Income and Loss

[Steve_and_Lina 0]

I think you're confounding "business income", or in your case "the income derived from the services you provide" from "personal income". In determining income for USCIS, a self-proprietor takes the inome of the business that is attributed to himself or left over to pay himself for the service he has offered to his entity ( that would be after business deductions, cost of goods sold, expenses etc) and uses that figure (from Schedule C) in lieu of providing a w-2, which is what an employee would have. The citation you quote from the FAM is written as it pertains to an individual, an indididual's income (not an entities' income), so "deductions" in this context refer to personal deductions, itemized and the federal standard deductions.

Actually, I'm in a discussion now with the US Consulate in Moscow on this very topic, as this is throwing a major wrench in the visa applications for my wife and stepdaughter.

I work mainly as an independent contractor and the majority of my income is reported to me on 1099s. When I do my taxes, I fill out a Schedule C and on line 7, enter my total income. Further down the form, I then enter all my deductions, subtract them from my income, and this figure gets transferred over to my 1040 on line 12.

Now, the issue of contention is this. According to the Foreign Affairs Manual Volume 9 (which is the guidebook for the regulations involving, among other things, immigrant visas), in section 9 FAM 40.41 N5.5-1, income is defined as follows:

"Income", for the purpose of Form I-864, means total unadjusted income as shown on the tax return, before deductions. Total unadjusted income includes not only salary (if any) but also monetary gains from any other source, such as rent, interest, dividends, etc.

It is my argument that the amount that gets transferred over to the 1040 line 12 is not unadjusted income, but adjusted income, since that figure represents my income minus deductions. As you can see, that conflicts with the directive I quoted above.

Instead, when considering income, I am contending that the State Department should use the figure on line 7 of the Schedule C and all other income on lines 7-11 and 13-21 on form 1040.

I will post a new comment when the Consulate issues their ruling. In the meantime, I'll continue to be sick to my stomach from worrying and unable to sleep. Isn't this fun?

No, I'm not confusing it. I don't own a business per se. I'm not incorporated or in any sort of partnership. I don't have any employees.

The entire thing hinges upon 2 definitions.

1- income, which we saw from above is defined as this- Total unadjusted income includes not only salary (if any) but also monetary gains from any other source, such as rent, interest, dividends, etc

I get hired for jobs and get paid by 1099 instead of by W2. This is my salary.

2- deduction.

Now, let's look at this. Suppose I owned a property and rented it out. According to the definition above, the rent would be defined as income and factored in and zero consideration is given to the cost/expense of the property- taxes, renovations/improvements, closing costs, etc etc. All things that deduct from the amount made from the property have zero bearing in this and you can claim the full amount of rent received as income for the purposes of the I-864, even if you spent 10 times the rent you received on renovations/etc. Heck, even if you torched the place and insurance paid zippo and you lost out on a $500,000 property, it wouldn't matter because USCIS/the State Dept don't care about that side of the equation. They only care about income.

So why should Schedule C deductions be treated differently? If the argument is because they're expenses I must pay, then consistency demands that W2 income be treated in the exact same manner. But it's not. The regulation specifically states "prededuction income". It doesn't differentiate between business/schedule C deductions and any of the 1040 deductions.

And again, if anything, because I am allowed to write off so many more things than W2 employees, I get to keep a far greater portion of my income and logically, this should weigh even more in my favor, not less.

It's a huge black hole I've fallen into here. Surely I can't be the first person who's run into this since these regs were put in back in '96. Or I just found a big loophole that other people completely missed. I don't know.

[Steve_and_Lina 0]

Sorry, I tried editing my previous response and couldn't. Here's what is should read:

I think you're confounding "business income", or in your case "the income derived from the services you provide" from "personal income". In determining income for USCIS, a self-proprietor takes the inome of the business that is attributed to himself or left over to pay himself for the service he has offered to his entity ( that would be after business deductions, cost of goods sold, expenses etc) and uses that figure (from Schedule C) in lieu of providing a w-2, which is what an employee would have. The citation you quote from the FAM is written as it pertains to an individual, an indididual's income (not an entities' income), so "deductions" in this context refer to personal deductions, itemized and the federal standard deductions.

