Affidavit of Support for K-1

[bruc 0]

Maybe you guys can help out with this.

I was in my accountants office yesterday picking up some papers. My accountant asked me some questions about the AOS for the K-1 on another client of his doing the K-1 on a girl from Russia . He knows he has to have my papers ready when my fiance goes for her interview also.

The question he put to me was....can a Schedule C be used to show AOS for his fiance ?

I told him I had no idea but I would asked some good folks in a forum and get back with him as soons as possible.

He did tell me that the gross income of the guy was $48.975.00 for 2006. I have no idea what his net income would be.

Any comments or suggestions would be much appreciated.

bruc

[payxibka 10,045]

Maybe you guys can help out with this.

I was in my accountants office yesterday picking up some papers. My accountant asked me some questions about the AOS for the K-1 on another client of his doing the K-1 on a girl from Russia . He knows he has to have my papers ready when my fiance goes for her interview also.

The question he put to me was....can a Schedule C be used to show AOS for his fiance ?

I told him I had no idea but I would asked some good folks in a forum and get back with him as soons as possible.

He did tell me that the gross income of the guy was $48.975.00 for 2006. I have no idea what his net income would be.

Any comments or suggestions would be much appreciated.

bruc

A USC will use the Form 1040 as the documented evidence to prove ability to support. Schedule C is an attachment to this form. The gross income will not be used but only the net income because it is the income available to the USC that they look at for support threshold not the available income of the business....

[slim 1,525]

Either way, dude has plenty of loot, so his fiancee should be just fine in the AOS process.

[russ 1]

Either way, dude has plenty of loot, so his fiancee should be just fine in the AOS process.

Without knowing how much he had in expenses, 48K may not be a lot of loot. He could have had a loss on his schedule C...

[payxibka 10,045]

Either way, dude has plenty of loot, so his fiancee should be just fine in the AOS process.

Certainly a confusing reply....

[akdiver 3]

Yeah, it's worth pointing out here that a Schedule C does not really mean jack ######. If you make a million dollars a year, but record $980,000 worth of expenses, then your net income is only $20,000. That's the number that the embassy is interested in. It doesn't matter if the $980,000 you write off in expenses includes your house, car, boat, plane and other interesting things you can write off through creative accounting by them "business expenses". This is where doing that kind of thing can hurt you. It's net income that matters, and this is reported on the 1040 itself anyway. The schedule C does not really do anything for you here. If you can't show the required income on the 1040 itself, the schedule C attachment is not likely to assist. If you are so bold to claim a loss with a schedule C, that actually reduces your net income to below 0, unless you have income from other sources. Good luck getting approved in these circumstances.

I am self-employed now. Well, technically, I am the president, CEO, and sole employee of a corporation that I am the only owner of. I'm not really self-employed, I'm employed by the corporation I own. Even so, I pay myself a check, cut myself a W-2, and cut myself a schedule K-1. I do not use the schedule C at all now (although I did before I incorporated and changed how I do things). This is a pretty good way to go in terms of documenting things for immigration purposes, but if you are already in the midst of an immigration process, it's a little late in the game for it.

Cheers!

AKDiver

Edited April 13, 2007 by akdiver

[russ 1]

I am self-employed now. Well, technically, I am the president, CEO, and sole employee of a corporation that I am the only owner of. I'm not really self-employed, I'm employed by the corporation I own. Even so, I pay myself a check, cut myself a W-2, and cut myself a schedule K-1. I do not use the schedule C at all now (although I did before I incorporated and changed how I do things). This is a pretty good way to go in terms of documenting things for immigration purposes, but if you are already in the midst of an immigration process, it's a little late in the game for it.

Cheers!

AKDiver

I pay myself as well from a corporation I own. This is really the best way to do things, as:

1) Corporation protects is owners from liability.

2) AMT does not exist for corporations. $1,000,000 in income and $980,000 in writeoffs for an individual will still trigger a huge tax bill. Sole Props (sch. C) limit this somewhat, but not as well as a corporation.

3) The books are cleaner - no opportunity to co-mingle money. Good paper trail if you are audited.

It isn't uncommon to have income from all of these sources at once.

[bruc 0]

Personally I have no problems with the affidavit of support.

The person in question and I use the same accountant. Yesterday when I was in his office for a visit, and he knows I have a Russian fiance, started asking me questions about the aos and I wondered why he was asking me some questions about it.

He told me he had another client that was doing the paperwork also and he was concerned because of all his write-offs were bringing his net income down low and he wanted to know about ..how much does he have to make to show support.

This afternoon I met the guy...he knew nothing about VJ, RWG, or any other forums for the K-1..he was winging it on his own and undoubtly doing a good job because he sailed through the noa1 & 2 without any problems....been over there three times for visits with no help from anyone...we're looney hillbilly's and sometimes got more guts than good sense. :-)

He told me he didn't realize how low his net would show after expenses....he called me later today and said an attorney had told him to dump some of his expenses and get his net income up and get ready to pay more taxes since he hasn't filed yet.

