Income and Loss

[Gary and Alla 3,694]

Jim,

Sorry, can't edit my response so a new post is needed.

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.

Yes, that's precisely my point. You can see from the example about the mileage precisely how generous these expense write-offs are. Now, folks can argue about depreciation being factored into the mileage allowance etc etc etc, but still.... the W2 is putting the same wear and tear on their car and they're not allowed any sort of deduction.

There needs to be an equitable standard at work, and there isn't one. Quite the contrary.

NOW you understand completely. There needs to be a more equitable standard at work...but there isn't. You CANNOT say something is NOT income to the IRS (and NOT pay tax on it) and then say to USCIS that it IS income. Pay your nickle and take your choice.

Get a current P&L prepared and a bank letter. My suggestions on how to do this are in the above posts where we don't discuss semantics and California Bolshevism.

[Steve_and_Lina 0]

You are no more "invested" than any other self employed person. Please do not suggest you are somehow more invested than any of the others of us that have been engaged and subsequently married our fiancees and filed TWO (in my case SIX) affadivits of support (K-1 and two K-2s)

"Deductions" are from personal income, AFTER line 22 and have no effect on line 22. Businesses do not have "deductions" they have "expenses" and "costs". The business income is NOT persoanl income from which you can support someone (well, it is, but not on paper) and it is not considered by the consulates or the USCIS. Those are the facts, man. Like it, love it, hate it...or get over it, those are the facts.

I will not argue your interpretation of "deductions" ,even though the word is not mentioned on the schedule C, because it doesn't matter. Your income on line 22 will be considered. And as mentioned above and in my FIRST post on this subject...CURRENT income is more important. It is July, alomost August, you mean you cannot show CURRENT income is above the guidelines? I hae been hinting around aboit this and hopefully you will drop the semantics argument long enough to understand my meaning. Sheesh. LAST YEAR's income is virtually a non-issue at this point. Turn your efforts to something productive and get a P&L statement for THIS year (to date) prepared.

I'm not claiming to be any more invested. Quite the contrary, my heart goes out to everyone who's gone through or is going through the process. This isn't a contest to see who's filed more paperwork or jumped through more hoops- don't try to make it into one or think I'm trying to make it into one. Quite the contrary, I'm looking for an answer to my dilemma while at the same time hoping that what I'm going through might help others in the same situation.

Did you read my post above about vehicle costs? If so, explain to me the difference between the W2 person and the 1099 person. Two people, same exact actual expense, but per the current interpretation by USCIS and the State Department, the W2 person is considered to have $35,000 in "income before deductions" and the 1099 person is considered to have $17,500 in "income before deductions".

Please, if you can, explain to me how that is fair or why it is the 1099 person, who financially comes out far better in this situation in terms of real dollars in their pocket, is instead deemed to be the person incapable of supporting someone.

Your point about current income is moot. My business is cyclical. I make about 65% of my income from September until the new year, and have for the past 17 years. Besides, USCIS isn't allowed to project future potential income so unless you've made more than the 125% already in the year, it doesn't matter.

Finally, your point that "those are the facts"..... well, I don't buy it. I'm not looking around seeing people owning slaves or women being told they can't vote, just to mention a few examples. If there's something wrong with the system, for me, shrugging it off and saying "those are the facts" isn't an option. You fight to change it, especially when it involves your family.

[Steve_and_Lina 0]

NOW you understand completely. There needs to be a more equitable standard at work...but there isn't. You CANNOT say something is NOT income to the IRS (and NOT pay tax on it) and then say to USCIS that it IS income. Pay your nickle and take your choice.

Get a current P&L prepared and a bank letter. My suggestions on how to do this are in the above posts where we don't discuss semantics and California Bolshevism.

Well, there should be an equitable standard. The fact that there isn't shows the glaring need to fix it because clearly, it is FUBARed and people are getting unfairly hurt by this.

And your logic fails. I'm not telling the IRS it's not income. On the contrary. Line 7 of Schedule C reads "gross income".

The fact that the tax code is then written to reduce my tax burden should have zero to do with USCIS's interpretation. The bottom line remains that my income before deductions more than satisfies the 125% threshold and we can argue semantics about "expenses" versus "deductions", but when you look at the intent of the law, the distinction between them is meaningless.

