Income and Loss

[Gary and Alla 3,694]

Your argument is correct. It doesn't matter. It isn't fair. It doesn't matter. The w-2 employee (and his employer) pay the 15.3% SS and medicare tax on ALL money paid to him for vehicles, YOU do not. YOU are far ahead of him in "money in the bank". Be happy. YOU do not get to claim it as "income" because you didn't pay tax on it...the w-2 guy did. Presumable you have the "tax savings" in the bank which can be used as an asset to offset your deficiency in income.

Like it or not, I have submitted SIX affadavits over a two "tax year" period and that is the way it is. You DO NOT have to like it.

Nor do I have to stand idly by and accept a deficiency of logic on the part of USCIS. It is brutally unfair. (see my above response) And no, I am not happy because I am being told, effectively, to make a choice that others in near-identical circumstances do not have to make- forgo legal deductions and pay $4k more in taxes, or we don't let your wife and kid into the country, but we'll wave Joe W2's (who pays the exact same expenses you do) wife and kid into the country.

And ok already, you win. I've only submitted 4 I-864s.

You truly have blinders on.

There is nothing "brutally unfair" particularly as it applies to the ill-conceived example of an auto expense (you need to stop using that one, it makes no sense) Now as to depreciation or business use of a home...yes, it makes sense.

But a w-2 employee has his income withheld for payroll and income tax ...you do not. A w-2 employee could argue THAT is unfair. You get your car with tax free money...the w-2 employee does not, he pays tax on the money FIRST and then has to pay for the car. He doesn't even get to deduct interest on the payments (if any) from his personal income. The tax rules are slanted FAR in favor of small business owners (you) as they should be...since small business owners MAKE jobs for other people and represent 60+% of the jobs in this country.

But yes, you do have to stand "idly by" unless you file an amended return. Doesn't matter if you like it or not. YES it is true, Joe w-2 making $9.85 per hour at Target will get approved. A small business owner with gross revenues (business) or $4 million...may not. You also have a basic misunderstanding of the I-864. You believe, like many, that it is supposed to "prove" you have enough income to "support" a family. It is not. It is to "prove" you have enough income to disqualify the immigrant for social welfare programs and take responsibility for paying them if they do. They do not care about "deductions" because they will go after your money before the IRS does. Any such liens would be "pre-tax" which explains why they use line 22. They do not care about your obligations or your car payment becuase they will take their money FIRST and to heck with your car payment...your problem. This is all about what money is available to THE GOVERNMENT...NOT to you or your family (you think the government cares about you or your family? ) But it is a common misconception, especially with Obama running around lying about it. Some people actually believe him. The I-864 contract is between YOU, the sponsor, and the GOVERNMENT. There is nothing about the family in there. It is all about "How do we (government) get OUR money if you default as a sponsor?" You need to provide the "collateral" of an income. The $9.95/hr guy bagging groceries DOES provide this, YOU do not.

When you "write off" your income as a "business expense" (such business which is not subject to a government lien) then you are essentially denying the government a means to collect this money. YOU are telling them "No it is not my money, it is the business money" Wink, wink. You are giving THEM no option but to deny the visa. THAT is why you must stand idly by. The governemnt ahs the visas and Green Cards and you WILL do it their way and they WILL cover their own a$$ and not give a damn about your or your family. Is any of this getting through?

The example of auto expense is a poor one since it is a "real expense" and really represents money the business spends (though your family may get an incidental benefit from it) and technicaly you should pay tax on any personal use of that automobile (OK, we won't belabor that point)

It is a much better argument that you use income to the company to pay a pro-rated portion of the use of your home (which your family DOES benefit from, exactly the same as if you rented a portion of your home to another person, you would have rental income) or "depreciation" expense which is neither an "expense" or, in most cases, a depreciation.

I would agree with you that the USCIS should be required to consider the line 22 of self employed people PLUS the dpereciation expense and business use of home expense (both can be very considerable, in my case, enough to qualify as a sponsor for a family of four on their own)

BUT such is not the case. I would never argue that actual business expenses (automobile, etc.) be considered "income" It isn't.