Actually, I'm in a discussion now with the US Consulate in Moscow on this very topic, as this is throwing a major wrench in the visa applications for my wife and stepdaughter.

I work mainly as an independent contractor and the majority of my income is reported to me on 1099s. When I do my taxes, I fill out a Schedule C and on line 7, enter my total income. Further down the form, I then enter all my deductions, subtract them from my income, and this figure gets transferred over to my 1040 on line 12.

Now, the issue of contention is this. According to the Foreign Affairs Manual Volume 9 (which is the guidebook for the regulations involving, among other things, immigrant visas), in section 9 FAM 40.41 N5.5-1, income is defined as follows:

"Income", for the purpose of Form I-864, means total unadjusted income as shown on the tax return, before deductions. Total unadjusted income includes not only salary (if any) but also monetary gains from any other source, such as rent, interest, dividends, etc.

It is my argument that the amount that gets transferred over to the 1040 line 12 is not unadjusted income, but adjusted income, since that figure represents my income minus deductions. As you can see, that conflicts with the directive I quoted above.

Instead, when considering income, I am contending that the State Department should use the figure on line 7 of the Schedule C and all other income on lines 7-11 and 13-21 on form 1040.

I will post a new comment when the Consulate issues their ruling. In the meantime, I'll continue to be sick to my stomach from worrying and unable to sleep. Isn't this fun?

No, I'm not confusing it. I don't own a business per se. I'm not incorporated or in any sort of partnership. I don't have any employees.

The entire thing hinges upon 2 definitions.

1- income, which we saw from above is defined as this- Total unadjusted income includes not only salary (if any) but also monetary gains from any other source, such as rent, interest, dividends, etc

I get hired for jobs and get paid by 1099 instead of by W2. This is my salary and because of the IRS tax code, I must declare this income on a Schedule C, rather than on my 1040.

2- Unadjusted income

By definition, this is income before deductions.

Now, let's look at this. Suppose I owned a property and rented it out. According to the definition above, the rent would be defined as income and factored in and zero consideration is given to the cost/expense of the property- taxes, renovations/improvements, closing costs, etc etc. All things that deduct from the amount made from the property have zero bearing in this and you can claim the full amount of rent received as income for the purposes of the I-864, even if you spent 10 times the rent you received on renovations/etc. Heck, even if you torched the place and insurance paid zippo and you lost out on a $500,000 property, it wouldn't matter because USCIS/the State Dept don't care about that side of the equation. They only care about income.

So why should Schedule C deductions be treated differently? If the argument is because they're expenses I must pay, then consistency demands that W2 income be treated in the exact same manner. But it's not. The regulation specifically states "prededuction income". It doesn't differentiate between business/schedule C deductions and any of the 1040 deductions.

And again, if anything, because I am allowed to write off so many more things than W2 employees, I get to keep a far greater portion of my income and logically, this should weigh even more in my favor, not less. To take your argument, when all is said and done, after expenses I have more money to pay myself, especially considering that what I am allowed to write off in expenses in terms of mileage greatly exceeds what I actually pay.

But this should be a moot point, going back to the whole "unadjusted income" argument.

It's a huge black hole I've fallen into here. Surely I can't be the first person who's run into this since these regs were put in back in '96. Or I just found a big loophole that other people completely missed. I don't know.

[pushbrk 12,822]

No, I'm not confusing it.

No, you're not confusing it, just conveniently misinterpreting it. The context is quite clear and is defined further as income from line 22 of the 1040 form. I'm self employed too, have no employees, overhead or inventory, (Well one of my businesses has a little inventory now and then.) and I'm not incorporated. It's all 1099 or direct income. Line 22 rules. You'd best learn to live with it. The tax advantages of being self-employed can come back to bite you on an affidavit of support.

[Brother Hesekiel 2,236]

Pshbrk,

your resonses are superb, right on the money, so to speak.

I am self employed for decades, doing okay. After getting married to me, my wife fulfilled her long time dream of opening her own business as well. Almost 3 years into the venture, she is still losing money. Last month it was $800, to give you an idea.

Early in 2008, my business partner and I purchases commercial real estate for our business, and spent silly money to fix it up.

Finally, we have a daughter as a dependant in college, quite expensive, so we need a certain amount of money to live on, all of which is coming from my income.

