U.S. TAX GUIDE IN FRANCE
How should you report self-employment income from France on a US tax return?
If you are a self-employed American living in France, you must report your income on Schedule C of your US tax return. This form captures your self-employment income and expenses, resulting in either a net profit or loss.
Does the US-France Totalization Agreement affect self-employment taxes?
Yes, the totalization agreement between the US and France ensures that you do not have to pay US self-employment tax if you are already contributing to the French social security system.
How is income tax on self-employment earnings handled?
While you may avoid self-employment tax, you might still owe US income tax. However, you can often reduce or eliminate this liability through foreign tax credits or the foreign-earned income exclusion. These credits allow you to offset your US taxes with the taxes you’ve already paid in France.
How do you report self-employment income correctly?
To report your self-employment income accurately and benefit from the totalization agreement, file your income on Schedule C and complete Form 8858 to address the foreign aspect of your taxes. Missing Form 8858 can result in significant penalties, so ensure it’s included.
What if you missed filing Form 8858?
If you have not filed Form 8858 in previous years, amend your past returns as soon as possible. Using the IRS Streamlined Offshore Filing Procedure can help you catch up on your filings and avoid penalties, especially if you take action before the IRS contacts you.