And I do not "win" because I submitted two additional I-864s that you did. I "win" because I am correct.

[thepizzadude 26]

Yes, I do. You choose to eat the tax advantages. Once eaten, that part of the cake is no longer visible to USCIS. You can't report 1099 income on a 1040 but you are not forced to eat the tax advantages available when you report it on the schedule C. You are free to explain and document the financial ramifications in your affidavit of support. If you can convince USCIS to consider them, more power to you.

See, this is what is counter-intuitive.

Your position- and the current position of USCIS- is that in order to make the line 22 number work, 1099 employees must forgo legal deductions on their taxes.

But what is the real-life ramification of doing so?

Taking the auto deduction example again, one would then have to pay an additional 15% in taxes on $17,500 in income, for starters. That's $2,625. Then there would be the increase in the self-employment tax as well. I don't have time to run all the numbers, but what we're looking at is that a 1099 person would have to shell out an additional $4k or so at the very least.

So that's $4k one would have to pay in taxes that they legally do not have to pay.

Isn't the purpose of the I-864 to make sure one has the means to support their wife/kid? Yet, because USCIS, for whatever reason, doesn't wish to consider line 7 of the C, a 1099 person now must shell out $4k that could otherwise be used for food, rent, putting some bucks aside for college for the kid, etc etc.

Again, it makes no sense. This isn't a choice of what kind of cake to eat. This is assessing a brutally punitive tax on self-employed people whose costs are the exact same as a W2 employee.

So the logic is that in order to show us you can support your family, you must give up $4,000.

Huh?????

Yep thats what they are saying, we the government will let you show us the income we require but only if you PAY us more to do it...give up your allowable deductions, expenses, depreciation or amortization it doesn't matter but that is the only way WE will let you pass GO. By cheating you....hehehe

I went through this last year with depreciaton of some major assets I purchased that can only be written off over a short period of time 5-7 years. When I checked with my CPA for her interpretation of my situation she had to call many other accountants she knew to get a consensus...SOME even said I COULDN'T NOT TAKE THE DEPRECIATION because it would raise flags, so it just shows the reason we have a zillion pages of tax law and 98% of it is just BS.

And i'm not a 1099 I am an S corporation so it all carries to my taxes.

Edited July 21, 2009 by thepizzadude

[Gary and Alla 3,694]

Yes, I do. You choose to eat the tax advantages. Once eaten, that part of the cake is no longer visible to USCIS. You can't report 1099 income on a 1040 but you are not forced to eat the tax advantages available when you report it on the schedule C. You are free to explain and document the financial ramifications in your affidavit of support. If you can convince USCIS to consider them, more power to you.

See, this is what is counter-intuitive.

Your position- and the current position of USCIS- is that in order to make the line 22 number work, 1099 employees must forgo legal deductions on their taxes.

But what is the real-life ramification of doing so?

Taking the auto deduction example again, one would then have to pay an additional 15% in taxes on $17,500 in income, for starters. That's $2,625. Then there would be the increase in the self-employment tax as well. I don't have time to run all the numbers, but what we're looking at is that a 1099 person would have to shell out an additional $4k or so at the very least.

So that's $4k one would have to pay in taxes that they legally do not have to pay.

Isn't the purpose of the I-864 to make sure one has the means to support their wife/kid? Yet, because USCIS, for whatever reason, doesn't wish to consider line 7 of the C, a 1099 person now must shell out $4k that could otherwise be used for food, rent, putting some bucks aside for college for the kid, etc etc.

Again, it makes no sense. This isn't a choice of what kind of cake to eat. This is assessing a brutally punitive tax on self-employed people whose costs are the exact same as a W2 employee.

So the logic is that in order to show us you can support your family, you must give up $4,000.

Huh?????

Yep thats what they are saying, we the government will let you show us the income we require but only if you PAY us more to do it...give up your allowable deductions, expenses, depreciation or amortization it doesn't matter but that is the only way WE will let you pass GO. By cheating you....hehehe

I went through this last year with depreciaton of some major assets I purchased that can only be written off over a short period of time 5-7 years. When I checked with my CPA for her interpretation of my situation she had to call many other accountants she knew to get a consensus...SOME even said I COULDN'T NOT TAKE THE DEPRECIATION because it would raise flags, so it just shows the reason we have a zillion pages of tax law and 98% of it is just BS.

