I am new to filing for Self Employment income on the US side.
My wife (USC living in Canada) opened an at home day care through a day home society. She received from the Society a T4A that had two boxes with numbers – Box 20 – Self employment commissions for 2500 and Box 28 – Government subsidy – 2900.
When I filed the Canadian side, and added in the calculations for expenses she ended up only owing $5 to the CRA. This was because her adjusted net income was only 3552 (or only slightly above the 3500 cpp minimum). I read most of the forums on this site that discussion FTC and Foreign Exclusion and cannot seem to figure out how to get the US software to recognize the CPP amount. Is it because it is only $5? Is there another amount I am supposed to claim? Or am I stuck paying the US SE tax?
Any help is appreciated!
Dayhome SE Tax
Moderator: Mark T Serbinski CA CPA
Self-employed residents of Canada simply have to provide a letter of compliance from CRA attesting that they are covered under CPP system. That takes care of SE tax.
see: http://www.cra-arc.gc.ca/E/pbg/tf/cpt56/README.html
Typically the software doesn't handle this.
Now, of course, her INCOME still needs to be reported and taxed in US. That is schedule C, not schedule SE. That is the only part that FEIE of FTC can cover. If hse uses 1116, then she merely reports the $5 as foreign tax, and will pay the rest to US.
see: http://www.cra-arc.gc.ca/E/pbg/tf/cpt56/README.html
Typically the software doesn't handle this.
Now, of course, her INCOME still needs to be reported and taxed in US. That is schedule C, not schedule SE. That is the only part that FEIE of FTC can cover. If hse uses 1116, then she merely reports the $5 as foreign tax, and will pay the rest to US.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
https://www.irs.gov/pub/irs-pdf/i1040sse.pdf
confirms what USC's living outside US need to do to exempt themselves from SE tax.
So, your spouse still needs to file a schedule C, and can exempt the net income from that using form 2555.
confirms what USC's living outside US need to do to exempt themselves from SE tax.
So, your spouse still needs to file a schedule C, and can exempt the net income from that using form 2555.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
This information has fixed that issue, now just have to get that compliance letter.
Two other clarifying questions - for UCCB should it end up in box 22 on 1040 as other income, since it is a taxable benefit?
Do I have to report the amount received from previous years tax return? If so, where does that go?
Two other clarifying questions - for UCCB should it end up in box 22 on 1040 as other income, since it is a taxable benefit?
Do I have to report the amount received from previous years tax return? If so, where does that go?