Income and Loss

[pushbrk 12,106]

Help me to better understand your feeling that the business eowner is being penalised. Where is the business owner's dilemma (unfairness in the "income" requirement) any different from a hard-working food server that gets cash tips that far exceed her income that is paid direct from the employer? She can report her tips and show a healthier income for USCIS purposes, and pay more tax as a consequence, or she can not declare a sizeable amount of her earnings, and reap the tax rewards, and fail to meet the USCIS income requirement. How does that differ from what you are claiming?

No, I'm not confusing it.

No, you're not confusing it, just conveniently misinterpreting it. The context is quite clear and is defined further as income from line 22 of the 1040 form. I'm self employed too, have no employees, overhead or inventory, (Well one of my businesses has a little inventory now and then.) and I'm not incorporated. It's all 1099 or direct income. Line 22 rules. You'd best learn to live with it. The tax advantages of being self-employed can come back to bite you on an affidavit of support.

Can you cite precisely the law or regulation where it says that "preduction income" is defined by only by what is entered Line 22?

Nothing that I have read has specifically said that this is the only interpretation. The wording is very hazy in the reg I cited, only stating "pre-deduction income" on the "income tax form". Well, Schedule C is an "income tax form" and I've established my preduction income via my 1099s and W2s, so failing a direct regulation or ruling that establishes Line 22 as the ONLY definition, I have a valid legal argument. More than valid, actually, because in this instance, the government appears to be violating the regulation by considering post-deduction income, contrary (again) to the regulation I cited.

And really, "learn to live with it"? I'm not the sort to stand by silently and be incorrectly penalized and just because others have chosen to done so does not validate that as a reasonable course of action. If according to the regulations (and I am shown so conclusively) I am incorrect, then I will accept it. But to this point, the issue remains wide open.

I'm not going to compare apples/oranges here, nor get into the ethical issues of filing a fraudulent return/falsely declaring income. Those are other discussions for other posts. I am only concerned about this narrow issue which directly affects me.

My contention that I am being penalized stems from all the arguments I've laid out in my previous posts- that those of us who receive 1099 income are being treated differently than those who receive W2 income in that for us, they are considering post-deduction income, which directly contravenes 9 FAM 40.41 N5.5-1, which state that income is defined as follows:

"Income", for the purpose of Form I-864, means total unadjusted income as shown on the tax return, before deductions. Total unadjusted income includes not only salary (if any) but also monetary gains from any other source, such as rent, interest, dividends, etc.

Read it and parse it carefully and then show me where the regulation directly refutes my argument. It doesn't. Others here think it does, but they are only offering their interpretation of what the regulation says, unsupported by any direct citation of the regulation or immigration court precedent.

Pull out your 1040 form and find the line that shows "total income". See if it isn't line 22 like it is on mine and everybody elses. Words, phrases, clauses, sentences and paragraphs always have a context. The context here is the total income line on a US tax return. "Deductions" and "business expenses" are not the same thing. Business expenses reduce "income". "Deductions" reduce tax liability on income. Business "income" is considered, "revenue" minus "expenses" in the broadest sense and no added detail will support your argument. Allowable deductions for business related expenses are calculated BEFORE "total income" on any US tax return.

That's the context and the vast majority of business people either already understand that or have their accountants explain it to them. A tax benefit can bite you on an affidavit of support. That's the way it is.

[Steve_and_Lina 0]

I wasn't comparing legal and illegal. I was trying to understand why the OP is focused on the fact that the figure he transfers from his Schedule C to line 7 is a penalising him. Frankly, I think and I am not a tax person, that he's confusing business deductions from personal deductions.

But why should there be a difference in how they are treated? A deduction is a deduction is a deduction. And honestly, in the long run, from a standpoint of who ends up with the most money, I win.

For instance, I am allowed to deduct what amount to four times what I actually pay for gas for my commute to/from jobs, not to mention whatever I pay in tolls and parking. In essence, I am getting a very hefty tax credit, especially since I am driving an already-paid for car and very little monthly insurance.

I'm assuming you're a W2 sort- you're not allowed to deduct anything. You get your paycheck and out of pocket you have to pay gas, tolls, parking, insurance, etc.