And i'm not a 1099 I am an S corporation so it all carries to my taxes.

And THIS is why I like the idea of the FAIR TAX. Eliminate all this BS and just pay tax on what you SPEND, not what you make.

[Steve_and_Lina 0]

{snip}

YOU have CHOSEN to file YOUR taxes in the way which was most beneficial to YOU to reduce the amount of money YOU paid to the government. GOOD FOR YOU!!!!!!! I agree. I will keep every $ I can for myself and my family since that is who I work to earn money for. The grocery store couldn't care less what my 1040 looks like, but they are greatly impressed with the appearance of US currency which I (and you) have more of because of how we CHOSE to file our taxes.

But you cannot come back later and say "But, but...." and get "credit" for the "income" you CHOSE to write off as "expense and costs". In fact you have MUCH MORE choice than a w-2 employee (who has none) and you have CHOSEN the one that is BEST for keeping money in your pocket but is the WORST for showing "income".

I mean, c'mon, stop with the righteous indignation. You sat down with your accountant (or as in my case, my accountant is me, yourself) and said "Make my tax as low as possible". Of course you did. So did I. (for 2007, I have since been incorporated and now receive a salary, w-2 and bonuses) You succeeded in making your tax as low as possible BUT the only way to do that was to make your INCOME as low as possible. Now you have to live with your CHOICE. That you didn't realize it would come back to bite you in the a$$ is not a valid excuse and does not change the rules of accounting and tax filing or affidavits of support.

Now if it makes you feel better, I will agree with you (I do, actually) and say "Yeah, you're right" and you will feel better? Go right ahead. File an I-134 with your insufficent income and no co-sponsor. There is another saying on this site..."Non Money, No Honey". Maybe we are wrong and it isn't really that way. Good luck.

Like I said, you need to forget about 2008. It was a CHOICE made without full information on your part, nothing to change it now without a huge tax expense. Better to get busy documenting the income you will make THIS year as it is more important anyway. You are spending 90% of your time on 10% of your problem. Not a good way to run a business.

You're right. I had no idea of the ramifications of how I filed my taxes. Silly me, I filed them honestly and didn't play any games with the government or hide things or fudge numbers to jigger the system. This is my income, these are my deductions, and if the government is telling us the only way to correctly play the system is to either cheat the system or cheat yourself, then something is seriously wrong and needs to be fixed.

I showed sufficient income according to a reasonable reading of the definition. I've discussed this with people and they agree- I've got a damn good argument.

It all hinges on the definition of "income before deductions." I've sent an email asking for a clarification of the phrase, since there are reasonable grounds to question the current interpretation. Everyone's got their opinions on it, but only one opinion will matter and we'll wait to see what that is.

[pushbrk 12,822]

Everyone's got their opinions on it, but only one opinion will matter and we'll wait to see what that is.

You got a mouse in your pocket? The rest of us already know the answer. Good luck though.

What will you do if you don't have an answer until after you provide the affidavit? What will you do in the event of a denial based on public charge concerns?

[Gary and Alla 3,694]

{snip}

YOU have CHOSEN to file YOUR taxes in the way which was most beneficial to YOU to reduce the amount of money YOU paid to the government. GOOD FOR YOU!!!!!!! I agree. I will keep every $ I can for myself and my family since that is who I work to earn money for. The grocery store couldn't care less what my 1040 looks like, but they are greatly impressed with the appearance of US currency which I (and you) have more of because of how we CHOSE to file our taxes.

But you cannot come back later and say "But, but...." and get "credit" for the "income" you CHOSE to write off as "expense and costs". In fact you have MUCH MORE choice than a w-2 employee (who has none) and you have CHOSEN the one that is BEST for keeping money in your pocket but is the WORST for showing "income".