Since my wife and I are filing income taxes together, I have legal deductions for 2008 that would have reduced our net income to marginal amount barely above the poverty amount. What did I do?

I did not even claim all of my deductions, paid Uncle Sam more money than I had to, just as to not have them raise any eyebrows when looking at our tax returns.

That's the solution. When facing an afidavid of support, deduct only so much that you are still making "enough." That's legal. If that's not enough, add income from babysitting or dogwalking until you reach the 125% of the poverty amount.

Edited July 19, 2009 by Just Bob

[Gary and Alla 3,694]

BTW I have my own business and dealt with this issue quite extensively last year moving money from one place to other to qualify without giving up ALL my allowable write offs. This process is very unfair to the business owner, you must give up GENUINE allowable expenses sometimes to qualify, and that in my opinion is unfair.

I'm confused by this. How is this unfair to business owners? What you have left on line 22 is more or less the same as what an employee would have left here - total personal income before adjustments, taxes, etc. Not deducting business expenses would make this number higher, but the fact is that you still spent that money on your business - it wasn't available for you to live on, and it won't be available for you to support your spouse.

No Jim, I agree with Pizza Dude. It is definitely a problem for business owners. For example my 2007 ITR (which was used for our interview) was a self employed return, schedule C. Now for example I can claim virtually ALL automobile ownership expenses as a business expense. This means it reduces my "income" but I do not have to pay for a car. So while the normal employee is getting "credit" for his gross income and then spending part of it to pay for a car (and therefore part of his expense to support a fiancee) I do not get that credit. If I claim business depreciation, it "reduces" my line 22 (by a large amount) yet "costs" me nothing. I get to keep all that money tax free. Rather than be "penalized" for this, I should get "extra credit" but I do not.

Business use of a home...form 8829, is nothing but a tax gift to small business owners. Yet it counts against me. Money I use to pay for my home (and support my family) can be deducted from my "income" but counts "against me" even though it is used to put a roof over my fiancee's (wife's) head!!! I USE the "income" to pay for my home, subsequently get to "deduct" from my profit (income) and then it counts against me!!!!!!!! The poor shlub who gets his paycheck ravaged by tax withholding and THEN has to pay for his house gets full "credit" for all his "income" BEFORE tax!

The typical "employee" is paying for their home PLUS paying tax on the money they used to pay for the home. I, on the other hand, get a portion of my home tax free (ALL tax free if I do the paperwork right) which puts me in a BETTER position than an "employee" earning the same "gross income" but it doesn't show that way "on paper".

One thing for business owners to keep in mind...unless consulate specific it is NOT necessary to meet this year's guidelines with LAST years income, so what your 2008 return does not matter so much as if you can PROVE your current income meets the guidelines. You can do this with P&L statements which do not include such end-of-year "goodies" as depreciation, business use of home, capital purchases, etc. You can also use current personal bank statements and/or bank letter. Bank letters are excellent for small business owners as they act as a way to verify income (much as check stubs for employees) but will also show (to your benefit) such non-taxable, "non" income such as business expense re-imbursement, hey I re-imburse myself over $1000 each month for business expense which is NOT income, but shows up just the same on my bank letter as a "deposit". It is. essentially. the withdrawl and re-deposit of the SAME $1000 each month. This amounts to "additional" deposits of $12,000+ per year.

It is often better (as I mentioned in my first post) for the self-employed person to make a solid documentation of "current" income, rather than go by the previous year's income.

While it would not be correct to give someone credit for the gross revenues of the business, there really should be a better formula for self employed persons

[Gary and Alla 3,694]

I think you're confounding "business income", or in your case "the income derived from the services you provide" from "personal income". In determining income for USCIS, a self-proprietor takes the inome of the business that is attributed to himself or left over to pay himself for the service he has offered to his entity ( that would be after business deductions, cost of goods sold, expenses etc) and uses that figure (from Schedule C) in lieu of providing a w-2, which is what an employee would have. The citation you quote from the FAM is written as it pertains to an individual, an indididual's income (not an entities' income), so "deductions" in this context refer to personal deductions, itemized and the federal standard deductions.

Actually, I'm in a discussion now with the US Consulate in Moscow on this very topic, as this is throwing a major wrench in the visa applications for my wife and stepdaughter.

