Income from an international organization (Goethe Institut)

[harshmdi]

Hi - I work as a contractor for Goethe Institut and got my annual income statement. They have not issued a 1099. How do i report this income on my taxes?

Below is the translated version on the income statement

In the attachment I will send you a confirmation of the payment of fees in 2023 for your records.

Please note that the Goethe-Institut as MFGO does not issue a 1099 form. This confirmation serves as a replacement for such a certificate.

The stated fee sum includes all fees paid in US dollars by Goethe Institutes in the USA in the year mentioned. 

Please get in touch if you have any questions about the form.

[DawnC]

Employees working for a foreign government or an international organization are subject to some special tax rules. The tax treatment of their compensation can vary according to whether the employee is a U.S. citizen, a dual citizen, a green cardholder (lawful permanent resident), or a foreign citizen without a green card.    Please review this IRS webpage, and let us know which category you are in.  

[harshmdi]

Thank you for a quick response. I am a green card holder. 

[AmyC · Accepted solution]

You need to enter the 1099 income more like wages since you are exempt from the self-employment tax. This means answering a few questions wrong to get the right answer. You need to have the amount in USD and enter a 1099-MISC with the income in box 3.

Follow these steps:

1. Log in to your return.
2. Go to income
3. Scroll down to Other Common Income
4. Select Income from 1099-MISC
5. Edit/ Start/ Revisit
6. Enter income -the income should be in box 3,
7. Enter tax if any withheld in box 4
8. Continue
9. Describe the reason -
10. continue
11. None of these apply
12. Continue
13. Did this involve main job?
14. No -this is for the worksheet to get the right answer despite it being your job
15. Continue
16. How often do you get?
17. Got in 2023 - even if you receive this each year so the program won't think this is another job
18. Continue
19. Intent to earn money?
20. No again, obviously you work for money but this needs to be no for the worksheets
21. Continue
22. Do you have another?
23. No
24. Continue

[harshmdi]

Thank you, this was really useful. 

[harshmdi]

One last question: I saw this on the IRS website. If you expect to have income tax due at the end of the year, you must make estimated tax payments because your compensation is not subject to withholding. Estimated payments are made using Form 1040-ES, Estimated Tax for Individuals and are generally due quarterly on: April 15, June 15, September 15, and January 15. There is a penalty for failure to make estimated tax payments on a timely basis

I am filing jointly with my spouse who is a W2 employee and we don't expect any taxes due to IRS at the end of the year. Do i still need to make the payment quarterly estimated taxes to IRS? I did not make them in 2023.  

[MonikaK1]

If your spouse is having enough taxes withheld from her wages to cover both your incomes, so that you don't expect to owe tax with your return, then you shouldn't need to make estimated payments.

If you expect to owe more than $1,000 in federal taxes for the tax year, you may need to make estimated quarterly tax payments using Form 1040-ES, or else face a penalty for underpayment.
 

If your federal income tax withholding (plus any timely estimated taxes you paid) amounts to at least 90 percent of the total tax that you will owe for this tax year, or at least 100 percent of the total tax on your previous year's return (110 percent for AGIs greater than $75,000 for single and separate filers and $150,000 for married filing joint), you most likely will not need to make estimated tax payments.

See this TurboTax tips article for more information.

[harshmdi]

Question about e-filing: The employer Goethe Institute does not have a EIN or tax id so i am not able to enter in my 1099-misc form and it not allowing me to e-file. 

I also enquired about how to report this income with another CPA and I was advised to report it as foreign earned income. 

Can someone please advise what is the correct way?

[AmyC]

You need to enter the income. If you fall under a tax treaty, you would take it back out and may need to file Form 8333. If you have paid tax on the income to another country, you can file Form 1116 for a credit. It could be as simple as just entering the income.

First enter the income:
1. go to the federal income section
2. scroll to the bottom
3. Miscellaneous Income, 1099-A, 1099-C, Start
4. Scroll to the bottom
5. Other reportable income, Start
6. Other taxable income?
7. Select YES
8. Description substitute 1099-MISC Goethe Institute
9. Amount, enter your amount
10. Continue

References:

Where do I enter the foreign tax credit (Form 1116) or deduction?

About Form 1116, Foreign Tax Credit 

Tax treaties

Form 8833, Treaty-Based Return Position Disclosure