[JimVaPhuong 4,863]

You are no more "invested" than any other self employed person. Please do not suggest you are somehow more invested than any of the others of us that have been engaged and subsequently married our fiancees and filed TWO (in my case SIX) affadivits of support (K-1 and two K-2s)

"Deductions" are from personal income, AFTER line 22 and have no effect on line 22. Businesses do not have "deductions" they have "expenses" and "costs". The business income is NOT persoanl income from which you can support someone (well, it is, but not on paper) and it is not considered by the consulates or the USCIS. Those are the facts, man. Like it, love it, hate it...or get over it, those are the facts.

I will not argue your interpretation of "deductions" ,even though the word is not mentioned on the schedule C, because it doesn't matter. Your income on line 22 will be considered. And as mentioned above and in my FIRST post on this subject...CURRENT income is more important. It is July, alomost August, you mean you cannot show CURRENT income is above the guidelines? I hae been hinting around aboit this and hopefully you will drop the semantics argument long enough to understand my meaning. Sheesh. LAST YEAR's income is virtually a non-issue at this point. Turn your efforts to something productive and get a P&L statement for THIS year (to date) prepared.

I'm not claiming to be any more invested. Quite the contrary, my heart goes out to everyone who's gone through or is going through the process. This isn't a contest to see who's filed more paperwork or jumped through more hoops- don't try to make it into one or think I'm trying to make it into one. Quite the contrary, I'm looking for an answer to my dilemma while at the same time hoping that what I'm going through might help others in the same situation.

Did you read my post above about vehicle costs? If so, explain to me the difference between the W2 person and the 1099 person. Two people, same exact actual expense, but per the current interpretation by USCIS and the State Department, the W2 person is considered to have $35,000 in "income before deductions" and the 1099 person is considered to have $17,500 in "income before deductions".

Please, if you can, explain to me how that is fair or why it is the 1099 person, who financially comes out far better in this situation in terms of real dollars in their pocket, is instead deemed to be the person incapable of supporting someone.

Your point about current income is moot. My business is cyclical. I make about 65% of my income from September until the new year, and have for the past 17 years. Besides, USCIS isn't allowed to project future potential income so unless you've made more than the 125% already in the year, it doesn't matter.

Finally, your point that "those are the facts"..... well, I don't buy it. I'm not looking around seeing people owning slaves or women being told they can't vote, just to mention a few examples. If there's something wrong with the system, for me, shrugging it off and saying "those are the facts" isn't an option. You fight to change it, especially when it involves your family.

Ok, let me see if I can explain this so that it makes sense, and it will be a challenge because I despise accounting and taxes. I can't wait until I can hire someone to do this stuff for me, and I can focus on designing new products.

A business is an entity - it brings in revenue, it pays expenses, and it pays taxes on the difference (grossly simplified, but you get the point). In the case of a corporation or LLC, the business entity is a legal construct. It has executives, board members, employees, it may even have stock holders. In the case of a sole proprietorship or self-employed individual, the business consists of an actual person, and the business doesn't pay any taxes because everything left after expenses becomes the income of the individual.

Your tax return includes income and deductions (if you like) for two entities; Steve (the business) and Steve (the individual taxpayer). Both are the same person, but there is a line between them as far as the government is concerned. Steve (the business) has revenues and expenses, and the difference is the personal income of Steve (the individual taxpayer). Because both entities are actually the same person, the IRS lets you combine them onto a single tax return, but the accounting is still kept separate - schedule C for Steve (the business) and the 1040 for Steve (the individual taxpayer).

USCIS and Department of State don't give a damn about Steve (the business) because that's not the entity that is sponsoring a foreign beneficiary. If it were, then the beneficiary would be applying for a work visa. Steve (the individual taxpayer) is sponsoring the beneficiary, and that's whose income they care about. If you want to make that income look better for USCIS and Department of State, then you need to shift more money from the business side of Steve over to the personal side of Steve. This means that Steve (the business) either needs more revenue or less expenses.

What you want USCIS and the State Department to do is to consider the income of Steve (the business) as if that entity were the sponsor. It isn't, which is why I made the comparison to myself taking deductions for money my employer spends on me, and why I made the comment about your attempting to move the line between the two entities.

Don't make me think about this stuff any more. It makes my head hurt.