I work mainly as an independent contractor and the majority of my income is reported to me on 1099s. When I do my taxes, I fill out a Schedule C and on line 7, enter my total income. Further down the form, I then enter all my deductions, subtract them from my income, and this figure gets transferred over to my 1040 on line 12.

Now, the issue of contention is this. According to the Foreign Affairs Manual Volume 9 (which is the guidebook for the regulations involving, among other things, immigrant visas), in section 9 FAM 40.41 N5.5-1, income is defined as follows:

"Income", for the purpose of Form I-864, means total unadjusted income as shown on the tax return, before deductions. Total unadjusted income includes not only salary (if any) but also monetary gains from any other source, such as rent, interest, dividends, etc.

It is my argument that the amount that gets transferred over to the 1040 line 12 is not unadjusted income, but adjusted income, since that figure represents my income minus deductions. As you can see, that conflicts with the directive I quoted above.

Instead, when considering income, I am contending that the State Department should use the figure on line 7 of the Schedule C and all other income on lines 7-11 and 13-21 on form 1040.

I will post a new comment when the Consulate issues their ruling. In the meantime, I'll continue to be sick to my stomach from worrying and unable to sleep. Isn't this fun?

No, I'm not confusing it. I don't own a business per se. I'm not incorporated or in any sort of partnership. I don't have any employees.

The entire thing hinges upon 2 definitions.

1- income, which we saw from above is defined as this- Total unadjusted income includes not only salary (if any) but also monetary gains from any other source, such as rent, interest, dividends, etc

I get hired for jobs and get paid by 1099 instead of by W2. This is my salary.

2- deduction.

Now, let's look at this. Suppose I owned a property and rented it out. According to the definition above, the rent would be defined as income and factored in and zero consideration is given to the cost/expense of the property- taxes, renovations/improvements, closing costs, etc etc. All things that deduct from the amount made from the property have zero bearing in this and you can claim the full amount of rent received as income for the purposes of the I-864, even if you spent 10 times the rent you received on renovations/etc. Heck, even if you torched the place and insurance paid zippo and you lost out on a $500,000 property, it wouldn't matter because USCIS/the State Dept don't care about that side of the equation. They only care about income.

So why should Schedule C deductions be treated differently? If the argument is because they're expenses I must pay, then consistency demands that W2 income be treated in the exact same manner. But it's not. The regulation specifically states "prededuction income". It doesn't differentiate between business/schedule C deductions and any of the 1040 deductions.

And again, if anything, because I am allowed to write off so many more things than W2 employees, I get to keep a far greater portion of my income and logically, this should weigh even more in my favor, not less.

It's a huge black hole I've fallen into here. Surely I can't be the first person who's run into this since these regs were put in back in '96. Or I just found a big loophole that other people completely missed. I don't know.

All good reasoning. I agree. But for the pruposes of the affidavit ...ONLY line 22 counts.

Period. end of story. We can argue and banter and it makes no difference. As Pushbrk points out, "get used to it". You are not the first person. I have run into it also and have consulted many others in the same situation. And remember you have to do this for the AOS also and have to provide the last THREE years for that one. I know MANY self employed people that have foregone legitimate business expenses and costs in order to "increase" their income (and pay MUCH higher taxes) just to get through this process. I am not sure that is the BEST way, but it is a way.

[JimVaPhuong 4,863]

BTW I have my own business and dealt with this issue quite extensively last year moving money from one place to other to qualify without giving up ALL my allowable write offs. This process is very unfair to the business owner, you must give up GENUINE allowable expenses sometimes to qualify, and that in my opinion is unfair.

I'm confused by this. How is this unfair to business owners? What you have left on line 22 is more or less the same as what an employee would have left here - total personal income before adjustments, taxes, etc. Not deducting business expenses would make this number higher, but the fact is that you still spent that money on your business - it wasn't available for you to live on, and it won't be available for you to support your spouse.

