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Per IRS Instructions for Schedule SE, on page SE-2:

U.S. Citizens Employed by Foreign Governments or International Organizations

You must pay SE tax on income you earned as a U.S. citizen employed by a foreign government (or, in certain cases, by a wholly owned instrumentality of a foreign government or an international organization under the International Organizations Immunities Act) for services performed in the United States, Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the U.S. Virgin Islands. Report income from this employment on Schedule SE, line 2. If you performed services elsewhere as an employee of a foreign government or an international organization, those earnings are exempt from SE tax.

Exception—Dual citizens. A person with dual U.S.-foreign citizenship generally is considered to be a U.S. citizen for social security purposes. However, if you are a U.S. citizen and also a citizen of a country with which the United States has a bilateral social security agreement, other than Canada or Italy, your work for the government of that foreign country is always exempt from U.S. social security taxes. For further information about these agreements, see the exception shown in the next section.

Do the following after entering Form W-2 Wage and Tax Statement with the amount in Box 1 for wages.

To enter the income so it is also assessed SE tax:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Taxes in the Federal Quick Q&A Topics menu to expand, then click Self-employment tax adjustments.
  3. Continue with the interview process to enter all of the appropriate information.
  4. On the screen titled Self-Employment Tax - Adjustments, enter a positive Other adjustments (+ or -) amount of wages subject to SE tax, then click Continue.

This will transfer the amount to Schedule SE (Form 1040) Self-Employment Tax for purposes of calculating the self-employment tax.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.

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