Tax for an NRA Independent Contractor

[nostrich 0]

Maybe you guys can help me with this. I'm a UK citizen in the US with my wife, under the VWP, preparing to apply for a CR-1 visa. I've been doing some work as an independent contractor for a US citizen (not my wife). Neither of us researched this well enough before I started working for him, and now we've run into some confusion.

I want to be put on my wife's bank account, and to do that, we were told I'd need proof of having applied for a TIN number. And that was something we'd been planning to do anyway, so that I can pay the appropriate tax on the money I've earned as an independent contractor. But int he process of researching it, we've run into some confusion. Here's where we're at.

I need an ITIN, and to apply for that, I also need to file a federal tax return with my ITIN application. So the guy I've been working for and I have been researching the requirements for us relating to tax. First we discovered that a US citizen was supposed to withhold 30% tax from an NRA independent contractor, which he has not been doing. But the IRS website also says we're exempt from that tax if a tax treaty exists between the two countries. So I looked up the US tax treaties with the UK, and it looks like we're exempt providing I haven't been working out of a "permanent establishment" -- if I understand what that is correctly, it means I haven't been, since I work from my wife's home, not a place of business or anything like that. And I'm not sure if it makes a difference, but I'm not contracting for a business either, I'm just providing a personal service, doing some work on this guy's personal website, that I'm pretty sure isn't set up as a business in any way.

But the tricky part is, if that is indeed the case, then it looks like I don't even need to file taxes, and thus have no reason to apply for an ITIN, and am likely to be refused if I do apply, and therefore can't be put onto my wife's bank account. But I also read ont he IRS website that I can still apply for an ITIN if I meet the exemption requirements, but that's as far as I've got so far -- I haven't figured out what forms I need to do in that situation.

By the way: the guy isn't paying me a huge amount of money. My net income from him for the year is around $2,500 -- the first payment was in GBP, and the second in USD, which may or may not complicate matters. I've used the majority of the money on purchasing plane tickets to and from the US throughout the year.

So my questions are:

1) Have I understood all of this correctly?

2) What do I need to do to get an ITIN number and get added on to my wife's bank account. (She's with Huntington, if it makes a difference.) And, if necessary, file a tax return.

I can happily provide more details if necessary.

We -- my wife, myself, and the guy paying me -- all agree it would be in our best interests for at least one of us to hire an accountant, or someone that knows a thing or two about tax law, at least for advice -- but while the guy paying me can probably afford to do that, my wife and I probably can't. Not comfortably, at least. If it turns out we need to, then I'm sure we can figure something out, but we're hoping we can avoid it.

[Deputy Purple 1,294]

No info for you regarding working while in the US on a visitors Visa or via the VWP...

To be added to your USC Wife's bank account all you need is to provide IRS form W8-BEN (google it). I was able to add my wife even before we were married using this form.

The ITIN is required if your wife wants to list you on her US Tax Filing.

[Brother Hesekiel 2,235]

Hmmmmmmmmmmmm . . . .

1) Bob, the other Bob, is correct in regard to the bank account.

2) If you work as an independent contractor in the US, you should have received a 1099 form from the guy you worked for, or you might still get it in January. Often people don't get one, which is not a big deal, but you would nonetheless state the amount received on your tax return as 1099 income.

Edited December 31, 2009 by Just Bob

[rebeccajo 14]

You do realize that as a VWP entrant, it was illegal for you to be working in the US?

[Brother Hesekiel 2,235]

Doesn't matter . . . all is forgiven at the AOS anyway as long as the work isn't related to prostitution or illegal drugs. But Uncle Sam still wants his share of the doe, so the O.P. has to declare that income on their tax return. If it happens that the other guy mailed a 1099 to the IRS and the I.O. doesn't match that amount on their tax return, he'll have a problem with Uncle Sam's elves.