Help with Entering Taxes for Self Employment

[koalatax]

see below

[pk]

@koalatax , which country are you in  and when did you enter that country ?  Is that country also  taxing you on your total income or what ?

I will circle back once I hear from you

[koalatax]

hi, i already found an answer to this, but really appreciate your response!

[pk]

@koalatax , thank you very much closing the loop and that you have had your question already answered.

Just wanted to be sure that you understood : 

(a)        that for the  self-employed portion of your income , the amount transferred to  form 2555 ( Foreign Earned Income Exclusion ) is the same as the amount shown as  income for Schedule-SE  ( Self-Employment Tax);

(b)  that unless the country where you have your tax home has a Totalization agreement with US, your wages  ( from employment ) are also subject to  Social Security / Medicare  taxes  and is best done by reporting as if this was  self-employment income ( Schedule-C )   except that there is no deductions allowed .

Hope this does help  --- Is there more one can do for you

[koalatax]

Thank you for the clarification!

If it's okay, I'd love to ask one more question-

I live in Japan and have a side gig and work a full time job.

My side gig income is automatically being calculated as taxable in

Turbotax unless I list the expenses. I did not have to do this

for my full time job. Is this correct?

For my side gig, I think I am supposed to list the income AND expenses in BOTH the self-employed section

and the foreign earned income exclusion sections, which is a pain.

[pk]

@koalatax ,  sorry for delay in responding to you .

(a) what I meant by reporting on self-employment income -- usually this is reported on Schedule-C. This allows reporting of gross income and any associated and allowable  / usual / necessary expenses  for this stream of income. This schedule -C reporting would also result in Schedule-SE for the SECA taxes ( equivalent to FICA for wage earners but at 15.3% of net Schedule-C income).  TurboTax  will help you fill out the details -- when under business income segment  you mention that you have self-employed income.

(b)  for your employment earnings , as a US citizen , you are still subject to FICA/SECA regs. But because your employer does not participate in the FICA contribution, you are left with essentially SECA situation and so you must include  your wages again on Schedule-SE  ( one way to do this is to add your wages to Schedule-C and thereby achieve the same objective -- but wage earners cannot have any expenses  against  the income -- so be careful )

(c) You also have to make sure that the form 2555, shows the total foreign income  ( and this is  easily done by including your wages  on Schedule-C as income-- in addition to your "gig" income.

(d) Totalization agreement does exist between US and Japan -- see here -->  https://www.ssa.gov/international/agreements_overview.html

Please read through the SSA  page on totalization  -- this allows you to pay  Social Security to ONLY one jurisdiction rather that yo both your host country and to USA.

Hope this helps

pk

[koalatax]

Thank you so much!

As I continue to work on this, more questions are coming up.

I hope it's okay I ask them here!

1. In section (b), for clarification, do you mean I have to enter my office job earnings in Schedule-SE? I am trying to find that section in Turbotax.

2.  When I enter expenses for my home, do they mean for the entire year? Or only for the amount of months I used the office for the particular side gig?