Straightpoop

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About Straightpoop

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  • Year of birth 1949

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  1. How German tax law applies to distributions from a US IRA/401(k) plan to a German tax resident remains an unsolved mystery.   The introduction into force of Article 18A of the USA-Germany tax treaty clarified many important aspects of taxation in the accumulation/contribution phase.   The existing Art 18, of course, clarifies the issue as to which of the two countries has the RIGHT to tax such distributions, but the treaty did not (and could not) clarify how the two countries, Germany and the USA, would tax distributions under their respective national tax laws.   In 2012, the OFD Karlsruhe entered the debate with a poopsheet (Merkblatt) containing its view as to how such distributions should be taxed:   https://datenbank.nwb.de/Dokument/Anzeigen/449077/   My question relates to the meaning of the word "Kapitalleistung" used by the OFD Karlsruhe in Section 2.2b of its opinion concerning the taxation of IRA distributions based on contributions that were tax-free only in the USA at the time they were made (i.e. generally before the treaty went into effect on 1.1.2008).   In its analysis, the OFD Karlsruhe makes a distinction between two types of distribution:   1.  A lifelong annuity/pension (Leibrente) and 2.  A Kapitalleistung   Leibrente is easy to understand and, in the case of an IRA could be accomplished by the simple expedient of arranging for the "annuitization" of the IRA.  (Economically, this is usually not very favorable especially in the current low interest rate environment but it would - if the OFD KA is correct - have the advantage of clarity as to how the distribution would be taxed.)   It is the meaning of "Kapitalleistung" that has me scratching my head.   Specifically, does the term imply a COMPLETE distribution, i.e. a "lump-sum" distribution of the entirety of an IRA/401(k) account or can the term embrace a PARTIAL distribution, i.e. one that is less than total but also not made as a life-long annuity (Leibrente)?   The OFD KA thinks that Kapitalleistungen are the way most IRA distributions are made.  If "Kapitalleistung" includes something less than a total distribution, then they would be 100% correct because few IRA owners elect either complete distribution or annuitization.   In the vast majority of cases involving an IRA, the beneficiary elects either to make a partial withdrawals from time to time after attaining age 59 1/2 or waiting until they reach 70 1/2 and are forced to make what are known as "Required Minimum Distributions (RMD)".   (RMDs, by the way, are computed according to a fixed formula that is based on attained age, life expectancy and the fixed total value of all IRAs on 31 Dec. of the year preceding the respective distribution year.  An RMD plan can normally be agreed with the IRA custodian who then does all the annual calculations and makes the required annual distribution for as long as the beneficiary is alive.  Such a plan has a lot in common with a "Leibrente" but with one important - possibly crucial - difference: it can be cancelled or modified by the beneficiary at any time.)   If such partial - or rather:  non-annuitized - distributions are considered "Kapitalleistungen" then the OFD KA says that the "income portion" - i.e. the difference between the contributions made and the amounts distributed will be taxable at the 25% Abgeltungssteuer rate as provided in § 20 para. 1 Nr. 6 of the EStG (Kapitalerträge) read in conjunction with § 32b EStG (Abgeltungsteuer).   Assuming the taxpayer has a complete set of records, the computation of income is easy in the comparatively rare case of a COMPLETE distribution.   But what if the taxpayer chooses neither to annuitize or completely distribute his IRA but instead elects a partial payout?  Would this be a "Kapitalleistung" in the opinion of the OFD KA?  If so, then how would the Ertragsanteil be computed?   Proportionally, i.e. the same way the IRS computes the taxable portion of an IRA in which the beneficiary has a "basis", i.e. non-deductible contributions (under US tax law)?   Or, would each distribution first be deemed a "return of capital" until the entire amount of contributions had been distributed and after that 100% of distributions would be deemed income subject to Abgeltungssteuer?   Of the two, the first - proportionate - makes a lot more sense but that's just my opinion.   The last issue is one I suspect no one can solve:   How does an IRA beneficiary substantiate their contributions to an IRA/401(k) that will be (German) tax-free under § 20 Para. 1 Nr. 6?   German tax law assumes - in its paternalistic way - that the insurance company or some other institution keeps records of contributions.  Not so in the USA. An IRA owner may change trustees several times and the new custodian has no knowledge of what went on before. An IRA can be inherited.  An IRA can be the result of a conversion from an employer-sponsored 401(k) or similar plan - sometimes for decades.   What practical avenue is available to the IRA beneficiary in Germany who does not elect annuitization yet cannot substantiate the amount (and date) of their contributions?   I would be most curious to learn your thoughts on the meaning of Kapitalleistung and the problem of substantiating contributions.  
  2. tax on company distributions