No Jim, I agree with Pizza Dude. It is definitely a problem for business owners. For example my 2007 ITR (which was used for our interview) was a self employed return, schedule C. Now for example I can claim virtually ALL automobile ownership expenses as a business expense. This means it reduces my "income" but I do not have to pay for a car. So while the normal employee is getting "credit" for his gross income and then spending part of it to pay for a car (and therefore part of his expense to support a fiancee) I do not get that credit. If I claim business depreciation, it "reduces" my line 22 (by a large amount) yet "costs" me nothing. I get to keep all that money tax free. Rather than be "penalized" for this, I should get "extra credit" but I do not.

Business use of a home...form 8829, is nothing but a tax gift to small business owners. Yet it counts against me. Money I use to pay for my home (and support my family) can be deducted from my "income" but counts "against me" even though it is used to put a roof over my fiancee's (wife's) head!!! I USE the "income" to pay for my home, subsequently get to "deduct" from my profit (income) and then it counts against me!!!!!!!! The poor shlub who gets his paycheck ravaged by tax withholding and THEN has to pay for his house gets full "credit" for all his "income" BEFORE tax!

The typical "employee" is paying for their home PLUS paying tax on the money they used to pay for the home. I, on the other hand, get a portion of my home tax free (ALL tax free if I do the paperwork right) which puts me in a BETTER position than an "employee" earning the same "gross income" but it doesn't show that way "on paper".

One thing for business owners to keep in mind...unless consulate specific it is NOT necessary to meet this year's guidelines with LAST years income, so what your 2008 return does not matter so much as if you can PROVE your current income meets the guidelines. You can do this with P&L statements which do not include such end-of-year "goodies" as depreciation, business use of home, capital purchases, etc. You can also use current personal bank statements and/or bank letter. Bank letters are excellent for small business owners as they act as a way to verify income (much as check stubs for employees) but will also show (to your benefit) such non-taxable, "non" income such as business expense re-imbursement, hey I re-imburse myself over $1000 each month for business expense which is NOT income, but shows up just the same on my bank letter as a "deposit". It is. essentially. the withdrawl and re-deposit of the SAME $1000 each month. This amounts to "additional" deposits of $12,000+ per year.

It is often better (as I mentioned in my first post) for the self-employed person to make a solid documentation of "current" income, rather than go by the previous year's income.

While it would not be correct to give someone credit for the gross revenues of the business, there really should be a better formula for self employed persons

Well, I guess all of those "gifts" from the IRS weren't of any use to me. Everything I deducted for a business expense reflected money I actually spent. My business is conducted entirely from my home, so no vehicle related deductions. The city I live in specifically disallows using more than 10% of my home for a home based business, and I have to combine the use of my office between my business and my day job - no exclusive use. My city also disallows meeting clients and vendors in my home, and disallows the use of separate structures or attached garages for the business. In other words, the rules for a home based business in my city seem to have been written specifically to prevent me from getting any tax benefits from it. Of course, that doesn't stop the city from making me pay taxes on my business. Not that it matters much, because the bulk of my expenses were above line 7 - cost of goods. I don't provide a service - I manufacture and sell products.

Anyway, I'll concede that some of you are getting legitimate deductions that far exceed your actual expenses. Kudos! I still don't see how this is unfair to self-employed or business owners. If anything, it's unfair to an employee who has many of the same expenses, but cannot deduct them. What you get from the IRS in return for those deductions is real tax savings every year. How is USCIS supposed to know how much you actually spent on your business versus how much you claimed to have spent on your tax return? I agree with pushbrk - you can't have your cake and eat it too.

Just my 1.25 cents (adjusted for depreciation).

[pushbrk 12,822]

I know MANY self employed people that have foregone legitimate business expenses and costs in order to "increase" their income (and pay MUCH higher taxes) just to get through this process. I am not sure that is the BEST way, but it is a way.

Of course, you can turn around and file amended returns later, so there's really no money lost long term.

[Steve_and_Lina 0]

No, I'm not confusing it.

No, you're not confusing it, just conveniently misinterpreting it. The context is quite clear and is defined further as income from line 22 of the 1040 form. I'm self employed too, have no employees, overhead or inventory, (Well one of my businesses has a little inventory now and then.) and I'm not incorporated. It's all 1099 or direct income. Line 22 rules. You'd best learn to live with it. The tax advantages of being self-employed can come back to bite you on an affidavit of support.

Can you cite precisely the law or regulation where it says that "preduction income" is defined by only by what is entered Line 22?