So I get a tax deduction to the tune of about $.35-$.40 for every mile I drive, which lowers what I report as my gross income on my 1040 on line 22 but in reality puts more money in my pocket by lessening my tax hit significantly. (and yes, this is all 100% legal)

You? Not only do you have to pay higher taxes because you're not allowed to take these deductions, you also have the out-of-pocket cost of gas/parking/tolls on top of it.

Does this make it a little more clear?

[diadromous mermaid 36]

Actually, no I'm not a W-2 type If it makes a difference I am a CEO of a corporation.

By the way, the "benefit" to which you refer, for mileage is what IRS claims is the requisite value of operating a vehicle for business use. It goes beyond a consideration for fuel. Haven't you considered that your "employer" is having you use your vehicle for "his" business purposes, and is accelerating the date when you'll be facing disposal of that asset due to extra use and at a lower market value.

What pushbrk and I have been trying to state (he better than I, in this case) is that a "deduction" is not a "deduction" in the sense you are proposing. You are confounding the vernacular.

I wasn't comparing legal and illegal. I was trying to understand why the OP is focused on the fact that the figure he transfers from his Schedule C to line 7 is a penalising him. Frankly, I think and I am not a tax person, that he's confusing business deductions from personal deductions.

But why should there be a difference in how they are treated? A deduction is a deduction is a deduction. And honestly, in the long run, from a standpoint of who ends up with the most money, I win.

For instance, I am allowed to deduct what amount to four times what I actually pay for gas for my commute to/from jobs, not to mention whatever I pay in tolls and parking. In essence, I am getting a very hefty tax credit, especially since I am driving an already-paid for car and very little monthly insurance.

I'm assuming you're a W2 sort- you're not allowed to deduct anything. You get your paycheck and out of pocket you have to pay gas, tolls, parking, insurance, etc.

So I get a tax deduction to the tune of about $.35-$.40 for every mile I drive, which lowers what I report as my gross income on my 1040 on line 22 but in reality puts more money in my pocket by lessening my tax hit significantly. (and yes, this is all 100% legal)

You? Not only do you have to pay higher taxes because you're not allowed to take these deductions, you also have the out-of-pocket cost of gas/parking/tolls on top of it.

Does this make it a little more clear?

[Steve_and_Lina 0]

Pull out your 1040 form and find the line that shows "total income". See if it isn't line 22 like it is on mine and everybody elses. Words, phrases, clauses, sentences and paragraphs always have a context. The context here is the total income line on a US tax return. "Deductions" and "business expenses" are not the same thing. Business expenses reduce "income". "Deductions" reduce tax liability on income. Business "income" is considered, "revenue" minus "expenses" in the broadest sense and no added detail will support your argument. Allowable deductions for business related expenses are calculated BEFORE "total income" on any US tax return.

That's the context and the vast majority of business people either already understand that or have their accountants explain it to them. A tax benefit can bite you on an affidavit of support. That's the way it is.

First off, I really object to the insulting tone of your post. This might be an amusing little exercise to you, but this is my family and I am deadly serious about this.

Now that that is out of the way...

You're correct about line 22 saying "total income". However, on Schedule C line 7, it says "Gross income" as well.

I challenge your assertion about "deductions" and "business expenses" being different. You're correct in that "business expenses" ultimate reduces income. The same can be said for "deductions". Both result in a lower NET income.

But everything I read suggests the government is not concerned about net income, only gross income, and this is again why I am waiting on a ruling from the State Department on this. The regulation is not clear cut and this is why I am challenging their interpretation of it. It is a matter of semantics and the current interpretation runs contrary to the intended effect of the regulation- that those of us who wish to bring family here have the necessary income to support them.

It shouldn't cut both ways, that the government can tell a small independent contractor that they will take into account income minus legal tax write offs, but not demand an accounting of expenses from W2 employees. There's an innate failure of logic that is demonstrated in my previous post.

[Steve_and_Lina 0]

Actually, no I'm not a W-2 type If it makes a difference I am a CEO of a corporation.

By the way, the "benefit" to which you refer, for mileage is what IRS claims is the requisite value of operating a vehicle for business use. It goes beyond a consideration for fuel. Haven't you considered that your "employer" is having you use your vehicle for "his" business purposes, and is accelerating the date when you'll be facing disposal of that asset due to extra use and at a lower market value.

What pushbrk and I have been trying to state (he better than I, in this case) is that a "deduction" is not a "deduction" in the sense you are proposing. You are confounding the vernacular.

