I-864 Current Individual Annual Income (when retirement plan contributions lower income on tax return)

[JKLSemicolon 327]

Hi all,

 

I have searched through many threads but was unable to find anything similar to this specific question.

 

Page 4, Part 6, #7 on the I-864 asks for "My current individual annual income". Many of the posters here seem to recommend putting one's annual salary (gross income).

 

However, a few sites out there say that it should be your estimate for the Total Income line of your tax return for the current year. Here is one such example.

 

I contribute the maximum to my employer's retirement plan and since those contributions are tax deferred, the "Total Income" line on my tax returns is much less than my gross salary. Since this Total Income amount is what is asked later on (Page 5, Part 6, #24), it seems logical that USCIS wants something similar for "current individual annual income". On the other hand, a letter from my employer (one suggested piece of evidence) would instead report my gross salary. Pay stubs (another suggested piece of evidence) would show my gross salary too, but also the various pre-tax deductions like my retirement contributions.

 

So what is USCIS looking for when it comes to "current individual annual income"? The I-864 form instructions for that specific question are fairly vague:

 

Quote

Type or print your current, individual, earned or retirement, annual income that you are using to meet the requirements of this affidavit and indicate the total in the space provided.

You may include evidence supporting your claim about your expected income for the current year if you believe that submitting this evidence will help you establish ability to maintain sufficient income. You are not required to submit this evidence, however, unless specifically instructed to do so by a U.S. Government official. For example, you may include a recent letter from your employer, showing your employer’s address and telephone number, and indicating your annual salary. You may also provide pay stubs showing your income for the previous six months.

 

Just as an example with made up numbers, suppose my annual salary is $40,000 and I plan to contribute $19,500 to a company 401k plan this year. Since that $19,500 is excluded from Wages/Salaries/Tips on my W-2, this would make the "Total Income" line on my 1040 closer to $20,000 than $40,000. As a result, the choice I am talking about makes a big difference.

 

If anyone has any insight, and especially any link to language from USCIS that might help clarify this, it would be greatly appreciated.

 

Thanks.

Edited July 9, 2020 by JKLSemicolon
added to quoted text

[geowrian 22,335]

As an employee, your current annual income is how much you earn in a year's worth of time. While tax return information is required and will be considered in the totality of the circumstances, that is past income for an employee.

 

Annual income = [$paycheck] * [# paychecks per year].

Example: $1000/week * 52 weeks/year = $52,000/year

This amount would be before any deductions/withholding (like a retirement plan).

 

This is the same whether you have been working since January 1st or were unemployed until last week.

 

1 hour ago, JKLSemicolon said:

suppose my annual salary is $40,000 and I plan to contribute $19,500 to a company 401k plan this year

50% of your pre-tax income going to retirement? Sounds hard, but enjoy the early retirement!

(I know it's just an example....I just had to point that part out)

Edited July 9, 2020 by geowrian

[Joyoussinger 1,410]

Our situation was similar in that my total income is not the same as my gross income on my income tax. I receive Social Security Retirement Benefits, which are not taxable so, even though there is a line for this on the 1040, it's not added into my total income. I included a letter explaining this, a letter from Social Security verifying my payments, and bank statements which show that the money is deposited each month. We had no problem at all. I know this isn't your specific situation, but I hope it helps a little. Money deducted for retirement, as @geowrian illustrated, is still income even though it may not be taxable at this time.

[JKLSemicolon 327]

Thanks for the responses so far. Right now I am leaning toward listing my gross salary for current individual annual income. Then, in Part 11. Additional Information, I would explain that my retirement plan contributions have reduced the Total Income amount listed from my last three tax returns. I will supplement this with a letter from my employer as well six months of pay stubs (which will show the retirement contributions).

 

However, I am still on the fence because this section of the USCIS Policy Manual again mentions income in the context of how it appears on one's tax return and W-2:

 

Quote

1. Income and Percent of the Federal Poverty Guidelines

USCIS reviews the annual household gross income of the applicant and the number of household members to determine whether he or she may have sufficient financial resources to support the household.

125 Percent of the Federal Poverty Guidelines

Generally, the applicant must demonstrate an income of at least 125 percent of the Federal Poverty Guidelines (FPG) based on his or her household size for the household income to be considered a positive factor.

...

