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Foreigned Earned Income can include 1099-MISC income? - Ask TaxGuru
 
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Old 04-13-2011, 03:36 PM
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Foreigned Earned Income can include 1099-MISC income?

I am a US citizen living abroad so I have a Foreign Earned Income exclusion up to $91,500.- However, I did some consultancy work for a US agency and received a 1099-MISC. for the $8000 earned. Doing my taxes I thought that the amount shown on my 1099-misc Box 7 ($8000) would be somehow added to my Foreign Earned Income ($30700+$8000) so no tax at all tax would have to be paid. However since my 1099-MISC income goes to Schedule C and as Self Employment Income and that shows in line 12 of my 1040 as a $8000 profit, a tax is applied!! Am I doing something wrong?? If I have a Foreign Earned Income exclusion up to $91,500, how come any 1099-MISC income is not also excluded? Can the 1099-MISC income be exempt since my earned income added to the consultancy work adds up to $38700 and that´s well below the Foreign Earned Income exclusion? thanks



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Old 04-14-2011, 05:17 AM
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“ However since my 1099-MISC income goes to Schedule C and as Self Employment Income and that shows in line 12 of my 1040 as a $8000 profit, a tax is applied!!” Am I doing something wrong??”---->I guess it depends; as long as your income on 1099-MISC line 7 that you earned as an IC is regarded as part of your foreign earned income, then you do not need to report it on 1040 Sch C line 1 or Sch SE line 4 and you do not pay SE tax( or estimated taxes, either) on it; you MUST pay tax to the foreign taxing authorities on the income and you need to claim your FEIE credit or foreign tax credit on your taxes paid to the foreign countr.If not, I mean if the income, $8,000, is NOT regarded as part of your foreign earned income, then you need to report it on Sch C, Sch SE or etc as usual; the income is NOT subject to foreign income tax(es)
“ If I have a Foreign Earned Income exclusion up to $91,500, how come any 1099-MISC income is not also excluded?”“ Can the 1099-MISC income be exempt since my earned income added to the consultancy work adds up to $38700 and that´s well below the Foreign Earned Income exclusion?”----->It depends on the situation as said above.You may claim the remainder as foreing tax credit on your federal raturn, but NOT on your state return; you can't claim your FEIE credit/foreign tax credit on your state return.



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Old 04-14-2011, 08:11 AM
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Thanks, now I have it clear.



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