Undocumented self employed making money from my home country

[Isi26]

Hi I’ve been trying to look for help / guidance everywhere. I had been in touch with multiple taxes accountants, immigrant taxers accountants and I haven’t had a good experience. (They didn’t even know what to do, or I booked a consultation and they never called).

So my income comes by me as self employed BUT most of money that I earn goes to my bank in my home country. I DO pay taxes in my home country and I’m aware that I have to fill taxes here too, what I don’t understand is if I would have to pay double taxes, also I know that if I fill taxes here I wouldn’t have necessarily to fill taxes in my country, but of course idk what to do or what are the recommendations. 
I have never filled taxes here so everything is confusing and new to me.

should I filled taxes based of everything that I earned ?even the money that goes to my country bank account? Even if I filled taxes of that $ in my country?

What form, are multiple forms?

[tagteam]

I will page Champ @pk. Check back here later.

[Opus 17]

What is your home country?

If you are a US person (citizen, green card holder, or living in the US and pass the substantial presence test) then you are required to file a US tax return and report all your world-wide income, no matter where you live, perform the work, or where your customers are located.

Whether or not you are require to also file a tax return in your home country is up to the laws of that country. 

Some countries have a tax treaty with the US that allow you to take a deduction or credit on your US return for foreign taxes paid, which may reduce double-taxation.  But it depends on what country.  

[Isi26]

Thank you so much for your help:)

chile !

should I fill then for all the income that I’ve earned right?  Do they asked about the sources or what type of documents they asked? Sorry for my ignorance, I ve been trying to do my best. 

[pk]

@Isi26 you need to tell us more about the following items :

(a) which country are you from   ( you said you have bank account there )

(b)  what do you mean by self-employed ?  Is it consulting or similar professional services that  you do here in the USA for people  back in your home country ?   Or are  you selling things on a website ( like Amazon) and payment is  made to you in your home country ?   Or what ?

(c) Which visa did you enter USA with  and when ?

I ask all these  because we need to determine whether your earnings are US sourced  or not  in addition to  tax treaty assertions.

Please answer my questions  and I will come back once I hear from you 

[Opus 17]

It's going to be tough to give you a complete education in US tax law in a couple of paragraphs.  You may want to buy a book or read some web sites.  Here's couple of blog posts.

https://turbotax.intuit.com/tax-tips/self-employment-taxes/beginners-tax-guide-for-the-self-employed...

https://blog.turbotax.intuit.com/self-employed/tax-tips-for-the-self-employed-2297/

Under US tax law, if you are self-employed, you are required to report all your gross income received from the business.  You can deduct ordinary and necessary expenses for that type of business.  You pay income tax and self-employment tax on the net profit.  Income tax is tax on all your income, and self-employment tax is social security and medicare tax you pay on income earned from working (but not non-working income like prizes or investments).  Social security and medicare tax goes to your credit for when you retire or if you become disabled.  Even if you send most of the cash overseas, you still owe tax on your net profit (income minus expenses) even if you don't keep the cash.  What counts as ordinary and necessary expenses depends on the kind of business.  Someone operating a food truck has different expenses than someone doing web design out of their home.

Your tax return will contain a schedule C for the business where you list your income and expenses.  You don't send proof of your income and expenses, just keep records in case you are audited later.  Your net profit will go on your main form 1040, where it is combined with any other income, deductions, or dependents, to calculate your final tax.

You will need an international tax ID number, if you are not eligible for a social security number.  To get an ITIN, you need to fill out an application form, and either mail it to the IRS with your first tax return, or take it to an acceptance agent for processing.

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

https://www.irs.gov/individuals/how-do-i-apply-for-an-itin

(The IRS doesn't care if you are undocumented as long as you pay your taxes, and they don't inform to ICE.  However, if you apply for a green card or citizenship, you will be asked if you paid any taxes you owed.)

If you use tax software, it should walk you through the process of reporting your income, expenses, and other tax situations, including a foreign tax credit, although it won't help with the ITIN.