Ah, but therein lies the rub. I am assuming your employees must show up for work every day and that at least some of them drive. They have to put wear and tear on their vehicle, pay for gas, parking, tolls, and insurance, and are not allowed to write off a single penny of it.

I make out a lot better than them because I am given a tax deduction that takes into account all of these things. Not only that, I can deduct myriad other things, some at cost, some at a rate that far exceeds actual cost. (hello, per diems in Alaska!) If I work in town and ride the subway in, it's a tax write-off as well. Not for them, though.

So who makes out better? When all is said and done, who has more left at the end of the day to support their family? The poor devils who spend $10 a day for gas and another $15 for parking, or the guy who not only gets to write off the $25, but gets to write off an additional $40?

And really, isn't the whole purpose of this is to ensure that we're able to support our family?

This is my entire point and is why I am fighting this.

[diadromous mermaid 36]

Ah, if only it were that simple.

Good luck on your quest, but please don't place too much hope on a positive outcome. Your time is worth far more to you if expended elsewhere.

Actually, no I'm not a W-2 type If it makes a difference I am a CEO of a corporation.

By the way, the "benefit" to which you refer, for mileage is what IRS claims is the requisite value of operating a vehicle for business use. It goes beyond a consideration for fuel. Haven't you considered that your "employer" is having you use your vehicle for "his" business purposes, and is accelerating the date when you'll be facing disposal of that asset due to extra use and at a lower market value.

What pushbrk and I have been trying to state (he better than I, in this case) is that a "deduction" is not a "deduction" in the sense you are proposing. You are confounding the vernacular.

Ah, but therein lies the rub. I am assuming your employees must show up for work every day and that at least some of them drive. They have to put wear and tear on their vehicle, pay for gas, parking, tolls, and insurance, and are not allowed to write off a single penny of it.

I make out a lot better than them because I am given a tax deduction that takes into account all of these things. Not only that, I can deduct myriad other things, some at cost, some at a rate that far exceeds actual cost. (hello, per diems in Alaska!) If I work in town and ride the subway in, it's a tax write-off as well. Not for them, though.

So who makes out better? When all is said and done, who has more left at the end of the day to support their family? The poor devils who spend $10 a day for gas and another $15 for parking, or the guy who not only gets to write off the $25, but gets to write off an additional $40?

And really, isn't the whole purpose of this is to ensure that we're able to support our family?

This is my entire point and is why I am fighting this.

[diadromous mermaid 36]

Commute miles to work are not expense that can be deducted. So, in this particular case, you and the employee are in the same boat, unless you schedule a business call at the end of your driveway both first thing in the morning and last thing at the end of the day.

Actually, no I'm not a W-2 type If it makes a difference I am a CEO of a corporation.

By the way, the "benefit" to which you refer, for mileage is what IRS claims is the requisite value of operating a vehicle for business use. It goes beyond a consideration for fuel. Haven't you considered that your "employer" is having you use your vehicle for "his" business purposes, and is accelerating the date when you'll be facing disposal of that asset due to extra use and at a lower market value.

What pushbrk and I have been trying to state (he better than I, in this case) is that a "deduction" is not a "deduction" in the sense you are proposing. You are confounding the vernacular.

Ah, but therein lies the rub. I am assuming your employees must show up for work every day and that at least some of them drive. They have to put wear and tear on their vehicle, pay for gas, parking, tolls, and insurance, and are not allowed to write off a single penny of it.

I make out a lot better than them because I am given a tax deduction that takes into account all of these things. Not only that, I can deduct myriad other things, some at cost, some at a rate that far exceeds actual cost. (hello, per diems in Alaska!) If I work in town and ride the subway in, it's a tax write-off as well. Not for them, though.

So who makes out better? When all is said and done, who has more left at the end of the day to support their family? The poor devils who spend $10 a day for gas and another $15 for parking, or the guy who not only gets to write off the $25, but gets to write off an additional $40?

And really, isn't the whole purpose of this is to ensure that we're able to support our family?

This is my entire point and is why I am fighting this.

[Steve_and_Lina 0]

Commute miles to work are not expense that can be deducted. So, in this particular case, you and the employee are in the same boat, unless you schedule a business call at the end of your driveway both first thing in the morning and last thing at the end of the day.

Quite the contrary. Because I'm a 1099, everything I do regarding my work, including driving mileage to/fron contract jobs, is considered business-related and a business expense. It isn't deductible if the job I work that particular day is a W2 job, which some of them are, and on my Schedule C worksheet in Turbotax, I have to report total miles for the year, commuting (non-deductible) mileage, personal mileage, and business mileage.