[Anh map 2,098]

Can't we talk about this in a calm and rational manner?

Edited July 21, 2009 by Anh map

[Steve_and_Lina 0]

Ok, let me see if I can explain this so that it makes sense, and it will be a challenge because I despise accounting and taxes. I can't wait until I can hire someone to do this stuff for me, and I can focus on designing new products.

A business is an entity - it brings in revenue, it pays expenses, and it pays taxes on the difference (grossly simplified, but you get the point). In the case of a corporation or LLC, the business entity is a legal construct. It has executives, board members, employees, it may even have stock holders. In the case of a sole proprietorship or self-employed individual, the business consists of an actual person, and the business doesn't pay any taxes because everything left after expenses becomes the income of the individual.

Your tax return includes income and deductions (if you like) for two entities; Steve (the business) and Steve (the individual taxpayer). Both are the same person, but there is a line between them as far as the government is concerned. Steve (the business) has revenues and expenses, and the difference is the personal income of Steve (the individual taxpayer). Because both entities are actually the same person, the IRS lets you combine them onto a single tax return, but the accounting is still kept separate - schedule C for Steve (the business) and the 1040 for Steve (the individual taxpayer).

USCIS and Department of State don't give a damn about Steve (the business) because that's not the entity that is sponsoring a foreign beneficiary. If it were, then the beneficiary would be applying for a work visa. Steve (the individual taxpayer) is sponsoring the beneficiary, and that's whose income they care about. If you want to make that income look better for USCIS and Department of State, then you need to shift more money from the business side of Steve over to the personal side of Steve. This means that Steve (the business) either needs more revenue or less expenses.

What you want USCIS and the State Department to do is to consider the income of Steve (the business) as if that entity were the sponsor. It isn't, which is why I made the comparison to myself taking deductions for money my employer spends on me, and why I made the comment about your attempting to move the line between the two entities.

Don't make me think about this stuff any more. It makes my head hurt.

Jim,

Thank you for a very succinct explanation. I understand the logic, but do not agree with it. My "business" is me and is conducted/taxed/etc under my social security number. There's no separate legal entity and for USCIS and the State Department to create one that conflicts with definition set by the IRS is wrong.

I'm with you about the headache, 'cause "dammit, Jim, I'm a stagehand, not a legal tax guru." (sorry, couldn't resist.)

[pushbrk 12,106]

Ok, let me see if I can explain this so that it makes sense, and it will be a challenge because I despise accounting and taxes. I can't wait until I can hire someone to do this stuff for me, and I can focus on designing new products.

A business is an entity - it brings in revenue, it pays expenses, and it pays taxes on the difference (grossly simplified, but you get the point). In the case of a corporation or LLC, the business entity is a legal construct. It has executives, board members, employees, it may even have stock holders. In the case of a sole proprietorship or self-employed individual, the business consists of an actual person, and the business doesn't pay any taxes because everything left after expenses becomes the income of the individual.

Your tax return includes income and deductions (if you like) for two entities; Steve (the business) and Steve (the individual taxpayer). Both are the same person, but there is a line between them as far as the government is concerned. Steve (the business) has revenues and expenses, and the difference is the personal income of Steve (the individual taxpayer). Because both entities are actually the same person, the IRS lets you combine them onto a single tax return, but the accounting is still kept separate - schedule C for Steve (the business) and the 1040 for Steve (the individual taxpayer).

USCIS and Department of State don't give a damn about Steve (the business) because that's not the entity that is sponsoring a foreign beneficiary. If it were, then the beneficiary would be applying for a work visa. Steve (the individual taxpayer) is sponsoring the beneficiary, and that's whose income they care about. If you want to make that income look better for USCIS and Department of State, then you need to shift more money from the business side of Steve over to the personal side of Steve. This means that Steve (the business) either needs more revenue or less expenses.

What you want USCIS and the State Department to do is to consider the income of Steve (the business) as if that entity were the sponsor. It isn't, which is why I made the comparison to myself taking deductions for money my employer spends on me, and why I made the comment about your attempting to move the line between the two entities.

Don't make me think about this stuff any more. It makes my head hurt.

