1099 issued for foreign contractor

[NGS369]

Hi! I am a Ukrainian citizen and Ukrainian resident, who obtained SSN with the restriction, "Valid for Work Only with DHS Authorization" when I was in the US on a J1 visa. I left the US in 2020 and have not been back since. 

I perform remote work for a Californian company. I provided a W-8BEN form when I was hired as a contractor. However, I recently received a 1099-NEC. I believe that this form should not have been issued in my case. But, when I contacted my employer, they said that it was issued because I have a SSN and a US bank account. 

Considering they have already issued a 1099-NEC, do I now owe these taxes no matter what?

Can you please offer me any advice as to what my options are?

[LoganathanB]

The company issued 1099-NEC to you because you worked for them and it is a US source of income for which you have to pay tax.

It does not matter whether you work onsite or remotely as long as it is a US source of income.

When you receive form 1099-NEC, you are self-employed and eligible to claim deductions on Schedule C, which you use to calculate your net profits from self-employment.

You file a nonresident tax return(1040NR) because you did not live in the USA during 2021.

Click on the link for more information

Schedule C

How to file taxes when you get 1099-NEC

[NGS369]

Thank you, @LoganathanB . To my understanding, the IRS considers all services performed entirely outside of the U.S. by a Nonresident Alien to be Non-U.S. Source Income: Nonresident Aliens - Source of Income

[RobertB4444]

@NGS369  You are right - doesn't look like you owe anything for that income.  Doesn't mean you shouldn't file though!  Telling the US that you DON'T owe them money is a good reason to file too.  They tend to ask for the money if they think you owe it and it's a god idea not to have it messing with your visa status later.

Here are some tips for non-residents along with a link to Sprintax, our international partner.

[NGS369]

@RobertB4444 Thank you for your reply! Absolutely! I was planning to file this income with a 1040-NR under 1c (Total income exempt by a treaty) and use the  "Independent Personal Services " treaty. I just wonder if I should insist on them issuing a corrected 1099-NEC with zeros first? 

[RobertB4444]

If you can get a corrected 1099 that would be the best.  The IRS matches forms so they have received a copy of the 1099 and are expecting a tax return to show up that matches it.  If you can get the 1099 changed then you may not even need to file a return.