Nothing that I have read has specifically said that this is the only interpretation. The wording is very hazy in the reg I cited, only stating "pre-deduction income" on the "income tax form". Well, Schedule C is an "income tax form" and I've established my preduction income via my 1099s and W2s, so failing a direct regulation or ruling that establishes Line 22 as the ONLY definition, I have a valid legal argument. More than valid, actually, because in this instance, the government appears to be violating the regulation by considering post-deduction income, contrary (again) to the regulation I cited.

And really, "learn to live with it"? I'm not the sort to stand by silently and be incorrectly penalized and just because others have chosen to done so does not validate that as a reasonable course of action. If according to the regulations (and I am shown so conclusively) I am incorrect, then I will accept it. But to this point, the issue remains wide open.

[diadromous mermaid 36]

Help me to better understand your feeling that the business eowner is being penalised. Where is the business owner's dilemma (unfairness in the "income" requirement) any different from a hard-working food server that gets cash tips that far exceed her income that is paid direct from the employer? She can report her tips and show a healthier income for USCIS purposes, and pay more tax as a consequence, or she can not declare a sizeable amount of her earnings, and reap the tax rewards, and fail to meet the USCIS income requirement. How does that differ from what you are claiming?

No, I'm not confusing it.

No, you're not confusing it, just conveniently misinterpreting it. The context is quite clear and is defined further as income from line 22 of the 1040 form. I'm self employed too, have no employees, overhead or inventory, (Well one of my businesses has a little inventory now and then.) and I'm not incorporated. It's all 1099 or direct income. Line 22 rules. You'd best learn to live with it. The tax advantages of being self-employed can come back to bite you on an affidavit of support.

Can you cite precisely the law or regulation where it says that "preduction income" is defined by only by what is entered Line 22?

Nothing that I have read has specifically said that this is the only interpretation. The wording is very hazy in the reg I cited, only stating "pre-deduction income" on the "income tax form". Well, Schedule C is an "income tax form" and I've established my preduction income via my 1099s and W2s, so failing a direct regulation or ruling that establishes Line 22 as the ONLY definition, I have a valid legal argument. More than valid, actually, because in this instance, the government appears to be violating the regulation by considering post-deduction income, contrary (again) to the regulation I cited.

And really, "learn to live with it"? I'm not the sort to stand by silently and be incorrectly penalized and just because others have chosen to done so does not validate that as a reasonable course of action. If according to the regulations (and I am shown so conclusively) I am incorrect, then I will accept it. But to this point, the issue remains wide open.

[Steve_and_Lina 0]

Help me to better understand your feeling that the business eowner is being penalised. Where is the business owner's dilemma (unfairness in the "income" requirement) any different from a hard-working food server that gets cash tips that far exceed her income that is paid direct from the employer? She can report her tips and show a healthier income for USCIS purposes, and pay more tax as a consequence, or she can not declare a sizeable amount of her earnings, and reap the tax rewards, and fail to meet the USCIS income requirement. How does that differ from what you are claiming?

No, I'm not confusing it.

No, you're not confusing it, just conveniently misinterpreting it. The context is quite clear and is defined further as income from line 22 of the 1040 form. I'm self employed too, have no employees, overhead or inventory, (Well one of my businesses has a little inventory now and then.) and I'm not incorporated. It's all 1099 or direct income. Line 22 rules. You'd best learn to live with it. The tax advantages of being self-employed can come back to bite you on an affidavit of support.

Can you cite precisely the law or regulation where it says that "preduction income" is defined by only by what is entered Line 22?

Nothing that I have read has specifically said that this is the only interpretation. The wording is very hazy in the reg I cited, only stating "pre-deduction income" on the "income tax form". Well, Schedule C is an "income tax form" and I've established my preduction income via my 1099s and W2s, so failing a direct regulation or ruling that establishes Line 22 as the ONLY definition, I have a valid legal argument. More than valid, actually, because in this instance, the government appears to be violating the regulation by considering post-deduction income, contrary (again) to the regulation I cited.

And really, "learn to live with it"? I'm not the sort to stand by silently and be incorrectly penalized and just because others have chosen to done so does not validate that as a reasonable course of action. If according to the regulations (and I am shown so conclusively) I am incorrect, then I will accept it. But to this point, the issue remains wide open.

