Self Employment Tax - Your help please!!!!

I have just used turbo tax to do my return.

* I am a UK tax resident so i qualified for the foreign tax exclusion. So I entered all my income under the 2555 section to exclude it.

* All the income I earned in 2013 was from self employment.

Even though I excluded all my income under the foreign income exlcusion, its still saying I owe thousands in self employment tax!!!!

I am horrified! Is there some section I am missing that causes this figure to come up?

MODIFIED MY EMAIL TO SAY

I have learned that this is due to social security tax and medicare tax. It looks like I have to get a certificate of coverage.  Now do I get that from the IRS in the states, or HMRC in the uk. I am currently paying national insurance contributions to the UK HMRC.

Also please, does this mean I cant use the online tax preparation services? How do I fill out my return so that I do not include an owed self employment tax. And do I just attach the cerficate and thats it?

Thanks so much for your help!

I am really worried that even though I am a UK tax resident I still have to pay the self employment tax.

Your help would so be appreciated. Thank you!!

I don't know about the mechanisms of using Turbotax when you are self employed in the UK, but you certainly are not liable for US FICA and Medicare taxes on income you earn in the UK. You are still liable to US income tax.

You may want to ask a dual qualified US/UK tax adviser to assist as you are not arriving at the optimum answer.

I am self employed in the UK.  As per advice from a qualified tax
advisor, I don't file as self employed on the on the 1040 form.  I
list my income as "other" on line 21 and show it on form 2555,
(foreign earned income). I put my name under "employers name" on that form.  I have invoices to submit with each pay transaction.
So far I have not had to pay any taxes at all the the US and I haven't made enough to have to pay here either

Lisa! Thanks so much! Your email may have saved me alot of time and headaches. Although, I do want to make sure I understand you, and that I can do what you suggest. If you don't mind helping.

If I use turbo tax, I think it may ask me to describe what this "other" income is. What does your advisor/you suggest putting down. Also, by not listing self employment, it means that you cannot reduce your earnings by claiming your expenses. So if later on down the line, they decide that you do have to list yourself as self employed, your earnings would be so much higher.

* Also, in the uk you have to legally declare that you are self employed, failure results in a penalty. Is this not the case with us returns?

So I would really appreciate your, and all other experts help on confirming that I can just file my taxes, without stating that I am self employed. That is, that I can legally do this. Just file my taxes using turbo tax and just declare my income as other income on 2555. And what do I stat that this other income is?

Do you think its beneficial not stating that I am self employed, and not getting the benefits of claiming expenses.

Any other advice/recommendations would be highly appreciated.

Lisa - Thank you!

I do not understand a jot.

If you are self-employed you complete IRS Schedule C and SE each year.  You have a choice in the US of accounting method and, arguably year-end, but certainly not how you complete a return.

You can of course be cautious and not claim too many expenses.

If you are self-employed you also complete the self-employment pages of the UK return and are subject to NIC Classes 2 & 4.  You have no choice in the UK of accounting method as the accruals method is mandatory; but you can select any year-end you like - including the calendar year.

You can also be cautious in the UK and not claim too many expenses.