    Still way too little information.   What kind of "company":  a publicly traded regular "C" corporation (e.g. IBM), a REIT (real estate investment trust), a publicly traded partnership, or maybe a Regulated Investment Company, an LLC, an S-Corp?   ASSUMING: 1.  you are single, and 2. it is a "regular", plain vanilla distribution of corporate earnings from a publicly listed company, you will report it as income not subject to Abgeltungssteuer withholding on your German Anlage KAP, and 3.  the distributed amount plus all other investment income (Kapitalerträge) in the year of distribution does not exceed €801, then . . . .   your German tax will be zero.      
  3. tax on company distributions

    Whose taxes?  Yours?  The company's?  What country or countries?   If distributed to you, the tax consequences to you will depend on who and where you are when you receive the distribution the nature of the "company" and what, when, how and why it was distributed.   All of your other income and a myriad of other facts and factors may also influence the result.
  4. Capital Gains Tax On Property US Expat Living in Germany

    @PandaMunich   Then I guess the answer to my question would be:   Taxable gains from the sale of German sited real estate (pursuant to § 22 para. 2 EStG read in conjunction with § 23 para. 1 EStG) are subject to ordinary (i.e. progressive) German income tax rates by default because they are not included in the exclusive list of items (generally speaking: those investment income items (Kapitalerträge) - including capital gains - listed in § 20 EStG) eligible for the 25% max rate prescribed by § 32b EStG (Abgeltungssteuer).   Hence, there would be no logical difficuly in applying Progressionsvorbehalt to gains realized on the sale of foreign real estate for which a DBA precludes direct German income taxation.    
  5. Capital Gains Tax On Property US Expat Living in Germany

      @PandaMunich   Hi Panda,   I have a question concerning your advice above.   If a German tax resident sold a German real property interest that they had acquired after 31.12.2008 and owned less than 10 years at a gain, would the gain be taxed in Germany as ordinary income or would it be subject to Abgeltungssteuer?   (I know that rental income is subject to ordinary income tax rates in Germany but I'm too lazy tonight to look up the answer to my question on real estate gain.)   The reason I ask is simple:  if the CHARACTER of an item of income makes it subject to Abgeltungssteuer which is has a maximum rate of 25% (+soli), how could progressionsvorbehalt be applied?    
  6. Some questions about US taxes

