1099 MISC Non resident

[fggrau94]

Hi,

I am Spanish and Argentinian. I have lived in the US for a few years. I am not a US citizen nor have I green card. I work for this US company as an employee, and I am about to stat to work with them as a contractor because I moved to the UK. They will be sending a 1099 MISC form, is that correct?  I still have an account in the Us. I want to understand what type of files I need to file in and what type of taxes do I need to pay and how much?

[RalphH1 · Accepted solution]

If you’re actually working as a contractor for the company, no longer receiving a W-2 is correct. However, the 1099-MISC has been replaced by Form 1099-NEC (see this TurboTax article) for self-employed people. (You could mention this to them, in case they haven’t updated things yet.) This also depends on your treatment as a contractor being correct , and your actually no longer being an employee (the IRS is touchy about this subject, which is discussed here).

The rest of your tax treatment depends on some additional info not included in your post. If you have been in the U.S. long enough to become a “resident for tax purposes” (based on the “Substantial Presence Test” — this IRS link is quirky, and you have to scroll up a little), then the question of whether you consider yourself to have permanently left the country (and whether your your actions support that) would determine if you’d continue to file form 1040, or be a “Dual-Status Taxpayer” (here) for the year.

If you hadn’t yet become a resident (through the Substantial Presence Test), you would continue to file Form 1040NR (which you should already be doing) for the year you leave (assuming you had income while here). But you would probably no longer be subject to U.S. tax law in subsequent years if you had no U.S. source income (which doesn’t include money paid to you by a U.S. company while you’re a contractor abroad).

Please give us more details about your stay in the U.S. so far and your situation with the U.K. move. We won’t be able to tell you how much tax you need to pay, but we can probably give you more specific guidance about how to file...

¡Gracias, @fggrau94!

[fggrau94]

Hi @RalphH1 ,

Thank you for you answer. In April 2022 I left the USA and I continue working as an employee from the UK. In the USA I was always working under a L1 Visa. I became a UK resident in October 2022, so now my company wants me to become a self-employment contractor.   They are stating that they will be sending the 1099-MISC form.  It seems that I am still a tax resident because I lived more than 183 days in the last 3 years. I will have to pay taxes in both the USA and the UK when I become self-employed? I still have a 401k and an individual brokerage account in the USA. 

Thank you,

Regards.

[RalphH1 · Accepted solution]

(You're welcome!) The 183 days officially made you a resident, but since you’re not a U.S. citizen, leaving the U.S. could mean you’re a non-resident going forward. As long as you’re residing permanently elsewhere (not intending to return except for visits), and not maintaining what anyone could construe as a tax home in the U.S. (the 401k and brokerage ownership alone wouldn’t suggest you’re still living here).

The IRS tells us about residency ending dates here, in Publication 519. Note that it normally takes place on December 31, but there’s an exception, wherein it can be your last day in the U.S. That exception requires having a “Closer Connection to a Foreign Country,” but if you were in a third country during the six month period between leaving the U.S. and establishing your residence in the U.K. (?), that may not apply. Also note that a statement is required to make the residency termination official.

Assuming you were a U.S. resident for all of 2022, you’d file a 1040 (like you have been), reporting all your worldwide income. (And you would approximately avoid double-taxation of the U.K. income by claiming the Foreign Tax Credit, described here.) But if you have been a nonresident as of 2023, you probably won’t have to file a U.S. return at all going forward (unless you come back and conduct business here), as the IRS discusses in this link. 

I hope this clarification is helping, @fggrau94. (¡Viva Messi!)