[diadromous mermaid 36]

Ah, so your work out of your home? I must have missed that.

Commute miles to work are not expense that can be deducted. So, in this particular case, you and the employee are in the same boat, unless you schedule a business call at the end of your driveway both first thing in the morning and last thing at the end of the day.

Quite the contrary. Because I'm a 1099, everything I do regarding my work, including driving mileage to/fron contract jobs, is considered business-related and a business expense. It isn't deductible if the job I work that particular day is a W2 job, which some of them are, and on my Schedule C worksheet in Turbotax, I have to report total miles for the year, commuting (non-deductible) mileage, personal mileage, and business mileage.

[JimVaPhuong 4,863]

Ok, let me get this straight.

The IRS allows you to tally your business expenses at a rate that is higher than what you actually spend on those expenses. The result is that you have more money left over for your personal income than your tax return would seem to indicate.

Now, the tax return's "Total Income" numbers on line 22 are fairly low because of these generous business expense deductions, which means you're getting a nice break on your taxes. But your REAL personal income is actually much higher. However, the "Total Income" numbers end up being SO low that you don't appear to qualify to sponsor an immigrant, according to your household size, even though your REAL income would be high enough.

So, what YOU want is for the IRS to continue to give you the generous deductions for your business expenses, but you want USCIS to take into account that that you're not REALLY spending that much on your business, and you ACTUALLY have more personal income than your tax return would appear to indicate. To be more specific, YOU want USCIS to pretend you didn't have ANY business expenses, and that your gross business income was entirely available to you as PERSONAL income.

To be precise, you want USCIS to treat your business expense deductions the same as they treat your personal deductions. Am I correct?

Ok, let me know if you are win because you will have successfully forced USCIS to move the line they draw between your business and personal finances, effectively making your business revenues the same as your personal income. If that works then I'm going to talk to my employer, because they spend a boatload of money on me, and I'd like it considered on my affidavit of support.

What's good for the goose...

[pushbrk 12,106]

Commute miles to work are not expense that can be deducted. So, in this particular case, you and the employee are in the same boat, unless you schedule a business call at the end of your driveway both first thing in the morning and last thing at the end of the day.

Quite the contrary. Because I'm a 1099, everything I do regarding my work, including driving mileage to/fron contract jobs, is considered business-related and a business expense. It isn't deductible if the job I work that particular day is a W2 job, which some of them are, and on my Schedule C worksheet in Turbotax, I have to report total miles for the year, commuting (non-deductible) mileage, personal mileage, and business mileage.

I work out of my home too and almost always have, whether W2, business or 1099. You are asking to have your cake (the tax advantages) and eat it too. It doesn't work that way, isn't intended to and won't.

We all understand the tax advantages and that the actual money available to spend on things others don't get to deduct means that effectively, the self-employed person's income is understated on line 22. Certain allowable expense deductions are not only significantly higher than the actual out of pocket expense. Also, when it comes to automobile expenses, those whose commute is from the kitchen to the garage with all other mileage or actual operating expense providing a reduction of taxable income is a huge benefit that contributes to the line 22 understatement of income. You don't have a problem with that until it bites you in the butt on your affadavit of support. We/I get it. It bites me too. The difference is, I'm willing to accept that I don't get to have my cake and eat it too and you're not. Nevertheless, the outcome is going to be you have no choice but to live with it because that's the way it is. No amount of convenient misinterpretation is going get you the cake back to eat twice.

If you want to be treated like a W2 employee leave the cake on the shelf instead of eating it and wanting it back again.

For every guy like you reaping the benefits of the mileage deduction while driving an old depreciated vehicle, there's another one claiming that deduction doesn't cover the actual expense of operating his beemer etc.

Edited July 20, 2009 by pushbrk

[Steve_and_Lina 0]

Ah, so your work out of your home? I must have missed that.

For tax purposes, yes, home is my work base, and I then travel to work sites, so however I get there- driving in my car, taking the subway/bus, plane tickets- is 100% tax deductible. Not sure how different it would be if I had an office/business space elsewhere.

[pushbrk 12,106]

Ah, so your work out of your home? I must have missed that.

