Foreign INFO

[Mafandr]

Hi all. I arrived in the US at the end of 2021 and have been in immigration court pending status ever since. At the end of 2021, I opened a security credit card with Bank of America. I didn't have a Social Security number. Then in April 2023, I opened a company and business debit card, and also received an ITIN. And already in September 2023, I received a social security number. Question! Am I required to pay taxes for 2022 if I did not have documents (in fact, I still don’t have them, since I am awaiting immigration court). All this time I was a freelancer, before I opened a company and officially did not have a position or work in the United States.

[Anonymous_]

@pk

[pk · Accepted solution]

@Mafandr , your immigration status ( citizen / Immigrant / Resident for Tax purposes  / Non-Resident-Alien ) does NOT come into consideration  on whether you have to pay taxes or not.

The ONLY difference between the different status' is whether you are taxed on world income OR US sourced income.

From your post what I get is as follows :

(a) for the year 2021 ( because the short time frame ) you probably were a Non-Resident Alien ( NRA ) and would have been taxed ONLY on US sourced/connected income. Generally you ( if you had any taxable income  from US sources ) would have  filed  a form 1040-NR to report your US sourced income and pay any taxes due .  Note that TurboTax does not support  this form ( 1040-NR ).

(b) for the calendar year 2022 and once you had passed the Substantial Presence Test ( 183 days total counting ALL days present in the year 2022 + 1/3rd the days present in 2021 + 1/6th days present in 2020 ),  probably sometime in June/July of 2022, you would have been classed as a Resident for Tax purposes.  Thus 2022 for you would have been a "Dual Status" year -- till SPT you would have been NRA and file a 1040-NR , taxed on US sourced income.  Post SPT   as a  Resident for tax purposes ,  you report your income on form 1040 and be taxed on your world income .

(c) As you see from the above , you need to file a return  for both 2021 ( based only on US sourced income )  and 2022 ( based on US sourced  income and world income ).

Does this make sense ?   Is there more I can do for you?

pk

[Opus 17]

The IRS doesn't take your legal status into account (and if you work, they don't inform on you, as far as I'm aware.  They just want their tax money.)

As a US citizen or resident (passing the substantial presence test) you must report and pay US income tax on all your world-wide income, even if you have income that is also taxed in your country of origin (such as investments).  If you are taxed in another country, the US will give you a credit or deduction to reduce the double-taxation.  

Here is the substantial presence test.

https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

For 2021, you are probably a non-resident alien.  You only owe income tax on income that was paid to you while living in the US.  You can use your SSN even though it was issued in 2023.  However, Turbotax does not prepare non-resident tax returns, you will need to use different software or see a tax professional. 

https://www.irs.gov/individuals/individual-taxpayer-identification-number

For 2022, you are probably a dual-status alien.  As @pk explained, you file as a non-resident for the period of time when you were a non-resident and only pay tax on US-source income, then you file as a resident for the period of time you are considered a resident, and pay income tax on all your world-wide income.  You can use your SSN.  Turbotax does not support dual-status taxpayers.

For 2023, you are a resident of the US and you will file as a resident, to report and pay income tax on all your world-wide income.  You can use Turbotax for your 2023 tax return.

Your filing requirements as a freelancer are the same whether or not you were an "official" business.  Whether you are a sole proprietor or a single member LLC, you file a tax return that includes a schedule C that reports your gross business income,  deducts ordinary and necessary expenses, and pays income tax and self-employment tax on the net profit.  (If you formed a partnership, an LLC with more than one member, or an S-corporation, the rules are different.).  You are required to report your income and expenses from your own accurate records even if you were paid in cash and made payments to others in cash.   There are some good books on how to report and pay business taxes, or you may want to pay a professional to advise you for the first couple of years.  

Don't forget that you also owe state income tax for 2021, 2022 and 2023, if you live in a state with an income tax.