Help-US citizen working abroad

[Art]

Client age 23 graduated from college in June 2010 and accepted an elementary teaching position in China starting in Sept 2010 thru June 2011 as part on an international educational program. Her visa will expire in June 2011 so it appears she would not qualify for physical presence exclusion unless her employment contract is renewed. She did not receive a W-2 form. The only document she has received just lists the Chinese taxes deducted from her pay. This was written in Chinese and she had a TA translate it into English. Her gross income from teaching in 2010 is $ 5300 US$. There was $215 deducted for Chinese taxes.

How does she report the income on her 1040? Wages line 7 with no W-2? Schedule C? Subject SE Tax? Can I e-file this return or paper only?

The language in her employment contract with the Chinese school would (under US rules) seen to make her an employee since they control all aspects of her work, but I am not certain that this is controlling for a US citizen working abroad.

I have not prepared a return like this before so I would really appreciate some guidance here from anyone who has experience with US citizens working abroad.
Art

[JG EA]

Sometimes I put foreign income on line 21 if it isn't self employement income. But like you I'm not very up on this issue. Also don't forget the foreign tax credit even though you can't take the foreign exclusion.

I don't think line 21 would matter even if earned income credit is involved because he wasn't in the US so can't take it, but it may make a difference for the making work pay credit because it is my understanding that you can be out of the country and get that. So, It may be more beneficial for him to put it on line 7 and I don't know if you can do that. Hopefully someone else will know so I guess all I'm doing here is giving this a bump.

[joanmcq]

My software has a line to input foreign wages. They should go on line 7. She would get EIC on that amount of wages.

[JG EA]

He said through June - that would not be more than 1/2 year in US.

[Gary2]

EIC, though possible, seems unlikely, as she's only 23 and few people with small children would take this type of position.

I don't see why the obvious answer isn't to put it onto a substitute W-2 (form 4852).

[David1980]

For e-filing there's what is called the "FEC record".

SECTION 4 – TYPES OF RECORDS
02 Tax Return Records continued.
4. Foreign Employer Compensation/Pension Record

The Foreign Employer Compensation/Pension Record is required information
to support entries to Line 7, Forms 1040 and 1040A, and Line 1, Form 1040EZ,
for compensation received from non-U.S. employers who do not have EIN’s nor
issue Forms W-2.

there should be some way to access this through your software, and it allows you to type in employer information (name, address, country, etc...) and the amount of income.

[Art]

Thanks for the replies. I found the FEC W-2 input and the coding entries. The wages flowed thru to line 7. Client was a full time student thru May 2010 and then took the teaching job in China. We did take the foreign tax credit--thanks for reminding me on that point. Read thru the China/US tax treaty to see if there was any other tax breaks, since she did not qualify for the foreign income exlusions. Since her income was quite small the net tax (after the FTC) was only a few hundred dollars so not a bad result. Thanks again for everyone's input, Really appreciate it.

Art