    @DreamLight   You are to be congratulated for having the foresight to make this sort of tax inquiry BEFORE moving to the US.   By doing so you can potentially save yourself and your family members a good chunk of money and some serious headaches.   Before I mention some specifics you need to know how your situation is labeled in US tax parlance.  In the calendar year in which you abandon your German tax residence and acquire US residence you will be regarded as a "Dual Status Alien".   For general information about what this means and the options available to you please read (carefully) the following:   https://www.irs.gov/individuals/international-taxpayers/taxation-of-dual-status-aliens   What the IRS information sheet does not discuss but which may be of critical importance to you is that once you become a US tax resident you are going to be treated just as bad as US citizens are with respect to any foreign financial connections that you may retain with the "Old World".   The administrative and potentially punitive horrors of owning foreign funds (incl. ETF's etc.) can be easily avoided by the simple expedient of selling ALL of said funds (and cancelling any Sparpläne you might have) before you acquire US residence and never - repeat: NEVER - buy any more FOREIGN funds afterwards.  Under current German tax law this should not be particularly burdensome because all funds are "marked to market" and for fund shares acquired before 1.1.2009 you have a €100,000 lifetime Freibetrag for realized gains.   Consider selling any other securities (e.g. stocks, bonds, etc.) acquired before 1.1.2009 that you are considering selling for whatever reason during the period of time you are resident in the US.  If you plan to live in the US permanently, that German tax free status will be lost for ever. If you sell them at a gain while you are a US resident you will get hit with a capital gain tax. (Not as bad as the Abgeltungssteuer but there will be no Sparerfreibetrag.)  On the other hand if the investments are solid and you think you are likely to be returning to Germany some day, then hold on to them - if your German Depotbank will allow it.   The opposite consideration should apply to any investment positions acquired before 1.1.2009 you might still have that are underwater. Their realized losses brings you nothing under German tax law but could be of use to offset US capital gains if you wait to sell them at a loss after you acquire US residency.   You may find that once your new US residence becomes known to your German bank that your bank may force you to close the account. (eg. Deutsche Bank, Commerzbank, et al.)  Plan for that possibility by asking ahead of time and if you need to keep German cash or securities accounts open find a bank to switch them to that won't care if you live in the US.   Although Germany will apply its Progressionsvorbehalt in calculating your tax rate on income earned in Germany before your "expatriation" to the US, the US does not use this for computing its taxes in transition years.   There's likely more depending on your particular circumstances but now that you have some basic information about the rules, you will be better able to pump your German and US tax advisors for specifics.   Bon Voyage!    
  7. @fichte   You are right to be concerned.   Your question touches on an issue that is not clearly settled under German income and inheritance/gift tax law.    You have correctly identified your father's trust as a "Vermögensmasse . . . .". This terminology was introduced into German inheritance tax law specifically to make transfers to a trust (especially but not only the US variety) a taxable event where the transferor was a German tax resident. You are also correct that a distribution to you as a beneficiary of something less than a total dissolution distribution of the trust would be a taxable gift to a "Zwischenberechtigte" under ErbStG.  That issue was settled by the Bundesfinanzhof in its 2012 decision:  BUNDESFINANZHOF Urteil vom 27.9.2012, II R 45/10 Schenkungsteuerliche Behandlung von Ausschüttungen eines US-amerikanischen Trusts Leitsätze 1. Zwischenberechtigte i.S. von § 7 Abs. 1 Nr. 9 Satz 2 Halbsatz 2 ErbStG sind alle Personen, die während des Bestehens eines Trusts Auszahlungen aus dem Trustvermögen erhalten.   The unclear issue is whether the mere creation - and more importantly: the mere funding of an irrevocable trust by your father resulted in an immediately German taxable gift to you because of your status as a co-trustee resident in Germany at the time title and control of trust principle passed to you as co-trustee.   I am sure there are solid arguments that can be made both for and against that proposition - and no doubt German legal academics have made them both - but to my knowledge the issue has not yet been addressed in the German tax courts.   The danger, however, is there and you may need to take prompt remedial action.   Before you take any action, however, I would urge you to contact your father to determine what goals he intended to accomplish with the creation of this trust.  Equally important is to discover whether your father obtained the advice of GERMAN tax counsel before setting up the trust and what that advice was (and if it was in writing).   The "remedial action" that immediately suggests itself as a "cure" for what MIGHT be anything from a harmless to a disastrous estate plan would be for you to resign your position as co-trustee with no residual authority or powers of any kind that might be sufficient for a local Finanzamt to argue that you have immediate possession, title and control over anything of determinable value held in the trust.   A trust can be a useful device in planning the transmission of wealth from a US resident to a German resident - if done correctly and with careful attention to the myriad real and potential traps lurking in both German income tax and inheritance tax law.  The possibility of double taxation (once as income and again as an inheritance) remains a real possibility if the structure is designed in ignorance of the danger.  (See, e.g. § 15 AStG which might make a portion of undistributed income accruals within a "Family Trust", defined as a one in which >50% of the beneficial interests are held by family members, subject to immediate income tax.)        
  8. German Tax Residency - 183+ days, or "registered"?