I'm not going to compare apples/oranges here, nor get into the ethical issues of filing a fraudulent return/falsely declaring income. Those are other discussions for other posts. I am only concerned about this narrow issue which directly affects me.

My contention that I am being penalized stems from all the arguments I've laid out in my previous posts- that those of us who receive 1099 income are being treated differently than those who receive W2 income in that for us, they are considering post-deduction income, which directly contravenes 9 FAM 40.41 N5.5-1, which state that income is defined as follows:

"Income", for the purpose of Form I-864, means total unadjusted income as shown on the tax return, before deductions. Total unadjusted income includes not only salary (if any) but also monetary gains from any other source, such as rent, interest, dividends, etc.

Read it and parse it carefully and then show me where the regulation directly refutes my argument. It doesn't. Others here think it does, but they are only offering their interpretation of what the regulation says, unsupported by any direct citation of the regulation or immigration court precedent.

[thepizzadude 26]

Help me to better understand your feeling that the business eowner is being penalised. Where is the business owner's dilemma (unfairness in the "income" requirement) any different from a hard-working food server that gets cash tips that far exceed her income that is paid direct from the employer? She can report her tips and show a healthier income for USCIS purposes, and pay more tax as a consequence, or she can not declare a sizeable amount of her earnings, and reap the tax rewards, and fail to meet the USCIS income requirement. How does that differ from what you are claiming?

No, I'm not confusing it.

No, you're not confusing it, just conveniently misinterpreting it. The context is quite clear and is defined further as income from line 22 of the 1040 form. I'm self employed too, have no employees, overhead or inventory, (Well one of my businesses has a little inventory now and then.) and I'm not incorporated. It's all 1099 or direct income. Line 22 rules. You'd best learn to live with it. The tax advantages of being self-employed can come back to bite you on an affidavit of support.

Can you cite precisely the law or regulation where it says that "preduction income" is defined by only by what is entered Line 22?

Nothing that I have read has specifically said that this is the only interpretation. The wording is very hazy in the reg I cited, only stating "pre-deduction income" on the "income tax form". Well, Schedule C is an "income tax form" and I've established my preduction income via my 1099s and W2s, so failing a direct regulation or ruling that establishes Line 22 as the ONLY definition, I have a valid legal argument. More than valid, actually, because in this instance, the government appears to be violating the regulation by considering post-deduction income, contrary (again) to the regulation I cited.

And really, "learn to live with it"? I'm not the sort to stand by silently and be incorrectly penalized and just because others have chosen to done so does not validate that as a reasonable course of action. If according to the regulations (and I am shown so conclusively) I am incorrect, then I will accept it. But to this point, the issue remains wide open.

Well just to put you back out in the pasture ONE is illegal and ONE is not...Thanks for joining play again soon.

[Steve_and_Lina 0]

Also, one more point.

If the amount on Line 22 were considered the be-all end-all figure, wouldn't it state this in the directions for the I-864, something direct and unequivocal like "Enter the amount from Line 22 of Form 1040 here."?

But it doesn't, and instead gives examples of what is considered income, including salary.

Many times the government parses the law to our disadvantage. In this instance, it might work in the other direction and I hope this is the case, not just for me and my wife and stepdaughter, but for everyone else who finds themselves in the same boat and works hard, abides by the rules, yet find themselves being unfairly held to a different standard.

[diadromous mermaid 36]

Sorry, but I just don't see your point. The "total unadjusted income before deductions", in my opinion is not referring to business deductions (namely the costs incurred to provide the service) but rather the social security deduction and other deductions (if applicable) which appear below line 22 (LINES 23-35) on the 1040.

Help me to better understand your feeling that the business eowner is being penalised. Where is the business owner's dilemma (unfairness in the "income" requirement) any different from a hard-working food server that gets cash tips that far exceed her income that is paid direct from the employer? She can report her tips and show a healthier income for USCIS purposes, and pay more tax as a consequence, or she can not declare a sizeable amount of her earnings, and reap the tax rewards, and fail to meet the USCIS income requirement. How does that differ from what you are claiming?

No, I'm not confusing it.