2. Basis for Determining Income

Annual Gross Income

Annual gross income is the total income before any adjustment, taxes, or deductions. This includes wages from employment. This is line 6 “total income” on the 1040 Internal Revenue Service (IRS) form. On a Wage and Tax Statement, Form W-2, the total income is in line 1 “Wages, tips, other compensation.” However, a W-2 does not include income from bank account interest, stocks and bond interest, or other income a person may be receiving outside of employment. If a person has multiple jobs with multiple corresponding Forms W-2, the income is added to find the total gross income.

 

Any thoughts?

[geowrian 22,335]

1 hour ago, JKLSemicolon said:

Thanks for the responses so far. Right now I am leaning toward listing my gross salary for current individual annual income. Then, in Part 11. Additional Information, I would explain that my retirement plan contributions have reduced the Total Income amount listed from my last three tax returns. I will supplement this with a letter from my employer as well six months of pay stubs (which will show the retirement contributions).

 

However, I am still on the fence because this section of the USCIS Policy Manual again mentions income in the context of how it appears on one's tax return and W-2:

 

 

Any thoughts?

I get that this specific topic is not treated exactly like the policy manual implies. Even the policy manual lacks codification on that subject (adjudication policies are generally used to comply with CFRs, which in turn comply with the INA).

That said, here is what has worked for others:

 

If you are an employee: Current income would be what you make today through a year's worth of time.

If you got fired today, your current income is $0 even if you earned $100k last year and $50k so far this year.

If you were hired next month at $40k/year, your current income would be $40k/year.

 

There are many cases of students who had no past income tax returns (they made under the limit to even need to file) who have successfully sponsored a spouse based entirely on their current employment. If the guidance from the policy manual was strictly applied, that would not be possible.

Similarly, there are people who have taken on a second job or changed jobs within the current tax year and successfully sponsored somebody using that increase in income (whereas they would have been below the minimums previously). If the policy manual was strictly applied, this change in income would not qualify.

Additionally, there are many cases of somebody who got an RFE/RFIE for the I-864, or were asked for an updated I-864 at/after the interview, who lost a job and no longer could qualify via current income (typically needing a joint sponsor).

 

tldr: This method of calculating current income has consistently worked without issue.

 

If you are self-employed, the most recent year's income tax return shows current income in the Total Income line. Anything obtained in-year from self-employment activities would be revenue until claimed on the tax return.

 

My suggestion is to list your gross income using the formula I noted above ($paycheck * #paychecks/year). I don't think it would hurt to provide an explanation re: retirement contributions, but I don't think it is necessary either. I tend to follow the KISS mentality.

[JKLSemicolon 327]

6 minutes ago, geowrian said:

 

If you are self-employed, the most recent year's income tax return shows current income in the Total Income line. Anything obtained in-year from self-employment activities would be revenue until claimed on the tax return.

 

My suggestion is to list your gross income using the formula I noted above ($paycheck * #paychecks/year). I don't think it would hurt to provide an explanation re: retirement contributions, but I don't think it is necessary either. I tend to follow the KISS mentality.

Thanks for the explanation. The examples you gave make sense and make me feel much more confident about reporting gross salary for my main job.

 

Since you mentioned self-employment income, I have a follow-up question:

 

I earn some money through microtask/survey platforms online that counts as self employment income for tax purposes. In the interest of transparency, right now I have indicated on Page 4, Part 6, #4 of the I-864 that I am self employed (the instructions say to check all of the boxes that apply). The self-employment earnings all appear on my tax transcripts, so no problem there. However, I'm not sure if expected earnings for the year in progress should factor into my current annual income number. I don't have any business expenses, so everything earned counts as income. 

 

Do I need to estimate this year's self employment earnings as part of the current individual annual income? If the philosophy is KISS, it would definitely be easier not to, since documenting these earnings would mean attaching screenshots from the websites where I have earnings, screenshots from PayPal (in some cases involving conversions from other currencies), checking account statements, etc. However, I wouldn't want it to appear as if I were hiding something. My rough estimate for the year might be somewhere in the neighborhood of $2000, but it's entirely up to me how much or how little of this work to do.

 

[geowrian 22,335]

1 minute ago, JKLSemicolon said:

Thanks for the explanation. The examples you gave make sense and make me feel much more confident about reporting gross salary for my main job.

