Foreign earned income

[Max W]

Client worked under contract as a teacher for several years in a non tax treaty country.  No taxes were withheld by foreign gov.  Income was well below the exclusion amount so no income tax.  But, what about SE tax.  If client were self-employed, he would pay SE tax, but he was on contract as a salaried employee.

I still think he still pays SE, but just want to be sure.  

TIA

 

[Margaret CPA in OH]

Excellent question!  I just watched a pretty good CPA Academy webinar today on US Expat Taxation and realized that self employment was not covered.  Have you scoured Pub. 519?  It would be tricky with a non tax treaty country, I would think.  Let us know; I'll keep poking around, too, as I seem to be getting more and more clients with international issues.

[mircpa]

If in fact he was on contract as salaried employee I don't think he is subject to SE tax

[Max W]

I've scoured the pubs and the other references and couldn't pin it down.  There is no mention of a contracted employee working in a non-treaty state, only those treaty states that have an agreement on SS, or self-employeds.  

I had been thinking of a client that used to work for the Australian Embassy in DC and had to file a form SE, but she was a US citizen residing here, so the circumstances were different.  

So, it looks like there is a loophole here -   Work under contract for a non-treaty state and avoid SE taxes.