A couple of follow-up questions.
(1) Will you be an independent contractor or an employee (given that you are NOT working on-site) this may be VERY simple by treating this as an independent contractor, rather than as an employee:
(You have a very good case of filing your taxes this way because they are not controlling your workplace)
In this scenario, you simply file a schedule C, as an attachment to your tax return and report the income (actually profit, after any non-reimbursed expenses), which will flow to line 12 of your tax return (business income or loss).
Schedule C (Form 1040)
And you'll notice on Schedule that it says "If a profit, enter on both Form 1040, line 12 (or Form 1040NR, line 13) and on Schedule SE, line 2."
Schedule SE (Form 1040)
Schedule SE is where you'll pay the social security and Medicare tax.
IF you are certain, that you will be categorized as an EMPLOYEE, then the answer depends on a couple of things:
See this from IRS: http://www.irs.gov/Individuals/International-Taxpayers/Social-Security-Tax-Consequences-of-Working-Abroad
When Social Security and Medicare Taxes Apply Outside Of U.S.
In general, U.S. social security and Medicare taxes continue to apply to wages for services you perform as an employee outside of the United States if one of the following applies:
- You are working for an American employer which includes:
- The U.S. Government or any of its instrumentalities
- An individual who is a resident of the United States
- A partnership of which at least two-thirds of the partners are U.S. residents
- A trust of which all the trustees are U.S. residents
- A corporation organized under the laws of the United States, any U.S. state, or the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands (with respect to the CNMI, refer to Revenue Ruling 80-167).
- You perform the services on or in connection with an American vessel or aircraft and either:
- You entered into your employment contract within the United States, or
- The vessel or aircraft touches at a U.S. port while you are employed on it
- You are working in one of the countries with which the United States has entered into a binational social security agreement (also known as Totalization Agreements), and the agreement provides that your foreign employment is subject to U.S. social security and Medicare taxes.
- You are working for a foreign affiliate of an American employer under a voluntary agreement entered into between the American employer and the U.S. Treasury Department
A foreign affiliate of an American employer is any foreign entity in which the American employer has at least a 10% interest, directly or through one or more entities. For a corporation, the 10% interest must be in its voting stock. For any other entity, the 10% interest must be in its profits.
Form 2032, Contract Coverage Under Title II of the Social Security Act(PDF), is used by American employers to extend social security coverage to U.S. citizens and residents working abroad for foreign affiliates of the American employers. Coverage under an agreement in effect on or after June 15, 1989, cannot be terminated.
Excludable Meals And Lodging
Social security tax does not apply to the value of meals and lodging provided to you for the convenience of your employer and excluded from your income.
Under aTotalization Agreement, dual coverage and dual contributions (taxes) for the same work are eliminated. The agreements generally make sure that you pay social security taxes to only one country.
Covered by U.S. only.If your pay in a foreign country is subject only to U.S. social security tax and is exempt from foreign social security tax, your employer should get a certificate of compliance from the Office of International Programs of the Social Security Administration.
Covered by foreign country only.If you are permanently working in a foreign country with which the United States has a social security agreement and, under the agreement, your pay is exempt from U.S. social security tax, you or your employer should get a statement from the authorized official or agency of the foreign country verifying that your pay is subject to social security coverage in that country.
Sorry, for the data-dump, but maybe this will get us to the pace where we can have a efficient conversation.