Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad - 2008 Page 11
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44chose exemption from social security and Medi-
Exemption From
care taxes and you received wages of $108.28
4.
or more from the organization, the amounts paid
Social Security and
to you are subject to self-employment tax. How-
ever, you can choose to be exempt from social
Medicare Taxes
security and Medicare taxes if you are a member
Foreign Earned
of a recognized religious sect. See Publication
The United States may reach agreements with
517 for more information about church employ-
foreign countries to eliminate dual coverage and
Income and
ees and self-employment tax.
dual contributions (taxes) to social security sys-
tems for the same work. See Binational Social
Effect of Exclusion
Housing:
Security (Totalization) Agreements in chapter 2
under Social Security and Medicare Taxes. As a
You must take all of your self-employment in-
general rule, self-employed persons who are
Exclusion –
come into account in figuring your net earnings
subject to dual taxation will only be covered by
from self-employment, even income that is ex-
the social security system of the country where
empt from income tax because of the foreign
Deduction
they reside. For more information on how any
earned income exclusion.
specific agreement affects self-employed per-
sons, contact the United States Social Security
Example. You are in business abroad as a
Administration, as discussed under Binational
consultant and qualify for the foreign earned
Social Security (Totalization) Agreements in
Topics
income exclusion. Your foreign earned income
chapter 2.
This chapter discusses:
is $95,000, your business deductions total
If your self-employment earnings should be
$27,000, and your net profit is $68,000. You
exempt from foreign social security tax and sub-
•
Who qualifies for the foreign earned in-
must pay self-employment tax on all of your net
ject only to U.S. self-employment tax, you
come exclusion, the foreign housing exclu-
profit, including the amount you can exclude
should request a certificate of coverage from the
sion, and the foreign housing deduction,
from income.
U.S. Social Security Administration, Office of
•
The requirements that must be met to
International Programs. The certificate will es-
Members of the Clergy
claim either exclusion or the deduction,
tablish your exemption from the foreign social
security tax.
•
How to figure the foreign earned income
Send the request to the:
If you are a member of the clergy, you are
exclusion, and
treated as self-employed for self-employment
•
How to figure the foreign housing exclu-
tax purposes. Your U.S. self-employment tax is
Social Security Administration
sion and the foreign housing deduction.
based upon net earnings from self-employment
Office of International Programs
figured without regard to the foreign earned in-
P.O. Box 17741
come exclusion or the foreign housing exclu-
Useful Items
Baltimore, MD 21235-7741
sion.
You may want to see:
You can receive exemption from coverage
Publication
for your ministerial duties if you conscientiously
oppose public insurance due to religious rea-
519
U.S. Tax Guide for Aliens
sons or if you oppose it due to the religious
principles of your denomination. You must file
570
Tax Guide for Individuals With
Form 4361 to apply for this exemption.
Income from U.S. Possessions
This subject is discussed in further detail in
596
Earned Income Credit (EIC)
Publication 517.
Form (and Instructions)
Income From U.S.
1040X Amended U.S. Individual Income
Possessions
Tax Return
If you are a U.S. citizen or resident alien and you
2555 Foreign Earned Income
own and operate a business in Puerto Rico,
2555-EZ Foreign Earned Income
Guam, the Commonwealth of the Northern Mari-
Exclusion
ana Islands, American Samoa, or the U.S. Virgin
Islands, you must pay tax on your net earnings
See chapter 7 for information about getting
from self-employment (if they are $400 or more)
these publications and forms.
from those sources. You must pay the
self-employment tax whether or not the income
is exempt from U.S. income taxes (or whether or
Who Qualifies for the
not you must otherwise file a U.S. income tax
return). Unless your situation is described be-
Exclusions and the
low, attach Schedule SE (Form 1040) to your
U.S. income tax return.
Deduction?
If you do not have to file Form 1040 with the
United States and you are a resident of any of
If you meet certain requirements, you may qual-
the U.S. possessions listed in the preceding
ify for the foreign earned income and foreign
paragraph, figure your self-employment tax on
housing exclusions and the foreign housing de-
Form 1040-SS. Residents of Puerto Rico may
duction.
file the Spanish-language Form 1040-PR.
If you are a U.S. citizen or a resident alien of
You must file these forms with the:
the United States and you live abroad, you are
Department of the Treasury
taxed on your worldwide income. However, you
Internal Revenue Service Center
may qualify to exclude from income up to
Austin, TX 73301-0215
$87,600 of your foreign earnings. In addition,
Chapter 4 Foreign Earned Income and Housing: Exclusion – Deduction
Page 11
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