Jim,

Thank you for a very succinct explanation. I understand the logic, but do not agree with it. My "business" is me and is conducted/taxed/etc under my social security number. There's no separate legal entity and for USCIS and the State Department to create one that conflicts with definition set by the IRS is wrong.

I'm with you about the headache, 'cause "dammit, Jim, I'm a stagehand, not a legal tax guru." (sorry, couldn't resist.)

USCIS has not created a separate entity. They are only concerned about the income of you the person, not your business. The IRS has created a tax filing system that allows you to choose to separate the business revenue minus expenses from your "personal income". When you choose to eat that cake by by subtracting allowable business expenses on a schedule C to reduce your tax liability, you leave less cake for USCIS to consider. This is only a problem when line 22 has a number lower than USCIS is looking for.

As for your auto expense allowance being far more than your actual expenses, there's no place to account for that. As far as USCIS knows, you're taking a mileage allowance for a vehicle that's costing you even more to operate than the mileage allowance. You could be taking an allowance many thousands of dollars less than actual operating costs. They can't see that piece of cake like you do, so they don't have a way to consider it.

[Steve_and_Lina 0]

USCIS has not created a separate entity. They are only concerned about the income of you the person, not your business. The IRS has created a tax filing system that allows you to choose to separate the business revenue minus expenses from your "personal income". When you choose to eat that cake by by subtracting allowable business expenses on a schedule C to reduce your tax liability, you leave less cake for USCIS to consider. This is only a problem when line 22 has a number lower than USCIS is looking for.

As for your auto expense allowance being far more than your actual expenses, there's no place to account for that. As far as USCIS knows, you're taking a mileage allowance for a vehicle that's costing you even more to operate than the mileage allowance. You could be taking an allowance many thousands of dollars less than actual operating costs. They can't see that piece of cake like you do, so they don't have a way to consider it.

But in this instance, my business is me.

And I am given no choice by the IRS on how to file my taxes. 1099 income gets reported on a schedule C, not the 1040. If you report 1099 income on the 1040, you're in violation of the law. There's no wiggle room there.

I am legally entitled to eat the cake by the IRS tax code. And the failure of the USCIS to grasp the implications is a failing on their part that needs to be corrected.

In terms of your point about the auto expense. What's to say the W2 employee isn't also driving a clunker that needs a new $3000 tranny every 8 months and a few grand more in parts? Does USCIS inquire about that? No, they don't.

The base fact of my argument remains- 2 people, identical driving expenses, identical $35,000 incomes, but the W2 person is considered to have an income still of $35,000, the 1099 person an income of $17,500 (if they take their write-offs to which they are entitled which give the 1099 person more actual in-pocket income than the W2 person.)

C'mon, you really can't consider this to be fair, let alone make any sense, do you?

[pushbrk 12,106]

USCIS has not created a separate entity. They are only concerned about the income of you the person, not your business. The IRS has created a tax filing system that allows you to choose to separate the business revenue minus expenses from your "personal income". When you choose to eat that cake by by subtracting allowable business expenses on a schedule C to reduce your tax liability, you leave less cake for USCIS to consider. This is only a problem when line 22 has a number lower than USCIS is looking for.

As for your auto expense allowance being far more than your actual expenses, there's no place to account for that. As far as USCIS knows, you're taking a mileage allowance for a vehicle that's costing you even more to operate than the mileage allowance. You could be taking an allowance many thousands of dollars less than actual operating costs. They can't see that piece of cake like you do, so they don't have a way to consider it.

But in this instance, my business is me.

And I am given no choice by the IRS on how to file my taxes. 1099 income gets reported on a schedule C, not the 1040. If you report 1099 income on the 1040, you're in violation of the law. There's no wiggle room there.

I am legally entitled to eat the cake by the IRS tax code. And the failure of the USCIS to grasp the implications is a failing on their part that needs to be corrected.

In terms of your point about the auto expense. What's to say the W2 employee isn't also driving a clunker that needs a new $3000 tranny every 8 months and a few grand more in parts? Does USCIS inquire about that? No, they don't.

The base fact of my argument remains- 2 people, identical driving expenses, identical $35,000 incomes, but the W2 person is considered to have an income still of $35,000, the 1099 person an income of $17,500 (if they take their write-offs to which they are entitled which give the 1099 person more actual in-pocket income than the W2 person.)