No, you're not confusing it, just conveniently misinterpreting it. The context is quite clear and is defined further as income from line 22 of the 1040 form. I'm self employed too, have no employees, overhead or inventory, (Well one of my businesses has a little inventory now and then.) and I'm not incorporated. It's all 1099 or direct income. Line 22 rules. You'd best learn to live with it. The tax advantages of being self-employed can come back to bite you on an affidavit of support.

Can you cite precisely the law or regulation where it says that "preduction income" is defined by only by what is entered Line 22?

Nothing that I have read has specifically said that this is the only interpretation. The wording is very hazy in the reg I cited, only stating "pre-deduction income" on the "income tax form". Well, Schedule C is an "income tax form" and I've established my preduction income via my 1099s and W2s, so failing a direct regulation or ruling that establishes Line 22 as the ONLY definition, I have a valid legal argument. More than valid, actually, because in this instance, the government appears to be violating the regulation by considering post-deduction income, contrary (again) to the regulation I cited.

And really, "learn to live with it"? I'm not the sort to stand by silently and be incorrectly penalized and just because others have chosen to done so does not validate that as a reasonable course of action. If according to the regulations (and I am shown so conclusively) I am incorrect, then I will accept it. But to this point, the issue remains wide open.

I'm not going to compare apples/oranges here, nor get into the ethical issues of filing a fraudulent return/falsely declaring income. Those are other discussions for other posts. I am only concerned about this narrow issue which directly affects me.

My contention that I am being penalized stems from all the arguments I've laid out in my previous posts- that those of us who receive 1099 income are being treated differently than those who receive W2 income in that for us, they are considering post-deduction income, which directly contravenes 9 FAM 40.41 N5.5-1, which state that income is defined as follows:

"Income", for the purpose of Form I-864, means total unadjusted income as shown on the tax return, before deductions. Total unadjusted income includes not only salary (if any) but also monetary gains from any other source, such as rent, interest, dividends, etc.

Read it and parse it carefully and then show me where the regulation directly refutes my argument. It doesn't. Others here think it does, but they are only offering their interpretation of what the regulation says, unsupported by any direct citation of the regulation or immigration court precedent.

[diadromous mermaid 36]

Help me to better understand your feeling that the business eowner is being penalised. Where is the business owner's dilemma (unfairness in the "income" requirement) any different from a hard-working food server that gets cash tips that far exceed her income that is paid direct from the employer? She can report her tips and show a healthier income for USCIS purposes, and pay more tax as a consequence, or she can not declare a sizeable amount of her earnings, and reap the tax rewards, and fail to meet the USCIS income requirement. How does that differ from what you are claiming?

No, I'm not confusing it.

No, you're not confusing it, just conveniently misinterpreting it. The context is quite clear and is defined further as income from line 22 of the 1040 form. I'm self employed too, have no employees, overhead or inventory, (Well one of my businesses has a little inventory now and then.) and I'm not incorporated. It's all 1099 or direct income. Line 22 rules. You'd best learn to live with it. The tax advantages of being self-employed can come back to bite you on an affidavit of support.

Can you cite precisely the law or regulation where it says that "preduction income" is defined by only by what is entered Line 22?

Nothing that I have read has specifically said that this is the only interpretation. The wording is very hazy in the reg I cited, only stating "pre-deduction income" on the "income tax form". Well, Schedule C is an "income tax form" and I've established my preduction income via my 1099s and W2s, so failing a direct regulation or ruling that establishes Line 22 as the ONLY definition, I have a valid legal argument. More than valid, actually, because in this instance, the government appears to be violating the regulation by considering post-deduction income, contrary (again) to the regulation I cited.

And really, "learn to live with it"? I'm not the sort to stand by silently and be incorrectly penalized and just because others have chosen to done so does not validate that as a reasonable course of action. If according to the regulations (and I am shown so conclusively) I am incorrect, then I will accept it. But to this point, the issue remains wide open.

Well just to put you back out in the pasture ONE is illegal and ONE is not...Thanks for joining play again soon.

I wasn't comparing legal and illegal. I was trying to understand why the OP is focused on the fact that the figure he transfers from his Schedule C to line 7 is a penalising him. Frankly, I think and I am not a tax person, that he's confusing business deductions from personal deductions.

Edited July 19, 2009 by diadromous mermaid