I mean, c'mon, stop with the righteous indignation. You sat down with your accountant (or as in my case, my accountant is me, yourself) and said "Make my tax as low as possible". Of course you did. So did I. (for 2007, I have since been incorporated and now receive a salary, w-2 and bonuses) You succeeded in making your tax as low as possible BUT the only way to do that was to make your INCOME as low as possible. Now you have to live with your CHOICE. That you didn't realize it would come back to bite you in the a$$ is not a valid excuse and does not change the rules of accounting and tax filing or affidavits of support.

Now if it makes you feel better, I will agree with you (I do, actually) and say "Yeah, you're right" and you will feel better? Go right ahead. File an I-134 with your insufficent income and no co-sponsor. There is another saying on this site..."Non Money, No Honey". Maybe we are wrong and it isn't really that way. Good luck.

Like I said, you need to forget about 2008. It was a CHOICE made without full information on your part, nothing to change it now without a huge tax expense. Better to get busy documenting the income you will make THIS year as it is more important anyway. You are spending 90% of your time on 10% of your problem. Not a good way to run a business.

You're right. I had no idea of the ramifications of how I filed my taxes. Silly me, I filed them honestly and didn't play any games with the government or hide things or fudge numbers to jigger the system. This is my income, these are my deductions, and if the government is telling us the only way to correctly play the system is to either cheat the system or cheat yourself, then something is seriously wrong and needs to be fixed.

I showed sufficient income according to a reasonable reading of the definition. I've discussed this with people and they agree- I've got a damn good argument.

It all hinges on the definition of "income before deductions." I've sent an email asking for a clarification of the phrase, since there are reasonable grounds to question the current interpretation. Everyone's got their opinions on it, but only one opinion will matter and we'll wait to see what that is.

Well, that's fine. Don't take our word for it, no need to. But we are not making this stuff up, wish I was, then it would not apply to me (or would not have at one time) Believe me, or not, it is the rule. And Pushbrk was the one that pointed it out to me when I was a noobie and preparing to file the petion and he was spot-on correct. I was panicked over the same thing and cannot remember how many "posts" I made on the subject but it was probably the bulk of my posts at the time, though I never tried to re-define it. I simply got the information I could and made adjustments. It just isn't a matter of "opinion", it is a matter of tax law.

No one said you weren't honest, I presumed you were. There are several "honest ways" which are not games, but options, each of which has benefits and downsides. You CHOSE one of the honest ways to reduce your tax bite. The easiest and least expensive (tax wise). Nothing wrong with that except it hurts your income. I got tired of that and it was brought home to me when I filed MY affidavit of support. Fortunately I had read ahead far enough to make some changes late in 2007 which "saved my bacon" for that tax year. Though as it turned out, current income was more important. So maybe I jumped the gun and cost myself a few thousand dollars in taxes. It is water under the bridge now and there are benefits to incorporating and paying yourself as an employee, workers comp insurance for one, credit to my wife for contributions made to Social Security which give HER credits toward her "40 quarters" even though SHE isn't working. She arrived in September and has accrued 8 quarters of "credits" already because we filed joint for 2008. It is why many people incorporate (S corporation is a good choice and saves you some paperwork, as mentioned by Pizzadude above) It also provides asset protection which I judged to be important now that I am not a bachelor anymore and have a family to care for.