C'mon, you really can't consider this to be fair, let alone make any sense, do you?

Yes, I do. You choose to eat the tax advantages. Once eaten, that part of the cake is no longer visible to USCIS. You can't report 1099 income on a 1040 but you are not forced to eat the tax advantages available when you report it on the schedule C. You are free to explain and document the financial ramifications in your affidavit of support. If you can convince USCIS to consider them, more power to you.

[Gary and Alla 3,694]

You are no more "invested" than any other self employed person. Please do not suggest you are somehow more invested than any of the others of us that have been engaged and subsequently married our fiancees and filed TWO (in my case SIX) affadivits of support (K-1 and two K-2s)

"Deductions" are from personal income, AFTER line 22 and have no effect on line 22. Businesses do not have "deductions" they have "expenses" and "costs". The business income is NOT persoanl income from which you can support someone (well, it is, but not on paper) and it is not considered by the consulates or the USCIS. Those are the facts, man. Like it, love it, hate it...or get over it, those are the facts.

I will not argue your interpretation of "deductions" ,even though the word is not mentioned on the schedule C, because it doesn't matter. Your income on line 22 will be considered. And as mentioned above and in my FIRST post on this subject...CURRENT income is more important. It is July, alomost August, you mean you cannot show CURRENT income is above the guidelines? I hae been hinting around aboit this and hopefully you will drop the semantics argument long enough to understand my meaning. Sheesh. LAST YEAR's income is virtually a non-issue at this point. Turn your efforts to something productive and get a P&L statement for THIS year (to date) prepared.

I'm not claiming to be any more invested. Quite the contrary, my heart goes out to everyone who's gone through or is going through the process. This isn't a contest to see who's filed more paperwork or jumped through more hoops- don't try to make it into one or think I'm trying to make it into one. Quite the contrary, I'm looking for an answer to my dilemma while at the same time hoping that what I'm going through might help others in the same situation.

Did you read my post above about vehicle costs? If so, explain to me the difference between the W2 person and the 1099 person. Two people, same exact actual expense, but per the current interpretation by USCIS and the State Department, the W2 person is considered to have $35,000 in "income before deductions" and the 1099 person is considered to have $17,500 in "income before deductions".

Please, if you can, explain to me how that is fair or why it is the 1099 person, who financially comes out far better in this situation in terms of real dollars in their pocket, is instead deemed to be the person incapable of supporting someone.

Your point about current income is moot. My business is cyclical. I make about 65% of my income from September until the new year, and have for the past 17 years. Besides, USCIS isn't allowed to project future potential income so unless you've made more than the 125% already in the year, it doesn't matter.

Finally, your point that "those are the facts"..... well, I don't buy it. I'm not looking around seeing people owning slaves or women being told they can't vote, just to mention a few examples. If there's something wrong with the system, for me, shrugging it off and saying "those are the facts" isn't an option. You fight to change it, especially when it involves your family.

1. The differece is what line 22 says.

2. It is not fair

3. Those are the facts, doesn't matter if YOU "buy it"

My point is not moot. You are not getting it. You must state your current income on form I-134. You do this by taking the YTD, dividing by the number of months in the calculation (7 currently) and multiply by 12. ADD to this any anticipated income for future quarters. This is how you calculate CURRENT income. Verify this with bank deposits. It isn't "fair" to w-2 wage earners...but that sword cuts both ways.

Now you can get busy with this or you can continue to whine and moan. Your choice.

[Gary and Alla 3,694]

USCIS has not created a separate entity. They are only concerned about the income of you the person, not your business. The IRS has created a tax filing system that allows you to choose to separate the business revenue minus expenses from your "personal income". When you choose to eat that cake by by subtracting allowable business expenses on a schedule C to reduce your tax liability, you leave less cake for USCIS to consider. This is only a problem when line 22 has a number lower than USCIS is looking for.

As for your auto expense allowance being far more than your actual expenses, there's no place to account for that. As far as USCIS knows, you're taking a mileage allowance for a vehicle that's costing you even more to operate than the mileage allowance. You could be taking an allowance many thousands of dollars less than actual operating costs. They can't see that piece of cake like you do, so they don't have a way to consider it.

But in this instance, my business is me.

