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Need help w/ form 2555 re foreign SE (Sch C) income. Anyone out there who can help?
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Answers are easy. Questions are hard!
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An adjustment for deductions allowed in relation to gross SE income excluded would be required under §911(d)(6). If you coded Sch C and F.2555 correctly, ProConnect Tax will do a pretty decent job making the necessary adjustment on F.2555.
Two key issues you need to explore, if you have not already done so, before you get to that point though:
1. Whether the foreign business entity through which the activities were conducted is, indeed, a DRE for US tax purposes since §7701 has a set of rules for foreign entity classification (which is different from how the rules apply to domestic entities). How you would report the income, the level of compliance required, and the tax implications would be vastly different if the foreign entity is not a DRE for US tax purposes based on those foreign entity classification rules; and
2. Whether the country in which your client works (which is, presumably, the entity's PE) has a totalization agreement with the US, in which case, territoriality rule would apply by default and that means US self-employment tax would not not assessable.
Still an AllStar
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My issue was one re navigation in the program, i.e., there is a need to make an entry in wages even though tp was SE. However, thank you greatly for your input. It is much aapeciated.
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Then, the helpful comment above from @George4Tacks is what you need.
Still an AllStar