As a self-employed US/Canadian citizen living in Canada, I have self-employment tax due (line 28) when I complete Form 1040. (I have completed 2555 and 1116 to make taxable income as $0).
Surely I would not owe self-employment tax to US when I have already paid taxes in Canada. What do I do to get the self-employment tax on 1040 to ... go away!!
Thank-you.
Self-employment tax
Moderator: Mark T Serbinski CA CPA
The reason you do not owe self-employmwnt tax (which is separate form income tax) has nothing to do with how much or how little Cdn income tax you pay.
You do not owe SE tax by virtue of the fact that you pay CPP on your SE income in canada, and should supply IRS with documentation of this by furnishing a compliance letter.
Your US INCOME tax is determined by applying either the foreign eearned income exclusion or foreign tax credits to reduce the US tax to (hopefully) zero.
Btw, line "28" (I think you meant 27) is actually a DEDUCTION of tha ttax. The SE tax is determined on Schedule SE. Follow the instructions on that form for ensuring that you pay no SE tax
You do not owe SE tax by virtue of the fact that you pay CPP on your SE income in canada, and should supply IRS with documentation of this by furnishing a compliance letter.
Your US INCOME tax is determined by applying either the foreign eearned income exclusion or foreign tax credits to reduce the US tax to (hopefully) zero.
Btw, line "28" (I think you meant 27) is actually a DEDUCTION of tha ttax. The SE tax is determined on Schedule SE. Follow the instructions on that form for ensuring that you pay no SE tax
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best