And I am given no choice by the IRS on how to file my taxes. 1099 income gets reported on a schedule C, not the 1040. If you report 1099 income on the 1040, you're in violation of the law. There's no wiggle room there.

I am legally entitled to eat the cake by the IRS tax code. And the failure of the USCIS to grasp the implications is a failing on their part that needs to be corrected.

In terms of your point about the auto expense. What's to say the W2 employee isn't also driving a clunker that needs a new $3000 tranny every 8 months and a few grand more in parts? Does USCIS inquire about that? No, they don't.

The base fact of my argument remains- 2 people, identical driving expenses, identical $35,000 incomes, but the W2 person is considered to have an income still of $35,000, the 1099 person an income of $17,500 (if they take their write-offs to which they are entitled which give the 1099 person more actual in-pocket income than the W2 person.)

C'mon, you really can't consider this to be fair, let alone make any sense, do you?

Your argument is correct. It doesn't matter. It isn't fair. It doesn't matter. The w-2 employee (and his employer) pay the 15.3% SS and medicare tax on ALL money paid to him for vehicles, YOU do not. YOU are far ahead of him in "money in the bank". Be happy. YOU do not get to claim it as "income" because you didn't pay tax on it...the w-2 guy did. Presumable you have the "tax savings" in the bank which can be used as an asset to offset your deficiency in income.

Like it or not, I have submitted SIX affadavits over a two "tax year" period and that is the way it is. You DO NOT have to like it.

[Steve_and_Lina 0]

Yes, I do. You choose to eat the tax advantages. Once eaten, that part of the cake is no longer visible to USCIS. You can't report 1099 income on a 1040 but you are not forced to eat the tax advantages available when you report it on the schedule C. You are free to explain and document the financial ramifications in your affidavit of support. If you can convince USCIS to consider them, more power to you.

See, this is what is counter-intuitive.

Your position- and the current position of USCIS- is that in order to make the line 22 number work, 1099 employees must forgo legal deductions on their taxes.

But what is the real-life ramification of doing so?

Taking the auto deduction example again, one would then have to pay an additional 15% in taxes on $17,500 in income, for starters. That's $2,625. Then there would be the increase in the self-employment tax as well. I don't have time to run all the numbers, but what we're looking at is that a 1099 person would have to shell out an additional $4k or so at the very least.

So that's $4k one would have to pay in taxes that they legally do not have to pay.

Isn't the purpose of the I-864 to make sure one has the means to support their wife/kid? Yet, because USCIS, for whatever reason, doesn't wish to consider line 7 of the C, a 1099 person now must shell out $4k that could otherwise be used for food, rent, putting some bucks aside for college for the kid, etc etc.

Again, it makes no sense. This isn't a choice of what kind of cake to eat. This is assessing a brutally punitive tax on self-employed people whose costs are the exact same as a W2 employee.

So the logic is that in order to show us you can support your family, you must give up $4,000.

Huh?????

[Steve_and_Lina 0]

Your argument is correct. It doesn't matter. It isn't fair. It doesn't matter. The w-2 employee (and his employer) pay the 15.3% SS and medicare tax on ALL money paid to him for vehicles, YOU do not. YOU are far ahead of him in "money in the bank". Be happy. YOU do not get to claim it as "income" because you didn't pay tax on it...the w-2 guy did. Presumable you have the "tax savings" in the bank which can be used as an asset to offset your deficiency in income.

Like it or not, I have submitted SIX affadavits over a two "tax year" period and that is the way it is. You DO NOT have to like it.

Nor do I have to stand idly by and accept a deficiency of logic on the part of USCIS. It is brutally unfair. (see my above response) And no, I am not happy because I am being told, effectively, to make a choice that others in near-identical circumstances do not have to make- forgo legal deductions and pay $4k more in taxes, or we don't let your wife and kid into the country, but we'll wave Joe W2's (who pays the exact same expenses you do) wife and kid into the country.

And ok already, you win. I've only submitted 4 I-864s.

[Gary and Alla 3,694]

You are no more "invested" than any other self employed person. Please do not suggest you are somehow more invested than any of the others of us that have been engaged and subsequently married our fiancees and filed TWO (in my case SIX) affadivits of support (K-1 and two K-2s)

"Deductions" are from personal income, AFTER line 22 and have no effect on line 22. Businesses do not have "deductions" they have "expenses" and "costs". The business income is NOT persoanl income from which you can support someone (well, it is, but not on paper) and it is not considered by the consulates or the USCIS. Those are the facts, man. Like it, love it, hate it...or get over it, those are the facts.

