Tax Returns, I 864 , 1099, gross vs taxable income requirements

[Lipquick 1]

My wife just had her Biometrics appointment and we are excited to be moving along the process.

My question is about income qualifications.

I am an LLC small business owner and use schedule C on my returns.

In 2019 my 1099 gross income was $164,000, and 0 taxable income.

In 2020 my 1099 gross is $265,000, but with my various deductions and credits my taxable income will probably be closer to $10,000.

I know the income requirements are 125% of the federal poverty guidelines, or $21,550 for a household of 2.

Do I need to show a taxable income above that, even though my 1099 shows a gross more than 10x that amount? 

Thanks for all your input on this, happy new year!

[Crazy Cat 39,280]

This is a pretty good article you might find helpful:

 

https://cliniclegal.org/resources/ground-inadmissibility-and-deportability/calculating-income-affidavit-support#:~:text=The Form I-864 requires,Manual (FAM) 40.41 N5.

 

The entire article has good info. Here is part of the article:

 

"Self-employed sponsors have additional duties. Remember that it is adjusted or net income, after deductions reported on Schedule C (Profit and Loss Statement), that controls. Current income should be verified with a statement on business letterhead signed by the sponsor and the Chief Financial Officer attesting to the estimated income for the current calendar year. Alternatively, or in addition, the sponsor may submit a statement from an independent tax preparer or certified public accountant assessing the current income of the business. Include any bank statements, deposited checks, and invoices that reflect current profitability. The burden of proving current annual income is harder if the self-employed sponsor is estimating earning more income than what was reported less income on last year’s income tax return. And it is even harder if last year’s reported income is below the 125 percent threshold."

Edited January 6, 2021 by Lucky Cat

[Lipquick 1]

Thank you lucky Cat. From that same source,

"The State Department interprets “income” for purposes of the affidavit of support to be “total unadjusted income as shown on the tax return, before deductions.”

seems like conflicting information. 

i haven't filed my taxes yet; and so far with my deductions I have reduced my taxable income to $35,864.

this doesn't include annual business credit card interest, per diem, marriage tax credit, and at least another $2000 in expense deductions.

I could probably get my taxable income to 0 again for 2020, but I don't want to disqualify myself as a sponsor to my wife.

Do I have to claim a higher net income and pay more taxes to simply qualify for my wife's greencard sponsor? Does bank account balances and investment accounts factor into the equation? 

 

[Ayrton 965]

1 hour ago, Lipquick said:

Thank you lucky Cat. From that same source,

"The State Department interprets “income” for purposes of the affidavit of support to be “total unadjusted income as shown on the tax return, before deductions.”

seems like conflicting information. 

i haven't filed my taxes yet; and so far with my deductions I have reduced my taxable income to $35,864.

this doesn't include annual business credit card interest, per diem, marriage tax credit, and at least another $2000 in expense deductions.

I could probably get my taxable income to 0 again for 2020, but I don't want to disqualify myself as a sponsor to my wife.

Do I have to claim a higher net income and pay more taxes to simply qualify for my wife's greencard sponsor? Does bank account balances and investment accounts factor into the equation? 

 

Your quote is a general definition for what they use to compare to the poverty line. For example if you have a salary, your annual income will be the whole thing, before retirement deduction, before tax deductions.

 

For Self Employment, you annual income is what you take home after your business deductions, it should be on the schedules, but before marriage tax credit and other deductions like that.

[Lipquick 1]

Right. The thing is I don't pay myself an income.

I actually showed a loss Last year of $4000.

I don't use an S Corp, I have an LLC and am a sole proprietor.

Someone on this site must be in a similar situation.

 

 

[Ayrton 965]

3 hours ago, Lipquick said:

Right. The thing is I don't pay myself an income.

I actually showed a loss Last year of $4000.

I don't use an S Corp, I have an LLC and am a sole proprietor.

Someone on this site must be in a similar situation.

 

 

https://rapidvisa.com/uscis-and-nvc-scrutiny-on-self-employed-income-earners/

 

This might help you too. Hopefully someone else in the same situation will show up here.

[carmel34 3,531]

From the I-864 instructions:

 

If you selected Part 6., Item Number 2. that you are self-employed, you should have completed one of the following
forms with your Federal income tax return: Schedule C (Profit or Loss from Business), Schedule D (Capital Gains),
Schedule E (Supplemental Income or Loss), or Schedule F (Profit or Loss from Farming). You must include each and
every Form 1040 Schedule, if any, that you filed with your Federal income tax return.