You still have a problem with the term "deduction" There are no business "deductions". Therefore the term "before deductions" cannot apply to a business. YOUR income IS considered "before deductions" as what appears on line 22. Your "deductions", adjustments, exemptions and credits come after this and are NOT counted against you. Each of these items reduces your INCOME TAX, none of them reduce your "total income" and none reduce your self-employment tax. ALL have specific definitions. Business does not have income and does not have "deductions". Business has "gross revenue", "costs" (specific costs to produce a specific result, raw material for manufacturing for example) and "expenses" which do not produce a specific result (electricity, telephone, office rent and vehicle expense for example). What is left over after all the costs and expenses is "profit" What does the business do with the "profit"? In your case, it gives ALL of it to you. This is YOUR "income". You pay self-employment tax on this. (also "after" line 22 and IT does not count against you either) Since it is often possible for a business owner to reduce his "profit" to -0- or even show a "loss", it is possible to avoid paying ANY self employment tax and income tax. Good news, except now you have "no income" which is not a problem just for USCIS. Try to get a home mortgage with "no income" or a car loan or a credit card. Also there is the matter of "entities". The business is a separate entity even of you are the ONLY "employee". Schedule C is a simpified form for small businesses which isn't really a good choice for someone making a living off a business. Yeah, for a money producing sideline hobby of selling homemade lip balms, it is fine. For a consultant working by himself or with other employees it is a terrible choice, saves tax dollars but costs big time in terms of scrambling your personal income all to hell. I mean when I was faced with this I was almost embarrased! Here I have a successful business for several years with gross revenues no one believes if I tell them, far exceeding two brothers who are doctors, and now I would do what? Ask my mother to co-sponsor me? Yeah, like that was going to happen! And put all at risk of a lawsuit? I got sued once because someone (alledgedly) got beat up by someone else in the parking lot of my building at 2am on a Sunday morning. So here I am sleeping at home with my new bride and someone can take a lot of our assets because they got beat up in my parking lot? No way! You think I want my wife to wake up to that? "Have a good rest, Sweetheart?" "Oh, yeah, while you were sleeping someone got beat up in our parking lot and now we will have to pay for their medical bills and we may have to sell your car to do it. But don't worry, we saved $3000 in taxes last year...before you arrived"

Taxes are not different than the whole visa process. How many people choose the K-1 because it is "fastest" and then find out their fiancee cannot travel for a few months or work for a few months? That's what the CR-1 is for. But no one wants to wait or go to the trouble of getting married first and then whines about their choice. You need to review ALL the tax options open to you and ALL the benefits and downsides and choose by what is best for your situation in life, not by what saves you the last nickle of taxes. OR if you DO choose that which saves you the last nickle, you need to accept the downside of that choice (and the upside which is more money in your pocket). YOU choose. YOU live with the choice.

The good news for you is the 2008 tax return is a neglible value if you can show adequate current income. Given the information you now have, why not?

[diadromous mermaid 36]

The OP would be well-served to also realise that this "issue" not only impacts immigration and his ability to demonstrate satisfactorily that he can meet the terms of the Affidavit of Support, but also plays a role in any potential sale of his "entity" down the road. Reducing business net profits by any and all available tax write-offs to save the requisite tax, while perfectly legal, can have a negative effect when determining an "entity's" value at sale time.

[pushbrk 12,822]

The OP would be well-served to also realise that this "issue" not only impacts immigration and his ability to demonstrate satisfactorily that he can meet the terms of the Affidavit of Support, but also plays a role in any potential sale of his "entity" down the road. Reducing business net profits by any and all available tax write-offs to save the requisite tax, while perfectly legal, can have a negative effect when determining an "entity's" value at sale time.

I think the OP has only his personal services to sell but it's a good point anyway. The same issue impacts qualification for loans, mortgages and any credit related applications, as the banks use line 22 as well. On the other hand banks have historically been willing to consider such things as company cars and tax advantages of the self-employed on a case by case basis. I say historically because in today's economic climate all bets are off on what a bank will consider. I expect nearly all have reverted back to strict line 22 policies.

[Gary and Alla 3,694]

The OP would be well-served to also realise that this "issue" not only impacts immigration and his ability to demonstrate satisfactorily that he can meet the terms of the Affidavit of Support, but also plays a role in any potential sale of his "entity" down the road. Reducing business net profits by any and all available tax write-offs to save the requisite tax, while perfectly legal, can have a negative effect when determining an "entity's" value at sale time.

I think the OP has only his personal services to sell but it's a good point anyway. The same issue impacts qualification for loans, mortgages and any credit related applications, as the banks use line 22 as well. On the other hand banks have historically been willing to consider such things as company cars and tax advantages of the self-employed on a case by case basis. I say historically because in today's economic climate all bets are off on what a bank will consider. I expect nearly all have reverted back to strict line 22 policies.

