CR1 Case DQ'd. Questions about Taxes.

[BeefedRamen 0]

Hi! Petitioner here.

Context: Originally, when I filed my taxes with a CPA and on my own for the past few years, the total income for each year fall 50% below the i864p poverty guideline. But I showed my tax documents to a different CPA about a week ago. He realized I've been filing wrong all these years. My total income for every year should actually be around $36000 for every year, which is $10,000 above the poverty line! So, the current CPA recommended that I amend all my federal tax returns for the past few years and send the amended forms to the NVC so that I will not need a joint sponsor.

However, I've been DQ'd recently, my original 3 tax forums have already been submitted to the NVC, and the NVC requested that "may" need to find a joint sponsor. I have not received the interview letter yet.

Questions: 
1) Would it be wise to follow the current CPA's advice?
2) Won't the Interviewer be suspect of the amendments? Or will the interviewer accept the amendments?
3) Should I contact NVC regarding my situation? Or is there a likelihood that they'll see my situation as a red flag?
4) Will amending tax forms delay the NVC process by months and months?
5) Even having earned $36000 per year for all three years and its anticipated for 2025, should I still have a joint sponsor?

Edited yesterday at 01:13 AM by BeefedRamen

[S2N 358]

How did you underreport/overdeduct $10k+ in income? Did the previous CPA just role forward your assumptions/what you did the prior year and have you asked that CPA about it?

 

My bigger concern would be the potential back taxes owed. It’s also weird the new CPA is telling you to amend so that you can meet the poverty guideline and not because you owe the federal government money.

Edited yesterday at 02:38 AM by S2N

[W199 477]

7 minutes ago, S2N said:

My bigger concern would be the potential back taxes owed. It’s also weird the new CPA is telling you to amend so that you can meet the poverty guideline and not because you owe the federal government money.

And interest and penalties

[JeanneAdil 7,150]

Takes time for IRS to look at 1040x (new taxes) and probability of thes IRS transcripts in time for interview ????

NVC will forward the packet with your current tax papers to the embassy and they will abide with what is current for IRS 

i would look for joint sponsor

[pushbrk 13,673]

If the CPA said you were filing wrong, they probably meant you were taking more deductions that were legally available to you.  You cannot now "hide" your previous returns from view by NVC and the Consular Officer.  You will also owe taxes and penalties on the additional income for all three years.  Cleaner to get a joint sponsor, but more honest to do what the second CPA says.

[S2N 358]

3 hours ago, pushbrk said:

Cleaner to get a joint sponsor, but more honest to do what the second CPA says.

They also need to understand why the first CPA told them the deductions were permissible deductible business expenses (what I’m gathering from this story.)

 

My guess is that they took a roll forward approach and relied upon OP’s assertions, which is a permissible approach for a CPA if they’re not engaged to also audit the numbers, but it’s legitimately odd that two different CPAs would have that big of a difference on small business/self-employed income. It’s not a particularly complex area of the tax code for accountants.

 

I think they should get a joint sponsor either way for immigration purposes. Safer.

Edited 13 hours ago by S2N

[W199 477]

Self-employment taxes are very complicated and very nuanced. There was a money article a while ago where, for an experiment,  they took the taxes to many different reputable CPAs.  Each one came up with a very different tax return, some where dramatically different.

 

Even a simple thing like doing Amazon vine reviews (doing reviews in exchange for receiving the products) there are a dozen totally different professional opinions from CPA, and so forth on how you must declare the income (value of the free products that were reviewed). Most of them are totally wrong.

 

No CPA is going to propose to amend 3 years of tax returns and pay interest and penalties. Therefore, this suggests that there was nothing wrong with his taxes, and this CPA was requested to come up with a solution to how to massage the tax return to meet the USCIS requirements. Nothing illegal about this since there are so many ways to do and file the taxes.

 

But this is a very unwise choice that will cost thousands of dollars, and has a risk of failure, since you will now need to include the whole amended and previous tax return instead of transcripts. Its likely USCIS will not have a clue how to read the returns and figure out the mess. Or maybe they will just be so confused they will ask for joint sponsor anyways.  Its not a good path to go in, and others have said, get a joint sponsor at this point.  

 

 

[pushbrk 13,673]

1 hour ago, W199 said:

Self-employment taxes are very complicated and very nuanced. There was a money article a while ago where, for an experiment,  they took the taxes to many different reputable CPAs.  Each one came up with a very different tax return, some where dramatically different.

 

Even a simple thing like doing Amazon vine reviews (doing reviews in exchange for receiving the products) there are a dozen totally different professional opinions from CPA, and so forth on how you must declare the income (value of the free products that were reviewed). Most of them are totally wrong.

 

No CPA is going to propose to amend 3 years of tax returns and pay interest and penalties. Therefore, this suggests that there was nothing wrong with his taxes, and this CPA was requested to come up with a solution to how to massage the tax return to meet the USCIS requirements. Nothing illegal about this since there are so many ways to do and file the taxes.

