Self employed income from overseas during AOS

[ggsacks 82]

Hi VJers

I am in quite a unique employment situation and it's a bit hard to figure out what I should be doing in regards to tax.

I started working in May, after receiving my EAD, on a project for a US company. I wasn't employed directly by the company, but instead through a staffing agency in California, with which I filed a W-4.

That's the straightforward bit.

Last month the US company moved us to a staffing agency based in Europe as independent contractors. Payment is on invoice, and is made as a wire transfer to my bank account. Being a European company, there is obviously no tax withheld.

Does anyone here know what my tax obligations might be? I can only seem to find info on US Citizens earning income in this manner, or at a stretch resident aliens. I can never quite work out if I am a resident alien for tax purposes yet, as my AOS is still in progress and I don't yet have a green card.

Sincerely,

V. confused!

[CarlosAndSveta 808]

Your self-employment income is U.S. sourced income and is subject to U.S. taxation. See Internal Revenue Code Section 861(a)(3). Here is a link to the code section: http://www.law.cornell.edu/uscode/text/26/861

[ggsacks 82]

Thank you. What I'm wondering on a practical level is how I deal with this income, given there is nothing against my social security # and there'll be no 1099 issued.

I've never dealt with taxes here before so I'm not sure at what point I report the income, and how much tax is payable on it, etc. I really have no idea of my obligations. I plan on paying an accountant when it's time to file my 2014 tax, but not sure if there's steps I need to take before that?

Thank you for your help

[ggsacks 82]

My high level plan is basically to put away 30% off my income in a savings account until tax time, and hope that roughly covers what is due. I'm not sure if that's too little or too much, or whether I should be paying the IRS at some other point in time, though.

[CowBoE 429]

There are many self-employed situations where no 1099 is issued and nothing was reported

to IRS about your income, but in most situations you are required to file tax.

I would check with the tax accountant and start the US life clean.

A quick 15 to 30 minute consultation could be free to about $100.

[ggsacks 82]

Yep, I know I am required to file tax. People may have the wrong idea about my question - I'm not trying to avoid paying taxes (quite the opposite -I am very ideologically opposed to tax avoidance) but having never filed taxes here before, I am really confused about which forms I am supposed to file and when I am supposed to do it. I.e. I don't know if there's some self employed equivalent form to the W-4 that I need to file ahead of tax time.

You are right, it seems like the best thing to do up front will be to talk to an accountant, so I'll get that underway.

Thanks!

[sma1488 155]

Look up the information about making "estimated tax payments" on the IRS website.

[CowBoE 429]

Yep, I know I am required to file tax. People may have the wrong idea about my question - I'm not trying to avoid paying taxes (quite the opposite -I am very ideologically opposed to tax avoidance) but having never filed taxes here before, I am really confused about which forms I am supposed to file and when I am supposed to do it. I.e. I don't know if there's some self employed equivalent form to the W-4 that I need to file ahead of tax time.

You are right, it seems like the best thing to do up front will be to talk to an accountant, so I'll get that underway.

Thanks!

Yes, a quick consultation with tax accountant will save you big headache down the line.

I have been filing my own tax for 30 years. Nowadays, it is simpler to do using the tax software

such as Turbo Tax or H&R Block tax software. They are about $30 to $100.

These software walks you through the tax processing like interview and it fills in the correct forms.

That said, I think going through the tax accountant for at least first year and once you learn

how things are done, you can revert to tax software.

Good luck.

[ggsacks 82]

Yes, a quick consultation with tax accountant will save you big headache down the line.

I have been filing my own tax for 30 years. Nowadays, it is simpler to do using the tax software

such as Turbo Tax or H&R Block tax software. They are about $30 to $100.

These software walks you through the tax processing like interview and it fills in the correct forms.

That said, I think going through the tax accountant for at least first year and once you learn

how things are done, you can revert to tax software.

Good luck.

Sage advice, thank you. That's exactly what I'll do.

[Nich-Nick 3,354]

Hi VJers

I am in quite a unique employment situation and it's a bit hard to figure out what I should be doing in regards to tax.

I started working in May, after receiving my EAD, on a project for a US company. I wasn't employed directly by the company, but instead through a staffing agency in California, with which I filed a W-4.

That's the straightforward bit.

Last month the US company moved us to a staffing agency based in Europe as independent contractors. Payment is on invoice, and is made as a wire transfer to my bank account. Being a European company, there is obviously no tax withheld.

Does anyone here know what my tax obligations might be? I can only seem to find info on US Citizens earning income in this manner, or at a stretch resident aliens. I can never quite work out if I am a resident alien for tax purposes yet, as my AOS is still in progress and I don't yet have a green card.

Sincerely,

V. confused!

Assuming a lot since I don't know your entire history or income--

You will file a joint tax return with your spouse for 2014 tax year. That means your tax obligation is his tax obligation. The IRS does not like taxpayers to pay their entire tax bill at the end when filing. They slap on a penalty if you (jointly) owe too much.

A self-employed person normally makes quarterly estimated tax payments because there is no withholding by an employer. It is the way you do your own withholding for tax, social security, and Medicare. There is no reason why you can't pay in estimated tax payments right now using your name and SSN on a Form 1040-ES. The form is little more than a payment slip to accompany your check. The due dates are:

For the period: .....Due date:

Jan. 11 March 31 .....April 15

April 1 May 31 ....June 16

June 1 August 31 .....September 15

Sept. 1 Dec. 31 ....Janurary 15 next year

There is also now an electronic way to pay in I think, and more often than quarterly. I don't know the details. I still mail a quarterly check.

For filing taxes next year, a Schedule SE will calculate your self employment tax. (easy to remember SE...Self Employed). It is called self-employment tax, but really it is your Social Security and Medicare contributions. When a person has an employer, half of this obligation is paid by the employer and the other half comes out of the paycheck. When you are self-employed, you are responsible for the employer and employee part...ALL of it. But the IRS does give you a break and you can deduct some of the self-employment tax when you file the return.

0n another topic--

Even if you don't get a 1099, the IRS (or Turbo Tax) will ask you "Did you earn any wages not reported on a 1099"? They always have a way for you to report wages. if you are honest, you report them and you have indicated you will. I just wanted to point out they can easily be reported on a tax return.

Here's an IRS page on paying estimated taxes http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estimated-Taxes

And this http://www.irs.gov/publications/p505/ch02.html#d0e6371