It would seem that way, Pushbrk. I know I used to be able to get a bank to consider the "profit" without the depreciation or "business use of home" expenses, but it seems lately (from the experience of others that have related it to me) that this is not the case. Seems now they go strictly by line 22. (Of course banks can do what they weant, so it is a general statement) but another reason I found the "schedule C" method unsatisfactory.

[thepizzadude 26]

The OP would be well-served to also realise that this "issue" not only impacts immigration and his ability to demonstrate satisfactorily that he can meet the terms of the Affidavit of Support, but also plays a role in any potential sale of his "entity" down the road. Reducing business net profits by any and all available tax write-offs to save the requisite tax, while perfectly legal, can have a negative effect when determining an "entity's" value at sale time.

I think the OP has only his personal services to sell but it's a good point anyway. The same issue impacts qualification for loans, mortgages and any credit related applications, as the banks use line 22 as well. On the other hand banks have historically been willing to consider such things as company cars and tax advantages of the self-employed on a case by case basis. I say historically because in today's economic climate all bets are off on what a bank will consider. I expect nearly all have reverted back to strict line 22 policies.

It would seem that way, Pushbrk. I know I used to be able to get a bank to consider the "profit" without the depreciation or "business use of home" expenses, but it seems lately (from the experience of others that have related it to me) that this is not the case. Seems now they go strictly by line 22. (Of course banks can do what they weant, so it is a general statement) but another reason I found the "schedule C" method unsatisfactory.

Same here, I have refinanced my home 3 times in 13 years and last 2 times it was a 10 day process, they didn't even ask for the appraisal or my income. This time the put me through the ringer, appraisal, proof of income and I was in much better position this time than either of the last 2.

It's crazy out there right now....LOL

[Steve_and_Lina 0]

Everyone's got their opinions on it, but only one opinion will matter and we'll wait to see what that is.

You got a mouse in your pocket? The rest of us already know the answer. Good luck though.

What will you do if you don't have an answer until after you provide the affidavit? What will you do in the event of a denial based on public charge concerns?

We have a cosponsor who's already filled out the paperwork and is waiting to hear if it needs to be submitted. We're not thrilled, but if that's the only way to do this that isn't going to cost us thousands of dollars, well, all parties agree it's for the best.

[Steve_and_Lina 0]

An update for folks.

I did a lot of digging and found this:

This issue (the definition of income/deductions for self-employed people) was addressed and a ruling issued in [Federal Register: June 21, 2006 (Volume 71, Number 119)] [Rules and Regulations] [Page 35731-35757]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr21jn06-27] on either page 35739 or 35740 of the Register.

The ruling/commentary was as follows:

Finally, one commenter believed that, for self-employed persons, the sponsor's income should be taken from line 7 of Schedule C to IRS Form 1040. That is to say, the self-employed sponsor's income should be the gross receipts of the person's business, minus the cost of goods sold, but without subtracting legitimate deductions the sponsor has taken.

USCIS cannot adopt this suggestion. The focus of concern is the sponsor's ability to provide the necessary support to the intending immigrant(s). Money paid for expenses included in part II of Schedule C is not available for this purpose. Moreover, it is the amount of income after deduction of expenses that is carried over from Schedule C to the Form 1040 itself.

Consequently, the final rule retains the original definition of income, but clarifies that total income means the entry for total income shown on the appropriate line of the relevant Federal individual income tax return, IRS Form 1040, 1040A, or 1040EZ, not the preliminary calculation of gross income on Schedule C. The final rule also tracks the language on IRS Forms 1040 and 1040A by using the term ``total income'' rather than ``gross income'' in relation to those forms, and the term ``adjusted gross income'' in relation to Form 1040EZ.

So Push and G&A, you were correct and I was not as to the official interpretation.

But that's not to say that the interpretation itself is correct. I have sent an email to USCIS challenging this policy.

First, G&A, it says explicitly that "the focus of concern is the sponsor's ability to provide the necessary support to the intending immigrant(s)" and that the I-864 helps to ensure that goal is met. Hang onto this thought.

