# US Citizen Self-Employed Tax Help Please!



## Irwi2lm (Mar 31, 2016)

Hi all! First time posting here but I've been a lurker for some time.

Forgive me if this is hidden somewhere in the forum, although I've been researching this for days and have yet to come across my answer!

I'm a US citizen living full time in the UK (I've been here for a year and a half but I qualify for the presence test). For all of the US 2017 tax year, I was self-employed for a US-based company. Because of this I have a 1099-MISC form. 

I've been attempting to file my US taxes for some time now and would love to avoid paying someone to help me. I've filed for and have received my certificate from HRMC to show my income was all generated in the UK, but that's where I'm stuck. 

I'm using TurboTax and it's showing I still owe $5,171 for Federal, which I'm assuming is for the social security tax since I'm self-employed, but I'm not sure what I should do next. 

I've read elsewhere that I'm supposed to enter 'see letter' on a line in Schedule C and send a copy of the certificate, but I'm not sure what line that is supposed to be. Do I just leave the tax form saying I owe and call it good?

Any/all help will be greatly appreciated (and again, sorry if this has been covered but everything I'm seeing has told me what to do up until the point of receiving the double taxation certificate).

Thank you!!
Lauren


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## nyclon (Apr 3, 2011)

I've moved your post to the tax forum where you should get more input.


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## Bevdeforges (Nov 16, 2007)

If you qualify for the physical presence test, then you should be excluding your earned income (i.e. your 1099 earnings) using a 2555 form (the Foreign Earned Income Exclusion) - and thus not subject to income tax on that income.

The self-employment tax (i.e. social security) is due unless you are enrolled in and paying social insurances to the UK. Technically, you are supposed to have a certificate to prove that you are registered for the UK "social security" system but you don't have to produce that to file your taxes - just have it handy in case anyone asks.

If you are "self-employed" then you are responsible for registering with the UK tax offices and for paying your own income and payroll taxes. If you haven't been doing this, you need to get that sorted first of all. But as long as you are enrolled in the appropriate UK social insurance programs, you should not be charged self-employment tax by the US. 

Depending on the level of income you received, you may not even have to fill out the Schedule C - you could just report the income and exclude it on the 2555 without having to detail out all the other stuff. 
Cheers,
Bev


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## Irwi2lm (Mar 31, 2016)

Bevdeforges said:


> If you qualify for the physical presence test, then you should be excluding your earned income (i.e. your 1099 earnings) using a 2555 form (the Foreign Earned Income Exclusion) - and thus not subject to income tax on that income.
> 
> The self-employment tax (i.e. social security) is due unless you are enrolled in and paying social insurances to the UK. Technically, you are supposed to have a certificate to prove that you are registered for the UK "social security" system but you don't have to produce that to file your taxes - just have it handy in case anyone asks.
> 
> ...




Thank you so much! I'm enrolled with the UK tax offices and have been paying taxes in the UK. Since I moved halfway through 2016, I just paid double taxes on my US/UK income that year. It wasn't that much because my income was a lot lower than it is now, but in retrospect, I probably could have figured out a way to pay less.

This is the first tax year where I meet the physical presence test and have received the certificate from the UK tax offices, but I wasn't sure what to do next. 

I'm starting to think maybe it would be easier to fill out the forms by hand instead of trying to use software like TurboTax. Using TurboTax, HR Block, etc made taxes easier for me while I lived in the US, but I think without seeing the actual forms I'm getting confused on what to put where. I've filled out what I thought was the 2555 form on TT, but it is still showing I owe money to the US so I must be doing something wrong somewhere  

Just to check - the 1040 and 2555 forms are the only ones I should have to send in, right? My income is below the max, around $36K

Thanks again for the help!!


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## Bevdeforges (Nov 16, 2007)

Actually, you may be able to claim back the taxes double paid for 2016, but get your 2017 filed first. The physical presence test can overlap two years - you just have to delay filing for that first year until you hit the one year anniversary of your arrival overseas. But for the time being, concentrate on 2017.

You should wind up using forms 1040, 2555, Schedule B (if only to check the boxes on the bottom of the form as to whether or not you have any "overseas accounts") and a form 8965 (to claim your exemption from the ACA requirement to have health coverage). https://www.healthcare.gov/exemptions-tool/#/results/2017/details/resident-alien

That should do it - and net you a $0 taxable income and $0 tax due.
Cheers,
Bev


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## Irwi2lm (Mar 31, 2016)

I appreciate this so much. Thank you!


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## Costa55 (Apr 13, 2016)

Good for you that the UK has a totalization agreement with the US to wash your UK social security payments vs the Self Employment Tax. Seems to suck a lot more if you live somewhere without a totalization agreement.  I've been mulling over starting a small business but getting lost in the home taxes vs US taxes and which cancel each other out.


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## NathalieGold (Apr 29, 2018)

Irwi2lm said:


> Thank you so much! I'm enrolled with the UK tax offices and have been paying taxes in the UK. Since I moved halfway through 2016, I just paid double taxes on my US/UK income that year. It wasn't that much because my income was a lot lower than it is now, but in retrospect, I probably could have figured out a way to pay less.
> 
> This is the first tax year where I meet the physical presence test and have received the certificate from the UK tax offices, but I wasn't sure what to do next.
> 
> ...


Hiya! 

If you're self-employed, you typically need: 
Form 1040 
Form 2555 (not EZ as you're self-employed)
Form 1040, Schedule C (you probably can use the EZ version if you don't deduct more than $5K of business expenses)*

*If you do deduct business expenses, you'll have to explain this in a federal statement & on your Form 2555 

& don't forget your health coverage exemption form 

@Bev, typically you do need to attach the statement (certificate of coverage) to your tax return every year: 

"To establish that your self-employment income is subject only to foreign social security taxes and is exempt from U.S. self-employment tax, request a certificate of coverage from the appropriate agency of the foreign country. If the foreign country will not issue the certificate, you should request a statement that your income is not covered by the U.S. social security system. Request it from the U.S. Social Security Administration. Attach a photocopy of either statement to your Form 1040 each year you are exempt from U.S. self-employment tax. Also print “Exempt, see attached statement” on the line for self-employment tax." - from the IRS, I can't paste the link though  

<*SNIP*> *Advertising kaju/moderator*


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## Bevdeforges (Nov 16, 2007)

> @Bev, typically you do need to attach the statement (certificate of coverage) to your tax return every year:


Or simply don't refer to yourself as "self-employed" on your tax forms. 
Cheers,
Bev


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