CPAs help! Form 2555 (Foreign Earned Income Exemption)

[Felipe Lecaros]

Hi all,

I am aligning everything to do my first REI in the U.S. and I am wondering if there is any CPA out there that can help with the following: I am a U.S. citizen living and working overseas (for 6 years now). I have my "bone fide tax residence" in Chile since 2015. Hence, I pay taxes in the U.S. claiming the Foreign Earned Income Exemption (Form 2555)

I have a client in the U.S. that pays me for my services (provided from Chile) to its business in NY (mostly compliance services -and some general legal orientation since I am an admitted attorney in NY). I get paid and every year and my client issues me a 1099-MISC. I was told that, since they reported my income in box 3 (instead of 14- for payments to attorneys) I have to pay Self Employment Tax (SET) in the U.S.- Is this correct? Even if the services were provided in Chile and I reside in Chile for tax purposes? Does that mean that I cannot take any U.S. clients without paying the SET? (since they will issue me a 1099-MISC).

Many thanks for any help or guidance with this issue.

Cheers