"Money paid for expenses included in part II of Schedule C is not available for this purpose." This is where there's a meltdown in logic.

You're all sick of the example I gave about the auto/mileage deduction, but the fact remains that the mileage deduction is not paid back on a 1/1 basis. Quite the contrary, for every $2.50 I spend for a gallon of gas , I get a corresponding $13.75 or so writeoff. And every 3,000 miles or so, $15 for an oil change, and every 6 months, I dump in some parts. So I make out pretty well.

Some kinda thing with the per diem meal allowance. In my industry, most of my meals are paid for when I'm on the road. Free breakfast in the hotel, and the venues usually provide all other meals for the day. Yet I'm allowed to write off the daily per diem, which is anywhere from $40 to something like $115 (in Alaska) per day.

Cha-ching! Free money.

Now, this is where the logic fails. By taking all these deductions, Push, you're absolutely correct, it lessens my tax hit considerably, to the tune of several grand a year.

But.... what this USCIS ruling says is they won't consider overlooking these deductions and instead, they only want to look at line 22, and the only way you can bring up line 22 is by giving up these deductions and paying a significantly higher amount in taxes.

So.... in order to show them my "ability to provide the necessary support to the intending immigrant(s)", I would have to give up the deductions and fork over about $3-$4 grand to pay the tax differential, just to make the line 22 all pretty for them. Take away real money to show fake money.

If you don't find this hysterical in a "Kafka meets 'Brazil'" kinda-way, well, clearly you have zero sense of humor.

[JimVaPhuong 4,863]

I think you may have a case that a self-employed or sole proprietor should be able to make an individual appeal for special consideration, if they can demonstrate that their actual personal income is significantly higher than the total income on their individual tax return, provided that legitimate business deductions are being taken.

However, I don't think you have a strong case at all for a general rule change. Your situation may apply to many self employed people, but it may not apply to most, and it certainly doesn't apply to all.

In my case, I will never have business deductions that exceed my actual expenses to the degree that you have. I don't have to drive anywhere for my business. All of my materials are delivered by private courier or USPS, and all of my products are shipped the same way. I can deduct the actual cost of shipping, and no more. I don't get per diem because all of my business is conducted from my place of business, which is currently my home. It would be similar for someone who has a business selling products online, which is currently a substantial portion of the people who have home based businesses. For these people, and for myself, the amount carried over to line 12 of the 1040 is an accurate reflection of what's left from my business revenues after expenses. If they took the number from line 7 of the schedule C then it would grossly misrepresent the amount of personal income I actually receive from my business, since there is still a substantial amount of money from line 7 that get's spent on my business before the remainder ever ends up in my personal checking account.

Consultants and contract employees get a lot more "free money" than most resellers or manufacturers.

[pushbrk 12,822]

I think you may have a case that a self-employed or sole proprietor should be able to make an individual appeal for special consideration, if they can demonstrate that their actual personal income is significantly higher than the total income on their individual tax return, provided that legitimate business deductions are being taken.

However, I don't think you have a strong case at all for a general rule change. Your situation may apply to many self employed people, but it may not apply to most, and it certainly doesn't apply to all.

In my case, I will never have business deductions that exceed my actual expenses to the degree that you have. I don't have to drive anywhere for my business. All of my materials are delivered by private courier or USPS, and all of my products are shipped the same way. I can deduct the actual cost of shipping, and no more. I don't get per diem because all of my business is conducted from my place of business, which is currently my home. It would be similar for someone who has a business selling products online, which is currently a substantial portion of the people who have home based businesses. For these people, and for myself, the amount carried over to line 12 of the 1040 is an accurate reflection of what's left from my business revenues after expenses. If they took the number from line 7 of the schedule C then it would grossly misrepresent the amount of personal income I actually receive from my business, since there is still a substantial amount of money from line 7 that get's spent on my business before the remainder ever ends up in my personal checking account.

Consultants and contract employees get a lot more "free money" than most resellers or manufacturers.

