expatfile.tax does it.  

[Dom19]

Thanks for your reply @ErnieS0 .  Your method worked for me to make a negative adjustment to my self-employment income on TurboTax Online so that I don't owe any self-employment tax.  This ended up deleting the Schedule SE from my return, while keeping my Schedule C which is perfect.  However it also deleted Form 1040 Schedule 2 from my return, I suppose because I don't happen to have any other "Additional Taxes" other than the self-employment tax which is now deleted.  But I can just print out a blank Schedule 2 and write the "Exempt, see attached" note on Schedule 2, Part II, line 4 (Self-employment tax) and attach my exemption certificate.

Also, thanks to @Hooktrunk for your advice.  I may have very well given up on TurboTax sooner had I not already paid for it this year and pretty much completed my return except for this one issue.  When you use expatfile dot tax, can you eFile with the IRS and attach documents electronically so you don't have to mail in a paper return to the IRS?  Turbotax won't let me make any attachments if I eFile.  So I still will have to send the IRS my proof of enrollment in foreign social security every year I have self-employment income.  Per SSA.gov guidance on social security totalization, "a self-employed person must attach a photocopy of the certificate (foreign social security coverage) to his or her income tax return each year as proof of the U.S. exemption."