    Here is the text of Article 15 of the US-Germany Tax treaty.   Article 15 is the only place in the treaty I am aware of offhand that mentions the "183 day rule".   Note that it's application is limited to employment income earned from his domestic employer during temporary absences abroad only.  It is one of 3 conditions that must apply to prevent the "other state" from having a crack at his employment income earned during his temporary presence on the "other state's" soil.   It has no application to issues of tax residence generally. (There is no mention of it in Article 4 of the treaty dealing with residence issues.)   The confusion is likely due to the fact that Germany's general rules on establishing tax residence refer to "six months" presence as raising a presumption of "ordinary residence".  That equates in many people's minds to "183 days" or "180 days".   BTW the time of actual physical residence to establish German tax residence need not fall in just one calendar year in order for "ordinary residence" to be established. Nor can you foil the tax man by breaking up the 6 month period by taking a quick jaunt out of the country. Without evidence that those absences are non-temporary, they will simply be ignored.  On the other hand, the presumption of "ordinary residence" after 6 months physical presence can be rebutted by a showing that the actual physical presence is not indicative of intent to be resident, e.g. medical emergency, family exigencies, etc.   Similarly, once tax residence is established, it will continue until the residence is actually abandoned.  For any period of the calendar year prior to abandonment in which the taxpayer had (worldwide) taxable income they will be subject to German residence taxation on that amount with Progressionvorbehalt applicable for income earned in that same year after residence is abandoned. (Works the same way in reverse, i.e. for the calendar year residence is established.)   Thus, theoretically, a German resident who abandons German residence on Jan 2 can be taxed as a resident on his worldwide income earned up to that date in that calendar year.   Article 15 Dependent Personal Services      1. Subject to the provisions of articles 16 (Directors' Fees), 17 (Artistes and Athletes), 18 (Pensions, Annuities, Alimony, and Child Support), 19 (Government Service; Social Security), and 20 (Visiting Professors and Teachers; Students and Trainees), salaries, wages, and other similar renumeration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State, unless the employment is exercised in the other contracting State. If the employment is so exercised, such renumeration as is derived therefrom may be taxed in that other State.        2. Notwithstanding the provisions of paragraph 1, renumeration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:   a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the calendar year concerned; and   b ) the renumeration is paid by, or on behalf of, an employer who is not a resident of the other State; and   c) the renumeration is not borne by a permanent establishment that the employer has in the other State.        3. Notwithstanding the foregoing provisions or this Article, renumeration derived by a resident of a Contracting State in respect of an employment as a member of the regular complement of a ship or aircraft operated in international traffic may be taxed only in that State.
  9. Tax on foreign income

      @Hulie   The reporting on Form 1042-S appears to be inconsistent with what one would expect for T-Bill ownership. The 01 income code is "interest", i.e. an amount actually paid and credited - not an allocable amount of Original Issue Discount.  If you did not actually receive any such interest then this characterization of income code is incorrect.   The 05 exemption code is the "portfolio interest exemption under IRC".  This means that your interest is exempt from US taxation under domestic US tax law, i.e. you don't need to claim the benefits of a tax treaty to obtain exemption.   If, as you say, the amount (together with any other Kapitalerträge) adds up to less than your German annual Freibetrag of €801 then you should have no problems:  just ignore the whole thing.   However . . . .   The brokerage or whoever the withholding agent is may not be competent in correctly meeting its information reporting requirements (not an unusual circumstance, by the way).   This is a case of "no harm, no foul" but be advised: theoretically speaking, the amounts shown on Form 1042-S are made accessible by the IRS to the German government or the government of whichever country you gave as your country of residence on Form W-8BEN.  Some day - perhaps years from now - the FA may ultimately learn of the "interest" reported on this form in the year 2018 and may ask you to explain yourself.   So . . .   If you find time weighing heavily on your hands, you may want to write your broker/withholding agent and ask for an explanation of what appears to have been an incorrectly prepared Form 1042-S.   On the other hand, if you have a life . . . .  
  10. Tax on foreign income

      @NikoNiko   After reading your "plan" it is not clear to me that you have fully grasped the difference between a "capital gain distribution" of profits realized from within and distributed by a fund and a capital gain realized on the sale of the fund shares themselves.   That is the reason you are having such difficulty figuring the instructions for Lines 31-37.  They apply only to sellers of fund shares.  You did not sell any fund shares yet under your "plan" you insist on breaking out the "capital gain" portion of your distribution and entering it on Line 9 where it is not supposed to go. Line 9 (and subsequent detailing in lines 31-37) is reserved for the reporting of the sale of fund shares.   To uncomplicate your life and your German tax return just follow the instructions and - after converting to EUR - put 100% of the amounts distributed to you from your fund - INCLUDING the "capital gain" portion - as reported on the 1099-DIV on the line in KAP-INV that is intended for it to go:  Line 4 (for a stock fund).   As far as those foreign taxes you paid are concerned you can forget about reporting them on your German return. Note that KAP-INV has no line to report any such creditable foreign taxes withheld on your fund distribution.  Reason:  beginning 1.1.2018 they are no longer creditable if withheld on a FUND distribution.  Punkt. Ende. Full Stop. or in plain New York English:  Fuggedaboudit.   Summary:   Stick the EURO value of 100% of the value of 100% of your US stock fund distribution on Line 4 Anlage KAP-INV   Now you're done.   
  11. Tax on foreign income

