# US taxes for self-employed individual



## JennMoore

I have dual citizenship (Canada and USA). I have lived in Canada for most of my life but have become aware that I should have been filing US tax returns. My understanding is that I need to go back and file returns for the last 3 years. I assume that this would mean that I would file 2009 through 2012 (3 years, plus the current year).

In Canada, I work contracts. So, I assume that I will need to file US returns as a self-employed individual. However, I make well below the $90 000 threshold and certainly have less than $5000 in expenses. 

As I can't afford to pay the prices that I have found to have my US taxes done by a professional, I would like to try to meet these requirements by myself. Where do I begin? And, what forms do I need to complete for my US tax returns?


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## Bevdeforges

I've moved your post over here to the tax section, since there are lots of folks in the same boat here who can help.

Filing as "self-employed" shouldn't be all that difficult. Normally, if you were filing from the US, you'd run up against the "self-employment tax" - but as long as you are paying your social security/social insurances in Canada, you should exempt out of the need to pay the US self-employment tax (which is actually just both sides of US social security). 

Take a look at Publication 54 - available for consultation or download on the IRS website: Forms & Pubs And for "everything you ever wanted to know" about US income taxes, consult Publication 17 (better consulted online as it's a LONG download). 

The forms you'll need are basically, 1040, Schedule B, 2555. There is some debate over whether or not you need to file a Schedule C for your self-employment work - though if your gross revenue from your contracting is less than the $90K limit, I wouldn't bother.
Cheers,
Bev


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## JennMoore

Thank you for giving me a place to begin!

Jenn


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## JennMoore

Having begun filling out the necessary forms, I have a couple more questions.

1) Since my returns will always be below the $90 000 income threshold, is there any reason that I need to complete the information necessary to claim exemptions? (e.g. the details/expenses related to two moves & interest on student loans)

2) According to the 2012 Instructions for Schedule SE (Form 1040), I should not complete Schedule SE. Instead on page two, I am told -
"If your self-employment income is exempt from SE tax, you should get a statement from the appropriate agency of the foreign country verifying that your self-employment income is subject to social security coverage in that country."

As a self-employed individual, I pay the equivalent of social security. This information is available on the web. I am wondering whether, instead of getting a statement from an appropriate agency in Canada, it would be sufficient to provide a government web page with government web address that says that self-employed individuals in Canada, pay CPP?

Thanks!


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## BBCWatcher

JennMoore said:


> 1) Since my returns will always be below the $90 000 income threshold, is there any reason that I need to complete the information necessary to claim exemptions? (e.g. the details/expenses related to two moves & interest on student loans)


I assume you're referring to the Foreign Earned Income Exclusion which is $95,100 for tax year 2012, plus an additional possible Foreign Housing Exclusion.

The FEIE/FHE do not apply to interest, dividends, capital gains, and other forms of unearned income. Consequently deductions and credits can still be helpful.



> "If your self-employment income is exempt from SE tax, you should get a statement from the appropriate agency of the foreign country verifying that your self-employment income is subject to social security coverage in that country." As a self-employed individual, I pay the equivalent of social security. This information is available on the web. I am wondering whether, instead of getting a statement from an appropriate agency in Canada, it would be sufficient to provide a government web page with government web address that says that self-employed individuals in Canada, pay CPP?


Maybe, but I recommend reading the instructions carefully. In my view the key word is "your": "...verifying that your self-employment income is subject...." In other words, I don't think a generic statement suffices. Whether the IRS needs a copy of the statement is another question -- I haven't looked at the instructions -- but you'll want to keep one on file at least. A year end statement showing CPP payments should be fine.


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## Bevdeforges

JennMoore said:


> Having begun filling out the necessary forms, I have a couple more questions.
> 
> 1) Since my returns will always be below the $90 000 income threshold, is there any reason that I need to complete the information necessary to claim exemptions? (e.g. the details/expenses related to two moves & interest on student loans)


If you're simply using the information to claim deductions against salary that is already excluded (via the FEIE) then I wouldn't bother.



> 2) According to the 2012 Instructions for Schedule SE (Form 1040), I should not complete Schedule SE. Instead on page two, I am told -
> "If your self-employment income is exempt from SE tax, you should get a statement from the appropriate agency of the foreign country verifying that your self-employment income is subject to social security coverage in that country."
> 
> As a self-employed individual, I pay the equivalent of social security. This information is available on the web. I am wondering whether, instead of getting a statement from an appropriate agency in Canada, it would be sufficient to provide a government web page with government web address that says that self-employed individuals in Canada, pay CPP?


I don't believe you need to send anything in with your return, but you should have something available should the IRS ask you for verification. (In my experience, they rarely do.) As BBCWatcher suggests, any sort of statement from the social insurances showing your payments into the system should be sufficient.
Cheers,
Bev


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