I will not argue your interpretation of "deductions" ,even though the word is not mentioned on the schedule C, because it doesn't matter. Your income on line 22 will be considered. And as mentioned above and in my FIRST post on this subject...CURRENT income is more important. It is July, alomost August, you mean you cannot show CURRENT income is above the guidelines? I hae been hinting around aboit this and hopefully you will drop the semantics argument long enough to understand my meaning. Sheesh. LAST YEAR's income is virtually a non-issue at this point. Turn your efforts to something productive and get a P&L statement for THIS year (to date) prepared.

I'm not claiming to be any more invested. Quite the contrary, my heart goes out to everyone who's gone through or is going through the process. This isn't a contest to see who's filed more paperwork or jumped through more hoops- don't try to make it into one or think I'm trying to make it into one. Quite the contrary, I'm looking for an answer to my dilemma while at the same time hoping that what I'm going through might help others in the same situation.

Did you read my post above about vehicle costs? If so, explain to me the difference between the W2 person and the 1099 person. Two people, same exact actual expense, but per the current interpretation by USCIS and the State Department, the W2 person is considered to have $35,000 in "income before deductions" and the 1099 person is considered to have $17,500 in "income before deductions".

Please, if you can, explain to me how that is fair or why it is the 1099 person, who financially comes out far better in this situation in terms of real dollars in their pocket, is instead deemed to be the person incapable of supporting someone.

Your point about current income is moot. My business is cyclical. I make about 65% of my income from September until the new year, and have for the past 17 years. Besides, USCIS isn't allowed to project future potential income so unless you've made more than the 125% already in the year, it doesn't matter.

Finally, your point that "those are the facts"..... well, I don't buy it. I'm not looking around seeing people owning slaves or women being told they can't vote, just to mention a few examples. If there's something wrong with the system, for me, shrugging it off and saying "those are the facts" isn't an option. You fight to change it, especially when it involves your family.

Ok, let me see if I can explain this so that it makes sense, and it will be a challenge because I despise accounting and taxes. I can't wait until I can hire someone to do this stuff for me, and I can focus on designing new products.

A business is an entity - it brings in revenue, it pays expenses, and it pays taxes on the difference (grossly simplified, but you get the point). In the case of a corporation or LLC, the business entity is a legal construct. It has executives, board members, employees, it may even have stock holders. In the case of a sole proprietorship or self-employed individual, the business consists of an actual person, and the business doesn't pay any taxes because everything left after expenses becomes the income of the individual.

Your tax return includes income and deductions (if you like) for two entities; Steve (the business) and Steve (the individual taxpayer). Both are the same person, but there is a line between them as far as the government is concerned. Steve (the business) has revenues and expenses, and the difference is the personal income of Steve (the individual taxpayer). Because both entities are actually the same person, the IRS lets you combine them onto a single tax return, but the accounting is still kept separate - schedule C for Steve (the business) and the 1040 for Steve (the individual taxpayer).

USCIS and Department of State don't give a damn about Steve (the business) because that's not the entity that is sponsoring a foreign beneficiary. If it were, then the beneficiary would be applying for a work visa. Steve (the individual taxpayer) is sponsoring the beneficiary, and that's whose income they care about. If you want to make that income look better for USCIS and Department of State, then you need to shift more money from the business side of Steve over to the personal side of Steve. This means that Steve (the business) either needs more revenue or less expenses.

What you want USCIS and the State Department to do is to consider the income of Steve (the business) as if that entity were the sponsor. It isn't, which is why I made the comparison to myself taking deductions for money my employer spends on me, and why I made the comment about your attempting to move the line between the two entities.

Don't make me think about this stuff any more. It makes my head hurt.

[Gary and Alla 3,694]

Yes, I do. You choose to eat the tax advantages. Once eaten, that part of the cake is no longer visible to USCIS. You can't report 1099 income on a 1040 but you are not forced to eat the tax advantages available when you report it on the schedule C. You are free to explain and document the financial ramifications in your affidavit of support. If you can convince USCIS to consider them, more power to you.