    @Hulie   OK.  That is odd.   What income code number appears in block 1 of the 1042-S?  Is it by any chance 30 (Original Issue Discount = OID) or 31 (short-term OID)?   What exemption code number appears in block 3a?   Any taxes withheld per block 7a?   Ordinarily because of their short-term nature T-bills are not subject to OID computation and reporting for US citizens.  However, there might be a different rule under Chapter 3 of the IRC (Non-resident Alien reporting and withholding) of which I am not aware.   Please do let us know what's on the 1042-S.   In any event, if no taxes were withheld then for US tax purposes, if you have nothing else to report, you can ignore the thing for US tax purposes. No return, no nothing. Nada.   As far as German taxes are concerned I am no expert but the last time I looked Germany had yet to develop anything as sophisticated as the US rules on OID for so-called "zero coupon bonds".  The Finanzamt will likely be happy to wait until your 2019 tax return shows up reporting your gain realized when the T-bill matures in 2019.   FWIW here is what Wikipedia says about the German tax rules:   Bei im Privatvermögen befindlichen Anlagen ist nach dem Steuerrecht der Bundesrepublik Deutschland eine Versteuerung der Erträge erst bei Fälligkeit oder vorherigem Verkauf der Wertpapiere vorzunehmen, so dass die implizite Wiederanlage der rechnerischen Bruttozinserträge erfolgt. Im Betriebsvermögen besteht diese Möglichkeit nicht, soweit der Steuerpflichtige bilanziert. Andere Rechtsordnungen, wie die USA, besteuern bei Nullkuponanlagen jährlich einen fiktiven Zins.    
  12. Tax on foreign income

    @Hulie   A 1042-S is an informational return issued to a non-resident alien (NRA) of the United States.   It is issued because the withholding agent (your broker) a) has received a W-8BEN from you certifying your NRA status or b ) because you ignored requests to provide a withholding certificate of any kind (e.g. W-8BEN or W-9) and the withholding agent has no information indicating you are a US citizen or LPR and is using your foreign address as the default indicator that you are an NRA.   It is issued only when there is income to report.  Unlike the 1099 information return series which are used to report income of US citizens or lawful permanent residents ("green card holders") and come in a wide variety depending on the type of income being reported (e.g. 1099-INT, 1099-OID, 1099-B, 1099-DIV, 1099-MISC, 1099-S, 1099-R etc, etc. ad nauseum), the 1042-S is used to report a vast array of different types of income, whether it is exempt from US taxes - and if so, why - the amount of US taxes withheld, etc. etc.   A different 1042-S will be issued for each different type of income (identified in Block 1 of the form).   So, the first question raised is:  is you or is you not a US Citizen or LPR?   The second question is:  You mention only buying a T-bill in 2018. This by itself would not have triggered the issuance of a 1042-S (or 1099 for that matter) for 2018 income, so what other income might you have had in 2018 to warrant issue to you of a 1042-S?   I have not the faintest idea at this point what you do or do not have to report to whom in what amount and for what time frame.    
  13. Tax on foreign income