Yes, an individual appeal seems (theoretically) justified to me for some cases like this one. But for others, not only do the deductions not exceed actual expenses but the actual expenses sometimes exceed the deductions, even when it's automobile expenses. The general rule is what it is primarily to close the door on the time and expense involved in dealing with such appeals. I expect they simply will reject such an appeal without consideration by pointing to their policy.

[Gary and Alla 3,694]

An update for folks.

I did a lot of digging and found this:

This issue (the definition of income/deductions for self-employed people) was addressed and a ruling issued in [Federal Register: June 21, 2006 (Volume 71, Number 119)] [Rules and Regulations] [Page 35731-35757]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr21jn06-27] on either page 35739 or 35740 of the Register.

The ruling/commentary was as follows:

Finally, one commenter believed that, for self-employed persons, the sponsor's income should be taken from line 7 of Schedule C to IRS Form 1040. That is to say, the self-employed sponsor's income should be the gross receipts of the person's business, minus the cost of goods sold, but without subtracting legitimate deductions the sponsor has taken.

USCIS cannot adopt this suggestion. The focus of concern is the sponsor's ability to provide the necessary support to the intending immigrant(s). Money paid for expenses included in part II of Schedule C is not available for this purpose. Moreover, it is the amount of income after deduction of expenses that is carried over from Schedule C to the Form 1040 itself.

Consequently, the final rule retains the original definition of income, but clarifies that total income means the entry for total income shown on the appropriate line of the relevant Federal individual income tax return, IRS Form 1040, 1040A, or 1040EZ, not the preliminary calculation of gross income on Schedule C. The final rule also tracks the language on IRS Forms 1040 and 1040A by using the term ``total income'' rather than ``gross income'' in relation to those forms, and the term ``adjusted gross income'' in relation to Form 1040EZ.

So Push and G&A, you were correct and I was not as to the official interpretation.

But that's not to say that the interpretation itself is correct. I have sent an email to USCIS challenging this policy.

First, G&A, it says explicitly that "the focus of concern is the sponsor's ability to provide the necessary support to the intending immigrant(s)" and that the I-864 helps to ensure that goal is met. Hang onto this thought.

"Money paid for expenses included in part II of Schedule C is not available for this purpose." This is where there's a meltdown in logic.

You're all sick of the example I gave about the auto/mileage deduction, but the fact remains that the mileage deduction is not paid back on a 1/1 basis. Quite the contrary, for every $2.50 I spend for a gallon of gas , I get a corresponding $13.75 or so writeoff. And every 3,000 miles or so, $15 for an oil change, and every 6 months, I dump in some parts. So I make out pretty well.

Some kinda thing with the per diem meal allowance. In my industry, most of my meals are paid for when I'm on the road. Free breakfast in the hotel, and the venues usually provide all other meals for the day. Yet I'm allowed to write off the daily per diem, which is anywhere from $40 to something like $115 (in Alaska) per day.

Cha-ching! Free money.

Now, this is where the logic fails. By taking all these deductions, Push, you're absolutely correct, it lessens my tax hit considerably, to the tune of several grand a year.

But.... what this USCIS ruling says is they won't consider overlooking these deductions and instead, they only want to look at line 22, and the only way you can bring up line 22 is by giving up these deductions and paying a significantly higher amount in taxes.

So.... in order to show them my "ability to provide the necessary support to the intending immigrant(s)", I would have to give up the deductions and fork over about $3-$4 grand to pay the tax differential, just to make the line 22 all pretty for them. Take away real money to show fake money.

If you don't find this hysterical in a "Kafka meets 'Brazil'" kinda-way, well, clearly you have zero sense of humor.

Yes of course it says the "focus of concern" is your family. Just like Obama says. You believe that? Then why to they let people "import" a finacee on a level of income that they cannot possibly provide a normal level of life for but which also happens to disqualify the benficiary from welfare? If they really cared about you they would at least give you the "tentative profit" line from the schedule C but they do not. As I said before, I do not agree with the interpretation either...it DOES NOT MATTER if you or I agree.

Did you expect it to say "the focus of concern is what money we can confiscate from him before anyone else gets their hands on it" ???

But I am glad you found a confirmation of what you alrweady knew from consulting VJ.