 

Since you mentioned self-employment income, I have a follow-up question:

 

I earn some money through microtask/survey platforms online that counts as self employment income for tax purposes. In the interest of transparency, right now I have indicated on Page 4, Part 6, #4 of the I-864 that I am self employed (the instructions say to check all of the boxes that apply). The self-employment earnings all appear on my tax transcripts, so no problem there. However, I'm not sure if expected earnings for the year in progress should factor into my current annual income number. I don't have any business expenses, so everything earned counts as income. 

 

Do I need to estimate this year's self employment earnings as part of the current individual annual income? If the philosophy is KISS, it would definitely be easier not to, since documenting these earnings would mean attaching screenshots from the websites where I have earnings, screenshots from PayPal (in some cases involving conversions from other currencies), checking account statements, etc. However, I wouldn't want it to appear as if I were hiding something. My rough estimate for the year might be somewhere in the neighborhood of $2000, but it's entirely up to me how much or how little of this work to do.

 

What I would do for current income is take your current income from regular employment and then add in the income from your self-employment activities (noting again that this is what was declared on the tax return).

Say you had $2,000 in self-employment income from last year's tax return and earn $52,000 in regular wages right now. The total current income would be $54,000.

 

That said, let me tag somebody and see if they want to chime in. @pushbrk

[JKLSemicolon 327]

14 hours ago, geowrian said:

What I would do for current income is take your current income from regular employment and then add in the income from your self-employment activities (noting again that this is what was declared on the tax return).

Say you had $2,000 in self-employment income from last year's tax return and earn $52,000 in regular wages right now. The total current income would be $54,000.

 

That said, let me tag somebody and see if they want to chime in. @pushbrk

That's a good idea, but last year I had almost no self-employment income.

 

So instead maybe I can just use whatever amount I have earned this year as of the time of filing, since I will have documentation for that.

[pushbrk 12,092]

5 hours ago, JKLSemicolon said:

That's a good idea, but last year I had almost no self-employment income.

 

So instead maybe I can just use whatever amount I have earned this year as of the time of filing, since I will have documentation for that.

What you have "earned" so far this year in self employment revenue is not "Income".  It is only "revenue" until it appears on a tax return as income.  Revenue minus business expenses is "income".

 

I would suggest using your gross salary as your current income. You can mention you are also self employed, in the applicable space, but since you qualify based on salary/wages alone, I wouldn't confuse the issue by adding last year's self employment income to the mix.  It's allowed to do so, but might unnecessarily confuse the issue.

 

Current income should be "documented".  Employment income is documented with a current pay stub.

[JKLSemicolon 327]

13 minutes ago, pushbrk said:

What you have "earned" so far this year in self employment revenue is not "Income".  It is only "revenue" until it appears on a tax return as income.  Revenue minus business expenses is "income".

 

I would suggest using your gross salary as your current income. You can mention you are also self employed, in the applicable space, but since you qualify based on salary/wages alone, I wouldn't confuse the issue by adding last year's self employment income to the mix.  It's allowed to do so, but might unnecessarily confuse the issue.

 

Current income should be "documented".  Employment income is documented with a current pay stub.

Thanks for the explanation. I agree that it would be confusing to try to add self employment income to my current income number and if it's not required, I would rather keep it simple.

[geowrian 22,335]

8 hours ago, JKLSemicolon said:

That's a good idea, but last year I had almost no self-employment income.

 

So instead maybe I can just use whatever amount I have earned this year as of the time of filing, since I will have documentation for that.

Yes, that is fine as well. You can just claim the regular employment income and provide documentation of that.

[Ayrton 965]

We had the same situation as yours. My husband salary was 90k, but he had 401k maxed and other non taxable discounts. So his tax transcript only showed around 65k. We wrote 90k for the annual income and sent the employment letter to verify it. Pay stubs also show the salary. 

 

And on question 24, we put the 65k. No RFE. And ready to schedule interview.

Edited July 11, 2020 by Ayrton

[JKLSemicolon 327]

5 hours ago, Ayrton said:

We had the same situation as yours. My husband salary was 90k, but he had 401k maxed and other non taxable discounts. So his tax transcript only showed around 65k. We wrote 90k for the annual income and sent the employment letter to verify it. Pay stubs also show the salary. 

 

And on question 24, we put the 65k. No RFE. And ready to schedule interview.

Good to know. Thanks for the data point.