    @PandaMunich  @NikoNiko   Perhaps I can clarify the confusion about US income tax reporting to holders of US mutual funds.   Whether or not passively (e.g. ETF) or actively managed, the vast majority of such funds qualify as "Regulated Investment Companies".  This is an important qualification because otherwise the fund would be subject to US taxation at the corporate level and if/when "distributions" were made to shareholders such distributions would be taxed again to the individual shareholders.   "RIC" status allows the fund to escape taxation at the corporate/fund level and "pass through" its earnings to its shareholders.   However, in order to qualify for this "pass-through" treatment a US mutual fund must distribute (Ausschütten) at least 90% of its income annually.  "Income" includes net gains and losses realized from the sale of securities held inside the fund.   This is the main reason why foreign mutual funds that have not qualified as RICs are given such unfavorable tax treatment in the US. Most countries do not have the requirement to distribute 90% of income, i.e. they allow "Thesaurierung" or internal reinvestment of income.  Germany's recent reform of fund taxation is designed to place some limits on the tax deferral opportunities offered by such "Thesaurierende Fonds".     Since the income realized inside a US RIC is "passed through" in the distribution to shareholders, that income retains its "character" in the hands of the shareholder recipient.  This is very important to the US shareholder because that distribution can be taxed very differently depending on the "character" of its components.   Consequently, when a shareholder receives a distribution during the year, the fund will issue a 1099-DIV in which the distribution is broken down into the various character components, e.g. ordinary dividends, qualified dividends, net short-term gains (included in "ordinary dividends"), long-term "capital gains" (AKA as "capital gain distributions"). Additional information on the 1099-DIV will include such exotica as "unrecaptured section1250 gain", Section 1202 gain, 28% gains (from sale of "collectibles"), foreign taxes paid, cash and non-cash liquidation distributions (i.e. non-taxable return of capital), etc.     How all this gets reported on the German return is not always clear.   The brutally simple approach is to treat the entire value of the US fund "distribution" as a foreign Kapitalertrag that was not subjected to 25% Abgeltungssteuer withholding.  In most cases that will produce the correct result.  However, what if the fund distribution includes a non-taxable "return of capital"?  Return of capital (e.g. this year's distribution from Deutsche Telekom) is not taxable but - just like in the US - results in a reduction of the shareholder's cost basis for determining gain/loss on a future sale.   And what about the foreign tax credit for US taxes paid on that distribution?   And the foreign (i.e. non US) taxes reportedly withheld on that distribution?   The credit (up to 15% by treaty) is allowed only on US source "dividends" ACTUALLY PAID.  Is the interest component of the RIC distribution (e.g. from a bond fund) a "dividend" or "interest" for purposes of computing the German foreign tax credit?  Is any amount of US taxes actually paid on the "capital gain" or "interest" portion of the distribution eligible for the German foreign tax credit? Under the treaty Germany has the exclusive right to tax interest and gains so there should be no German foreign tax credit allowable for this portion - but only if you are required to break out the various components of the US RIC distribution on the German tax return. And what about the non-US foreign taxes withheld on the foreign dividends your US "international fund" paid you?   Are you required to break all this out on your German return?  Can you do so voluntarily? I just don't know.   And then there is the problem of proving to the Finanzamt exactly how much US taxes you really ACTUALLY paid on the dividend portion of those distributions.  Assuming you ACTUALLY PAID anything this proof will involve sharing the worksheet for your US return entitled "Qualified Dividends and Capital Gains Worksheet".   Nasty, huh?   PS   Fund distributions (US and foreign) that are "automatically reinvested" by using the distribution to purchase additional fund shares must not be confused with internal fund income that is reinvested within the fund (i.e. thesauriert). I cannot tell you how often I have had to explain to US fund shareholders that just because they automatically reinvested their distributions does not mean they had no taxable income.    
  14. Tax on foreign income

    @Hulie   I am not sure what a "broker's report for US authorities" is. Since you had no coupon interest - T-Bills are a type of "zero-coupon bond", i.e. they do not pay coupon interest - and no proceeds from a sale, I can only assume the "report" you are referring to is a brokerage transaction confirmation for your records - not the "authorities".   When the Bill matures in 2019 you - and the US authorities - will receive a 1099-INT reporting as (US) taxable interest (in 2019) the difference between your purchase price and the redemption proceeds.    
  15. Owing self-employment tax to the U.S.

    @thomash2   If I were you I would stick to the procedure you have followed successfully to date regardless of what I have recommended.   I have always filed Schedule SE out of caution and that technique has always worked for me.  Your experience, however, makes clear that following the IRS instructions also seems to work too and that my assumptions about what the IRS computer does in the absence of a filed Sched. SE may be simply wrong.   If you were to add a Sched. SE you would use the "short form".  Just fill in the net taxable income from Schedule C and the net amount subject to SE tax and then (if you're using software) override the calculation of tax and enter "0".     The IRS requires those filing a certficate of coverage DUSA/101 to file on paper so before printing out the return I overprint the .pdf version of Schedule SE with the words: "Treaty Exempt per IRC §1401(c) and Germany-USA Social Security Treaty". The overprint appears to the immediate left of the "0" bottom line. (In the past I have also used a self-adhering label with those words and placed it to the immediate left of the "0" bottom line of Schedule SE.)   I also put the words "Treaty Exempt" on Line 57 (or whatever the new line number will be on the 2018 revamped forms) showing SE taxes and, of course, the certificate of coverage.