 

The profit or loss from your LLC will be reported on Schedule C, then also reported on Schedule 1 for the addition of other income (capital gains, tax credits, real estate income, etc.), then the total from Schedule 1 is transferred to the 1040 line 8.  Line 9 of the 1040 is total income and will be the number they consider for financial sponsorship on the I-864.  Good luck!

[wingman23 140]

5 hours ago, Lipquick said:

Right. The thing is I don't pay myself an income.

I actually showed a loss Last year of $4000.

I don't use an S Corp, I have an LLC and am a sole proprietor.

Someone on this site must be in a similar situation.

 

 

my wife is also a sole proprietor of her LCC and we reported in our I-864 the TOTAL INCOME and not GROSS INCOME.

 

we got the approval for green card after our interview yesterday!

[Lipquick 1]

Just now, wingman23 said:

my wife is also a sole proprietor of her LCC and we reported in our I-864 the TOTAL INCOME and not GROSS INCOME.

 

we got the approval for green card after our interview yesterday!

Congratations! What is total? You mean net? I understand gross to mean total, pre-tax income, while net is your taxable income after various deductions and credits.

[wingman23 140]

35 minutes ago, Lipquick said:

Congratations! What is total? You mean net? I understand gross to mean total, pre-tax income, while net is your taxable income after various deductions and credits.

Thanks!

 

Ooopppss, sorry! TOTAL means GROSS, the pre-tax income before all adjustments and deductions. We took the amount listed in the IRS transcript from the line TOTAL INCOME.

[Ayrton 965]

43 minutes ago, wingman23 said:

Thanks!

 

Ooopppss, sorry! TOTAL means GROSS, the pre-tax income before all adjustments and deductions. We took the amount listed in the IRS transcript from the line TOTAL INCOME.

Total Income on the form is not Gross Income, though.

 

Like @carmel34 said, Total Income line from the transcript comes from the schedules for someone that is self employed.

 

So whatever Total Income OP has on the transcript/1040, that's what they should write down on the form. 

[Lipquick 1]

10 minutes ago, Ayrton said:

Total Income on the form is not Gross Income, though.

 

Like @carmel34 said, Total Income line from the transcript comes from the schedules for someone that is self employed.

 

So whatever Total Income OP has on the transcript/1040, that's what they should write down on the form. 

My form 864 has been submitted back in June 2020.

Due to pandemic delays and extensions, my taxes for 2019 were not yet filed, so I submitted 2018 tax returns and 2019 1099's.

My concern now is filing my 2020 returns.

I can aggressively reduce my tax burden legally and get my taxable income between 0 to 10k, or I can bite the bullet and take a tax hit on $25 to $35 k, whatever puts me over the minimum comfortably.

That means I will have to pay 7 to $12k in taxes, versus paying little to nothing at all.

 

[Ayrton 965]

11 minutes ago, Lipquick said:

My form 864 has been submitted back in June 2020.

Due to pandemic delays and extensions, my taxes for 2019 were not yet filed, so I submitted 2018 tax returns and 2019 1099's.

My concern now is filing my 2020 returns.

I can aggressively reduce my tax burden legally and get my taxable income between 0 to 10k, or I can bite the bullet and take a tax hit on $25 to $35 k, whatever puts me over the minimum comfortably.

That means I will have to pay 7 to $12k in taxes, versus paying little to nothing at all.

 

Then I wouldn't worry. If you don't get a RFE, they won't even talk about it at the interview. You still have some time to file taxes. Wait until you have the ready to schedule update before you file taxes. If you do get a RFE though, find a joint sponsor and file taxes as usual.

Edited January 7, 2021 by Ayrton

[Cornflake 108]

12 hours ago, Lipquick said:

In 2019 my 1099 gross income was $164,000, and 0 taxable income.

In 2020 my 1099 gross is $265,000, but with my various deductions and credits my taxable income will probably be closer to $10,000.

 

What was your Adjusted Gross Income in 2019? Form 1040, line 7

[Cornflake 108]

2 hours ago, Lipquick said:

My form 864 has been submitted back in June 2020.

 

 

What's the status of your case right now? Has it changed to "“case is ready to be scheduled for interview”" already?