Sounds like a good plan to me and it suits him.

Thanks guys for all your commets,

bruc

[slim 1,525]

Tell your buddy not to send too much. If he has a paper saying his income is $XX,XXX that's all he needs. He doesn't need to prove anything more. If he gets his W-2, and it says he earns 125% of the poverty level, he's good. Trying to send in all this extra BS is unnecessary.

I sent my W-2 and my last 1040. That's it.

They don't need to know how much you have after expenses. If they would've known how much I had after expenses, they would've never issued my fiancee a visa!

[payxibka 10,045]

Tell your buddy not to send too much. If he has a paper saying his income is $XX,XXX that's all he needs. He doesn't need to prove anything more. If he gets his W-2, and it says he earns 125% of the poverty level, he's good. Trying to send in all this extra BS is unnecessary.

I sent my W-2 and my last 1040. That's it.

They don't need to know how much you have after expenses. If they would've known how much I had after expenses, they would've never issued my fiancee a visa!

Your missing the difference between a regular wage earner (such as yourself) and a self employed person. However, if all you need to provide is your 1040... then guess what.... the income shown for a sef-employed person is the NET... not gross....

[slim 1,525]

Your missing the difference between a regular wage earner (such as yourself) and a self employed person. However, if all you need to provide is your 1040... then guess what.... the income shown for a sef-employed person is the NET... not gross....

I did miss that point.

So, if you're self employed, there wouldn't be a difference in your gross and net? You wouldn't pay insurance, FICA, etc.? I suppose it's all how you set it up, but I have no idea how this self-employed stuff works.

There are several guys on here that are self-employed. I wonder if that has anything to do with the fact that they're taking foreign brides? Seems like a proportionally larger percentage of self-employed people with Russian fiancees as opposed to working schmoes like me with Russian fiancees. You guys notice that? I may be one of the last "suckers" left on here that still works for "the man."

[russ 1]

I did miss that point.

So, if you're self employed, there wouldn't be a difference in your gross and net? You wouldn't pay insurance, FICA, etc.? I suppose it's all how you set it up, but I have no idea how this self-employed stuff works.

There are several guys on here that are self-employed. I wonder if that has anything to do with the fact that they're taking foreign brides? Seems like a proportionally larger percentage of self-employed people with Russian fiancees as opposed to working schmoes like me with Russian fiancees. You guys notice that? I may be one of the last "suckers" left on here that still works for "the man."

Huge difference. There are a few basic ways that you can be self employed. I'll run down the list.

W-2 / contractor. Worst way to go. All expenses are deducted on your 1040. AGI (income) will appear larger, but AMT (alternative minimum tax) will limit how much can be claimed in expenses.

1099 contractor (also called Sole Proprietor). Slightly better. Profit (or loss) is reported on on Schedule C. Only the profit or loss goes onto form 1040.

C Corp/S Corp (preferred way to go). You own a corporation. In the case of an S Corp, it does not pay taxes. You pay yourself a salary (W-2). Any leftover profit you pay to yourself (1099 - distribution, taxed at a lower rate), or stays on the company's books (you still pay taxes yourself as retained earnings). A C Corp is similar, but also has corporate income tax. You can form a corporation in any state you like, though some are better. (Deleware/Nevada/Florida are the most popular).

LLC/LLP/ Trusts/ etc - Depending on the state there are other entities, mostly used by law firms and real estate developers. In most cases, corporations are better for most businesses.

Corporations can also have credit in their own name. Owners prefer this, since it is totally separate from your own credit. Since just about everything a business buys is on credit (net 30 or 45 generally), you wouldn't want all of this to show up on your own credit report. If the business fails, the owners are not generally liable for the debt. As stockholders, this is a good thing. It limits how much you can lose. (If you own a share of Ford stock and Ford goes bankrupt, the banks can't come after you (the owner) for what they lost). Creditors have more rights with respect to corporations than with individuals. They can force a company into bankruptcy. In case of default, they basically end up owning a company.

BTW, corporations have credit reports just like people. Dun and Bradstreet and Experian are the major ones.

[Satellite 1]

I am self-employed now. Well, technically, I am the president, CEO, and sole employee of a corporation that I am the only owner of. I'm not really self-employed, I'm employed by the corporation I own. Even so, I pay myself a check, cut myself a W-2, and cut myself a schedule K-1. I do not use the schedule C at all now (although I did before I incorporated and changed how I do things). This is a pretty good way to go in terms of documenting things for immigration purposes, but if you are already in the midst of an immigration process, it's a little late in the game for it.