I'm surprised you could not get professional help.  As long as you are in the US at least 180 days and pass the substantial presence test, you file the same tax return as any other US citizen.  All the rules and forms are the same, except for the slight addition of a foreign tax credit.  

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

For the foreign tax credit and other issues, I will wait for @pk 

[Opus 17]

@pk 

Taxpayer says Chile, and says "undocumented" in their original question. 

[pk]

@Isi26  @Opus 17 , There is a tax treaty between US and Chile including  double taxation  clause.   However, I am  still not clear as to the self-employment  --  at this point I don't know  if it  US sourced or not.  From the  original post  it appears to be  Chile sourced  at least .

Please @Isi26  -- tell us about the  "self-employment " as also when and under which visa you entered the  USA .

pk

[Isi26]

Hi! Thank you so much! I am sorry for my lack of information because I didn’t know what I information needed to provide.

i offer different online services like wellness.

as for example personal trainer remotely.

most of my clients are from Chile or from other countries.

i have a few (small amount) clients that would pay me on my bank account here in the states. 

I came here with a tourist visa. 

so most of my income is Chilean source for my understanding. Again I’m so sorry for my ignorance. Doing my best.

[Isi26]

Yes it’s been really hard to get help, some of them have told me to talk to a immigrant attorney (about my taxes), of course inmigrantes attorney told me to talk to a taxers accountant, then a taxers accountant told me I had to open a LCC, and he wanted to help me to open a busssines so I was suspicious. Then another was supposed to called me , never called 

I’ve been back in forth for years 

[pk · Accepted solution]

@Isi26  based on what you have posted so far ( nationality , entry to US,  type of  self-employment etc. ) ,  and generally agreeing with all that my colleague @Opus 17  has posted earlier for US federal purposes  :

(a) you need to prepare  a return on form 1040 ( TurboTax supports this ),  you  report your global  income  on Schedule-C , deducting allowable expenses ---   About Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship) | Internal Revenue ...

 Pay good attention to all the instructions for Schedule-C

(b)  Note that because  this  is self-employment income (active income ) you are subject to Self-Employment  Tax  ( SECA at 15.3% of  approx 92% of net-income from  Schedule-C ) . However, because Chile  and US Social Security  has a "Totalization Agreement", you will need to participate only in one country. --See here  -->U.S. International SSA Agreements | International Programs | SSA

(c) Once you are all done  ( note for making software happy you will need to use a dummy Social Security Number  like 234-84-5000), print out the return, sign date, replace the dummy SSN with " N R A".

(d) Now go to IRS website and download  form W-7 and its instructions.  Fill out the form, attach all the documents asked for .

(e) Send the  whole package to IRS .  This  should result in IRS   retroactively issuing you an ITIN   ( since you are not eligible for  SSN ).

(f) In future years you can file normally using the issued ITIN.

(g) Your foreign taxes paid to Chile, may be eligible for Foreign Tax credit.

(h)  Given that you have never filed a US return,  you probably should consider  TurboTax full service or see a tax professional; familiar with  International Tax, Schedule-C and Totalization agreement.  You can take a printout of this response ( the  whole thread )  along with you .

Is there more  I can do for you ?

[Isi26]

Thank you so much for your help!!!!! 
I’ll get through all the information you send to me,

I really appreciate it

thank you !!!! 

[Opus 17]

@Isi26 

I just want to clarify, you say you are "undocumented", I assume that means you overstayed your tourist visa. Please check the substantial presence test.  Generally, you have to be in the US more than 183 days in 2024, or more than 183 days over the past 3 years, counted using a certain formula.

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

If, as of December 31, you do not meet the substantial presence test (have not been in the US long enough), then your income will be taxed very differently.  However, if you meet the test, all the above answers apply.

I just wanted to clarify, since you never actually told us how long you have been in the US (or more importantly, how long you will have been here as of December 31, 2024).