# Freelance income



## Alltimegreat1 (Feb 25, 2015)

I'm a US citizen working in Germany (since 2011). I had been filing the FEIE through 2014 and switched to the FTC for 2015 (which earned me a $1,000 child credit) 
In 2016 I began a freelance business on the side and made about $7,000 in addition to my normal salary of about $60,000. I've declared all this income to the German government and paid my taxes on it last week.
With that settled, it's time to get started on my US tax return. My question is how to declare this freelance income. Can I just add it to my salary and report the total taxes paid or do I need to declare this separately? I'm concerned the IRS might try to ding me for social security contributions or hassle me in some other way about the freelance income.


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## Moulard (Feb 3, 2017)

If you are a self-employed U.S. citizen or resident, the rules for paying self-employment tax are generally the same whether you are living in the United States or abroad. 

The totalisation agreement between the US and Germany is likely to mean that you are likely exempt from US social security payments.

https://www.ssa.gov/international/Agreement_Pamphlets/germany.html

If it is like most of these social security agreements you will need to obtain and send a Certificate of Coverage to the Social Security Administration to gain an exemption.


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## Bevdeforges (Nov 16, 2007)

You'll have to check pub 54 more carefully, but I don't believe that you have to send the Certificate of Coverage to the SSA (nor to the IRS). You only need to be able to show one (i.e. that you are covered by the German social insurance system) if and when the question arises. 

In most of the publications I've seen, they say you should obtain your local certificate of coverage and "retain it" - but you don't have to produce it unless asked.
Cheers,
Bev


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## Alltimegreat1 (Feb 25, 2015)

Thanks, Bev. Could you imagine any issues arising from the declaration of this separately from my salary as income from self-employment? Such as it not being covered by the FTC or reducing the $1,000 child credit?


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## Bevdeforges (Nov 16, 2007)

The only catch might be that, as "self-employment" income, you may be expected to file a Schedule C in order to claim any deductions or expenses you have before you carry your net income over to line 7. However, they don't ask for any itemization of your "salary" income (and that's where you'd report it - just that you have no W-2 to file).

Unless you've got some significant amount of expenses to claim, I'd just add it to your salary, bung it all onto line 7 and go from there.
Cheers,
Bev


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