Everything posted by tallfellow
Owing self-employment tax to the U.S.
tallfellow posted a topic in FinanceHi Everyone, I read as many earlier posts as I could find but I didn't see this exact question asked. As I'm filling out my first ever IRS forms from Germany, I thought it was clear that self-employed persons still are responsible to pay self-employment tax (schedule SE), but then I discovered a paragraph in the SE instructions that makes the issue a bit foggy, it says: "If you are a self-employed U.S. citizen or resident alien living outside the United States, in most cases you must pay SE Tax. (then next paragraph it says) "Exception. The United States has social security agreements with many countries to eliminate dual taxes under two social security systems. Under these agreements, you must generally pay social security and Medicare taxes to only the country you live in." And then it lists Germany as one of these countries. So I'm a bit confused. Since I only got permission last summer to work in Germany I only have about 5000 Euros of income. So I will not owe any income tax in either Germany or the U.S., but usually I would have to always pay the 15% self-employment tax in the U.S. and it seems as though I should now too, except that it says something about this treaty exception. So do I pay, and to whom? I'm sure others who have been here a while have had to deal with this, can you help me figure out what I really need to do here in Germany about this. Many thanks.