See, this is what is counter-intuitive.

Your position- and the current position of USCIS- is that in order to make the line 22 number work, 1099 employees must forgo legal deductions on their taxes.

But what is the real-life ramification of doing so?

Taking the auto deduction example again, one would then have to pay an additional 15% in taxes on $17,500 in income, for starters. That's $2,625. Then there would be the increase in the self-employment tax as well. I don't have time to run all the numbers, but what we're looking at is that a 1099 person would have to shell out an additional $4k or so at the very least.

So that's $4k one would have to pay in taxes that they legally do not have to pay.

Isn't the purpose of the I-864 to make sure one has the means to support their wife/kid? Yet, because USCIS, for whatever reason, doesn't wish to consider line 7 of the C, a 1099 person now must shell out $4k that could otherwise be used for food, rent, putting some bucks aside for college for the kid, etc etc.

Again, it makes no sense. This isn't a choice of what kind of cake to eat. This is assessing a brutally punitive tax on self-employed people whose costs are the exact same as a W2 employee.

So the logic is that in order to show us you can support your family, you must give up $4,000.

Huh?????

Yes. Now you understand and THAT would make you equal to a w-2 wage earner with the same income and an automobile.

You stated above that you had "no choice" how to file taxes. NOT TRUE. You have many choices. You could decline to take the vehicle expense as a business expense. This would raise your income (line 22) and your self employment tax (just as it would if you were a w-2 employee) and you could then claim the vehicle expense on the schedule A. It would then STOP to be an "expense" and become a "deduction" and would not be "counted against you"...just as it would not count against a w-2 wage earner. This would cost you more in tax and give you less money to support your family BUT would "look" like you made more. Simple. You could file an amended return today, remove as many business expenses and costs as you choose (you could enter -0- for expenses and costs on the schedule C if you like) then send it in with a large check for the additional tax and file THAT return with your I-134. You have that CHOICE. You would then be considered (and in actually be) the same as a w-2 employee who had all that money deducted from his check all year.

You can also CHOOSE to incorporate your business, pay yourself as an employee, be subject to withholding tax, and get a w-2 at the end of the year. Pay yourself a minimal amount of money, take the rest as a Capital Gain which is not subject to SS and Medicare tax and is taxed at a lower rate for income tax and have the best of both world's. And NO schedule C to fill out (for yourself) but it also means a separate tax return for your corporation (which can be -0- income after costs and expenses, as your salary and bonus is a business expense now...not a "profit")

YOU have CHOSEN to file YOUR taxes in the way which was most beneficial to YOU to reduce the amount of money YOU paid to the government. GOOD FOR YOU!!!!!!! I agree. I will keep every $ I can for myself and my family since that is who I work to earn money for. The grocery store couldn't care less what my 1040 looks like, but they are greatly impressed with the appearance of US currency which I (and you) have more of because of how we CHOSE to file our taxes.

But you cannot come back later and say "But, but...." and get "credit" for the "income" you CHOSE to write off as "expense and costs". In fact you have MUCH MORE choice than a w-2 employee (who has none) and you have CHOSEN the one that is BEST for keeping money in your pocket but is the WORST for showing "income".

I mean, c'mon, stop with the righteous indignation. You sat down with your accountant (or as in my case, my accountant is me, yourself) and said "Make my tax as low as possible". Of course you did. So did I. (for 2007, I have since been incorporated and now receive a salary, w-2 and bonuses) You succeeded in making your tax as low as possible BUT the only way to do that was to make your INCOME as low as possible. Now you have to live with your CHOICE. That you didn't realize it would come back to bite you in the a$$ is not a valid excuse and does not change the rules of accounting and tax filing or affidavits of support.

Now if it makes you feel better, I will agree with you (I do, actually) and say "Yeah, you're right" and you will feel better? Go right ahead. File an I-134 with your insufficent income and no co-sponsor. There is another saying on this site..."Non Money, No Honey". Maybe we are wrong and it isn't really that way. Good luck.

Like I said, you need to forget about 2008. It was a CHOICE made without full information on your part, nothing to change it now without a huge tax expense. Better to get busy documenting the income you will make THIS year as it is more important anyway. You are spending 90% of your time on 10% of your problem. Not a good way to run a business.