For tax purposes, yes, home is my work base, and I then travel to work sites, so however I get there- driving in my car, taking the subway/bus, plane tickets- is 100% tax deductible. Not sure how different it would be if I had an office/business space elsewhere.

The difference would be you couldn't deduct the mileage or expense traveling from your home to your office. You can't now either but since your home is your office, you're not losing anything.

[Steve_and_Lina 0]

I work out of my home too and almost always have, whether W2, business or 1099. You are asking to have your cake (the tax advantages) and eat it too. It doesn't work that way, isn't intended to and won't.

We all understand the tax advantages and that the actual money available to spend on things others don't get to deduct means that effectively, the self-employed person's income is understated on line 22. Certain allowable expense deductions are not only significantly higher than the actual out of pocket expense. Also, when it comes to automobile expenses, those whose commute is from the kitchen to the garage with all other mileage or actual operating expense providing a reduction of taxable income is a huge benefit that contributes to the line 22 understatement of income. You don't have a problem with that until it bites you in the butt on your affadavit of support. We/I get it. It bites me too. The difference is, I'm willing to accept that I don't get to have my cake and eat it too and you're not. Nevertheless, the outcome is going to be you have no choice but to live with it because that's the way it is. No amount of convenient misinterpretation is going get you the cake back to eat twice.

If you want to be treated like a W2 employee leave the cake on the shelf instead of eating it and wanting it back again.

What do you mean "have your cake and eat it too"?

I'm not looking to defraud the government or achieve any sort of advantage not given to others. I have played fairly, according to the rules and laws set down by the government.

I've stated my position and have based it upon the law.

Clearly, you have a problem with that and seem rather hostile and I don't know why, nor do I really care. You have your opinion which deems my position a "creative misinterpretation" but fail to provide any facts to back up your position. I've asked you repeatedly to provide any sort of citation to support your position or to prove mine incorrect and you haven't provided one in repeated posts. You've just continued to state opinion, not law, compounded by insults. As such, I've responded to you the last time, and I find it really mind-blowing that anyone would come on this board to insult others and be less than helpful. I really feel sorry for you if you have nothing better to do with your time.

[pushbrk 12,106]

I work out of my home too and almost always have, whether W2, business or 1099. You are asking to have your cake (the tax advantages) and eat it too. It doesn't work that way, isn't intended to and won't.

We all understand the tax advantages and that the actual money available to spend on things others don't get to deduct means that effectively, the self-employed person's income is understated on line 22. Certain allowable expense deductions are not only significantly higher than the actual out of pocket expense. Also, when it comes to automobile expenses, those whose commute is from the kitchen to the garage with all other mileage or actual operating expense providing a reduction of taxable income is a huge benefit that contributes to the line 22 understatement of income. You don't have a problem with that until it bites you in the butt on your affadavit of support. We/I get it. It bites me too. The difference is, I'm willing to accept that I don't get to have my cake and eat it too and you're not. Nevertheless, the outcome is going to be you have no choice but to live with it because that's the way it is. No amount of convenient misinterpretation is going get you the cake back to eat twice.

If you want to be treated like a W2 employee leave the cake on the shelf instead of eating it and wanting it back again.

What do you mean "have your cake and eat it too"?

I'm not looking to defraud the government or achieve any sort of advantage not given to others. I have played fairly, according to the rules and laws set down by the government.

I've stated my position and have based it upon the law.

Clearly, you have a problem with that and seem rather hostile and I don't know why, nor do I really care. You have your opinion which deems my position a "creative misinterpretation" but fail to provide any facts to back up your position. I've asked you repeatedly to provide any sort of citation to support your position or to prove mine incorrect and you haven't provided one in repeated posts. You've just continued to state opinion, not law, compounded by insults. As such, I've responded to you the last time, and I find it really mind-blowing that anyone would come on this board to insult others and be less than helpful. I really feel sorry for you if you have nothing better to do with your time.

It's not a question of law. It's a question of policy and standard accounting practices.

The "cake" is the "total income" as shown on line 22 of the 1040. You "eat it" when you derive the tax advantage. You also want the cake "income" to remain on the shelf so you can eat it again for the affidavit of support. I can understand your point about the paragraph you quoted being less than crystal clear, but it's meaning has long been understood by many if not most self-employed people. Again, I suggest you have your accountant explain it to you.

You can TRY anything you want. I'm just telling you how it's going to come out in the end. That you don't like it is one thing that IS crystal clear.