I'm Anne. I've been preparing taxes for 27 years and I'll be helping you today.
First, as a US citizen,/ Resident Alien
, your client is responsible for reporting
, and paying tax, on world wide income
However, there is a Foreign Earned Income Exclusion of up to $100,800 if your clients meet the criteria. See below:http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion
Even if your income is below the $100,800, you must still file a US tax return and include the Form 2555, Foreign Earned Income
to tell the IRS WHY you are not paying US tax on our earnings.
From your information, it sounds like the tax that you are questioning SE tax.
If that's true, then you're correct that there is a tax treaty between the US and Germany, and your client would not be responsible for SE tax in both Germany and the US.
However, even in the reference material you sent, it states
"On the other hand, if your employer sends you from one country to work for that employer or an affiliate in the other country for five years or less, you will continue to be covered by your home country and you will be exempt
from coverage in the other country. For example, if a U.S. company sends an employee to work for that employer or an affiliate in Germany for no more than five years, the employer and the employee will continue to pay only U.S. Social Security taxes
and will not have to pay in Germany."
I've done alot of tax returns
for US citizens/Resident Aliens working abroad, and I have never been able to exclude SE tax from their earnings, even if they make less than the foreign earned income exclusion.
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