Self-employment tax totalization agreement for partial year residency

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taxquestions
Posts: 42
Joined: Tue Dec 18, 2018 6:31 pm

Self-employment tax totalization agreement for partial year residency

Post by taxquestions »

Say I made 175k USD in 2020. I was a resident of Canada for Q1, and a US resident for the rest of the year. Im a dual citizen.

I earned 25k USD while a resident of Canada (Q1 2020) and paid Canadian income taxes on this 25k. I will claim this on Form 1116 for a FTC (foreign tax credit).

Question:

On this 25K USD Canadian sourced income I also paid CPP (Canadian Social Security). FTC doesnt cover self-employment tax. Would I be able to deduct the CPP paid on this 25K against the self-employment tax owed? Normally I would write "EXEMPT" on Form 1040 (Schedule 2) line 4 "Self-employment tax" as Canadian-US have a Totalization Agreement.
nelsona
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Re: Self-employment tax totalization agreement for partial year residency

Post by nelsona »

You should exempt SE income from SE tax on the portion from Q1, by the toatlization agreement. The CPP is a tax credit to be used on 11116, not a SE tax credit.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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