I pay myself as well from a corporation I own. This is really the best way to do things, as:

1) Corporation protects is owners from liability.

2) AMT does not exist for corporations. $1,000,000 in income and $980,000 in writeoffs for an individual will still trigger a huge tax bill. Sole Props (sch. C) limit this somewhat, but not as well as a corporation.

3) The books are cleaner - no opportunity to co-mingle money. Good paper trail if you are audited.

It isn't uncommon to have income from all of these sources at once.

Don't worry Slim, I'm also one of those W2 earners, so you are not alone. But for our single stock holder corporation owners I'm probably preaching to the choir when I mention the piercing the corporate veil doctrine.

If your corporations ever go south, here is how your creditors could still hold you personally liable:

(Some) Factors Used to Justify Piercing the Corporate Veil:

1. Alter ego/Instrumentality

a. commingling of funds and assets

b. failure to observe corporate formalities

c. under capitalization: where the corporation is formed without capital adequate to meet known and expected business risks;

2. Deception/misrepresentation/fraud

Things used to show a single entity.

1. Cash management system.

2. Approval for major expenditures

3. Domination of board of directors

4. Promotional literature.

Two-part test:

1. Single economic entity and

2. Unfair to operate in this way.

To avoid these problems: Protecting the Veil:

1. Provide adequate capital for the entity’s intended purpose

2. Document the capital infusion

3. If the entity is a corporation, issue certificates or clearly provide documentation that the shares are uncertificated

4. At a minimum, prepare annual minutes for meetings of shareholders and directors.

–Even better, adopt resolutions reflecting approval of all major corporate actions. LLCs should also document actions!

5. Pay dividends when possible.

6. Do not install other directors and officers who will be there simply for window dressing.

–Either involve directors and officers in their respective roles or do away with the positions

7. Do not blur the entities’ identities. Use separate letterhead. Don’t use the same or similar name or logo for related companies.

8. Deal with related entities at arm’s length

9. Do not divert assets

10. Do not favor a related creditor

The following was a piece of my law school outline for corporations. Take it as that and not as legal advice.

Edited April 14, 2007 by Satellite

[russ 1]

All great advice. Having adequete insurance is also imortant (to pay your

lawyers to protect you from such challenges). D&O and E&O come to mind. Insolvent companies can't pay lawyers - the insurers have exposure as well.

Most corporations have several million dollars in insurance for directors and officers, and against errors and ommisions. Most of us should also have CPAs to yell at us to prevent breaking these rules.

Keeping up to date books, balance sheets and cash flow forecasts: these are very important (both to know the health of the business, and to secure financing). Most creditors will want to see these for any high-line account (typically over $50,000).

Most of Sat's points are satisfied by:

Separate banking accounts, use of accounting software, dual control (payables and recievables done by a different person), keeping minutes of meetings, and not having related entities as debtors/creditors.

SOX exposes officers of Public Companies to potentially more liability than officers of other corporations, though I don't think that is important to anyone here.

Assuming that neither the officers nor the corporation are doing anything fraudulent or illegal, the business is profitable and capitalized, and follows accepted accounting rules, and is adequetely insured, owners are pretty safe.

Don't worry Slim, I'm also one of those W2 earners, so you are not alone. But for our single stock holder corporation owners I'm probably preaching to the choir when I mention the piercing the corporate veil doctrine.

If your corporations ever go south, here is how your creditors could still hold you personally liable:

(Some) Factors Used to Justify Piercing the Corporate Veil:

1. Alter ego/Instrumentality

a. commingling of funds and assets

b. failure to observe corporate formalities

c. under capitalization: where the corporation is formed without capital adequate to meet known and expected business risks;

2. Deception/misrepresentation/fraud

Things used to show a single entity.

1. Cash management system.

2. Approval for major expenditures

3. Domination of board of directors

4. Promotional literature.

Two-part test:

1. Single economic entity and

2. Unfair to operate in this way.

To avoid these problems: Protecting the Veil:

1. Provide adequate capital for the entity's intended purpose

2. Document the capital infusion

3. If the entity is a corporation, issue certificates or clearly provide documentation that the shares are uncertificated

4. At a minimum, prepare annual minutes for meetings of shareholders and directors.

–Even better, adopt resolutions reflecting approval of all major corporate actions. LLCs should also document actions!

5. Pay dividends when possible.

6. Do not install other directors and officers who will be there simply for window dressing.

–Either involve directors and officers in their respective roles or do away with the positions

7. Do not blur the entities' identities. Use separate letterhead. Don't use the same or similar name or logo for related companies.

8. Deal with related entities at arm's length

9. Do not divert assets

10. Do not favor a related creditor

The following was a piece of my law school outline for corporations. Take it as that and not as legal advice.

[slim 1,525]

Maybe I'll just keep working for "the man" for a little bit.