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sweetsrw
New Member

QBI (Independent Online Contractor Working Abroad for a US Based Company - Income received to US Bank Account) - Do I qualify?

I am an independent contractor who is self-employed and working online but working from an overseas location (Mexico).  The work I do is for a exclusive US based tech company and I get paid my income into a US bank account.  However, I am based abroad due to being with my family.  Can I use the QBI deduction with the above parameters (as long as my income is below the maximum levels for QBI)?  Thank you so much

4 Replies
Kat
Level 15
Level 15

QBI (Independent Online Contractor Working Abroad for a US Based Company - Income received to US Bank Account) - Do I qualify?

Because your sole-proprietorship business is "home" in Mexico, I'm going to say no.  The QBI Deduction requirements specifically state that the deduction is available to a "domestic business".  See the attached screenshot.Inked2019-09-12 14_08_57-Window_LI.jpg

*** I am NOT a tax expert. I am a seasoned TurboTax user, and volunteer to provide assistance to TT users. Nothing I post is to be considered TAX ADVICE; I bear no legal liability for responses.***
Kat
Level 15
Level 15

QBI (Independent Online Contractor Working Abroad for a US Based Company - Income received to US Bank Account) - Do I qualify?

The QBI deduction is so new, and your situation unique.  I'd recommend consulting a tax professional regarding your question.

 

 

 

 

*Please mark as best answer if your question is resolved. Thank you.

*** I am NOT a tax expert. I am a seasoned TurboTax user, and volunteer to provide assistance to TT users. Nothing I post is to be considered TAX ADVICE; I bear no legal liability for responses.***
Rick19744
Level 11

QBI (Independent Online Contractor Working Abroad for a US Based Company - Income received to US Bank Account) - Do I qualify?

As noted by @Kat this area in general is new, and adding in the complexity of your facts is really beyond the scope of this forum.

 

Having said that, in general, I would say the income does not qualify.  In order to qualify, the income must be effectively connected income.  The sourcing rules for this are covered in Code Sections 861-865.  The general rule for personal services is based on where the services are performed.  Based on your current facts, that appears to be Mexico.  As a result, that would disqualify the income from qualifying for the Section 199A deduction.

 

I would also recommend that you consult with a foreign tax specialist depending on the $$ involved.

*A reminder that posts in a forum such as this do not constitute tax advice.*
pk
Level 12
Level 12

QBI (Independent Online Contractor Working Abroad for a US Based Company - Income received to US Bank Account) - Do I qualify?

@sweetsrw , while agreeing with @Kat  & @Rick19744  as far as the  question asked, I wonder are you US citizen / Resident ( Green Card ) .  If that is true then yes you have to file a US return and the  question regarding QBI is valid.  Even then the question about your tax home would be pertinent -- if your tax home is Mexico ( i.e. you satisfy   having an abode in Mexico, and  pass the Physical Presence Test ) then  your  income , even if paid in the USA   may be taxed by Mexico and also be eligible  for foreign  earned income exclusion.  Every thing depends on facts and circumstances in this case.  So please tell us more of the situation , including if this is  your first year  abroad and if your  "employer" is withholding any taxes for you .

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