Form 1040: do I use schedule C to do an EXPAT's self-employment tax?

Forum|Forum|1 year ago
March 27, 2025
4 replies
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My client worked for a foreign company overseas during the entire year of 2024. He is not the owner of the business. He got paid by salary, and he paid the income tax in the foreign country.

How do I do his self-employment tax in ProSeries Basic? Do I use Schedule C?

Thanks.

ProSeries Basic

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Best answer by BobKamman

Based on my research, I found these Q&A very helpful.

https://alliscpa.com/social_medicare.php

As the link says, " Employees of a foreign company are not subject to FICA while working outside the states."

sjrcpa

Level 15

No Schedule C.

Someone who uses ProSeries can chime in but you're looking for a way to adjust the Schedule SE income I think.

The more I know the more I don’t know.

J

jeffmcpa2010

Level 10

Schedule SE Adjustments Worksheet

I would probably put it on Line 6.

As long as it gets paid, I don't think you can get in too much trouble if the description doesn't fit exactly.

H

helenyinAuthor

Level 5

Do I deduct the expenses and put in the net number, which would be less than the gross income amount reported on his foreign tax paid document?

BobKamman

Level 15

Now that you have found Pub 54, where does it says that an employee of a foreign company, working in that country, must pay US self-employment tax? We can't even start to answer your question without knowing what country is involved.

Bilateral Social Security (Totalization) Agreements

The United States has entered into agreements with some foreign countries to coordinate social security coverage and taxation of workers who are employed in those countries. These agreements are commonly referred to as “totalization agreements.” Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. The agreements generally make sure that you pay social security taxes to only one country.

Generally, under these agreements, you will only be subject to social security taxes in the country where you are working. However, if you are temporarily sent to work in a foreign country and your pay would otherwise be subject to social security taxes in both the United States and that country, you can generally remain covered only by U.S. social security.

You can get more information on specific agreements at Social Security Totalization Agreements and IRS Totalization Agreements.