Reporting income from a foreign country

[Panthermonium]

My wife is a US citizen working for a French Government Agency remotely from the USA. She is paid a salary into a French Bank Account.

1. Where in Turbo Tax do we account for this income from a Foreign Country?
2. We understand that her salary was not charged taxes in France due to a treaty with the USA.  Is this correct?  
3. We were told even though we did not pay taxes in France, we still have to file tax forms in France.  Is there anyone that can confirm this is true and if so, where they might suggest getting information on filing said forms?

Thanks for any insight you can provide.

DO

[DavidD66 · Accepted solution]

You file on Schedule C.  According to the IRS:

If you are a U.S. citizen working in the United States for a foreign government or international organization, you must report this compensation as wages on Form 1040 and pay self-employment tax on the compensation under the Self-Employment Contributions Act (SECA). Self-employment tax is computed on Schedule SE, Self-Employment Tax, and is also reported on Form 1040. Although you are subject to self-employment tax on this employee compensation, you are not "self-employed" for any other federal tax purposes. You may not claim deductions for expenses on Schedule C and are not qualified to establish a Simplified Employee Pension (SEP) Plan and there is no allowable deduction for contributions to any such plan.

TurboTax doesn't support the taxation and filing for foreign countries.

[Panthermonium]

David:

Thanks for your response.  So is Schedule C a form that can be filled out using Turbo Tax, or must it be done separately outside of the software?  

I appreciate your assistance.

Regards

Dave

[DaveF1006]

Yes, Schedule C is something that can be handled by Turbo Tax. To report:

1. Go to federal>wages and income
2. Self-employment>Self-employment income and expenses

Turbo Tax will treat this like a business even though it isn't thus you will need to fill out some preliminary information such as:

1. For business description, you can say something like French Banking Consultant
2. Then it will ask for the name of the business. You can say you are using your own name.
3. Name and address is your address and not the Bank's address.
4. Say no when it asks for the EIN.
5. When it asks for a Business Code, you can put in 999000 since there isn't a specific code for this.
6. Accounting method would be cash.
7. Yes, you are an active participant
8. make any payments that require a 1099, answer no.
9. uncommon situations. Don't place a check mark in any of those.
10. Any 1099 NEC income.  The answer is no.
11. No 1099 MISC
12. No 1099 K
13. For the income, this is entered as other income because you don't have any 1099 NEC, 1099K, or !099 MISC.

Now your income is entered.  Do not enter any expenses for the reasons that DavidD66 has outlined above.

Let us know if this helps and reach out to us if you have additional questions. We are here to help.

@Panthermonium