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Question for the Money Doctors

Question submitted on Jan 4, 2013.

Question

Hello, I live and work as an independent contractor, outside the US, make way under the $92K/year, my spouse is not a US Citizen, but our daughter is. 2 questions: Do I have to pay the 13% self employment taxes even though I make under costs and have been out of the US for 330 days? And should I claim our daughter''s daycare costs?
Thanks so much for your help

Answer

The rules relating to US citizens living and working abroad are complex, so the first thing I suggest is that you consult with a tax advisor. Whether you are required to pay self-employment tax depends on if your work is covered by your resident country''s social security system, assuming that it is your tax home, and what the treaty ("totalization agreement") between the US and that country provides.

If you meet all the other qualifications for the child care credit, you may be able to take the credit. This depends on your income and whether you have any US tax. If your care provided does not have a US taxpayer identification number, use the code "LAFCP" in lieu of entering a number.


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