 

But this is a very unwise choice that will cost thousands of dollars, and has a risk of failure, since you will now need to include the whole amended and previous tax return instead of transcripts. Its likely USCIS will not have a clue how to read the returns and figure out the mess. Or maybe they will just be so confused they will ask for joint sponsor anyways.  Its not a good path to go in, and others have said, get a joint sponsor at this point.  

 

 

As a long term self employed person myself, I tend to agree with the part I bolded above.  I've often advised people here that the year you sponsor an immigrant is not the year to get agressive on business expenses, unless your taxable income will still be well above the minimum.  You can always amend the returns later to fix the deductions you forgot.  This CPA number 2 approach is backwards, and likely to backFIRE.

[S2N 358]

3 hours ago, W199 said:

Self-employment taxes are very complicated and very nuanced.

For an individual who isn’t trained, yes. Schedule C isn’t that difficult for a professional. It’s why small shops tend to do them and larger firms ignore them. They’re fairly simple even for an accountant who doesn’t have a tax specialization to pick up vs. something more complex like partnerships.

 

3 hours ago, W199 said:

No CPA is going to propose to amend 3 years of tax returns and pay interest and penalties. Therefore, this suggests that there was nothing wrong with his taxes, and this CPA was requested to come up with a solution to how to massage the tax return to meet the USCIS requirements. Nothing illegal about this since there are so many ways to do and file the taxes.

There’s not “so many ways” to do taxes for something like Schedule C, and yes, a CPA has an ethical obligation to suggest amending to pay more if something was wrong and I know many who have. The differences you see between CPAs on stuff like this usually relates to how much data the client provides and what questions they ask the client. Large corporations there’s creativity involved, but that’s not what we’re talking about here. It’s standard tax compliance for an individual small business owner, and that’s pretty cut and dry.
 

That’s also why I don’t think the first person messed up, oddly enough, and came to the same conclusion. The only way would be if OP misreported expenses on accident. Other CPA could be deciding not to write them off as not expenses to massage the total income, which is why I suggested talking to the first one to see what’s going on. It’s really weird for income to vary that much between tax professionals.

Edited 4 hours ago by S2N

[W199 477]

3 hours ago, S2N said:

For an individual who isn’t trained, yes. Schedule C isn’t that difficult for a professional. I

 

There’s not “so many ways” to do taxes for something like Schedule C, and yes, a CPA has an ethical obligation to suggest amending to pay more if something was wrong and I know many who have. The differences you see between CPAs on stuff like this usually relates to how much data the client provides and what questions they ask the client.

Sorry, but I am going to both agree and totally disagree with that simplistic view.   For a simple business, or maybe you could even say for "many" self-employed business owners, sure it can be simple and have only one way of doing things.  They collect their pile of receipts, books, etc..and so forth, hand it over to the CPA.  And its so easy to do that, I don't know why they just don't do it themselves with Turbotax home and business edition. Its not hard as you said.

 

On the other hand, a top sophisticated and clever CPA can work with a more sophisticated business owner  to do things in ways that are extremely complex.  I know people who started their own small business, have only 1-2 employees, and the taxes they do are incredibly complex the way they handle everything .. They also setup LLC's and other complex structures to meet the unique needs of that business. And again, I am not talking about a large corporation, just a single owner .. 

 

So Yes .. there are so many many different ways to set up a small business and manage the income,expenses, and so forth ... It can be very simple as you said, to extremely complex and mind blowing with techniques that I can promise you that you never heard of (I didn't until this guy explained me all the things they are doing) ... 

 

Going back to this OP, we have no idea whether he has just a simple business or a complex setup that his CPA did ..

 

But ok, I admit, this sounds like something very simple .. and I bet we don't have all the facts and truth's about what both the CPAs really said and whats really going on ...  So all our speculating is just making a huge set of assumptions .. But I bet this is all about him trying to manipulate things to qualify ;...

Edited 38 minutes ago by W199

[S2N 358]

10 minutes ago, W199 said:

Sorry, but I am going to both agree and totally disagree with that simplistic view.   For a simple business, or maybe you could even say for "many" self-employed business owners, sure it can be simple and have only one way of doing things.  They collect their pile of receipts, books, etc..and so forth, hand it over to the CPA.  And its so easy to do that, I don't know why they just don't do it themselves with Turbotax home and business edition. Its not hard as you said.

 

On the other hand, a top sophisticated and clever CPA can work with a more sophisticated business owner  to do things in ways that are extremely complex.  I know people who started their own small business, have only 1-2 employees, and the taxes they do are incredibly complex the way they handle everything .. They also setup LLC's and other complex structures to meet the unique needs of that business. And again, I am not talking about a large corporation, just a single owner .. 

 

That’s forward looking tax planning and business formation, which is very different than tax compliance, which is what we’re talking about here. Two competent CPAs with the same set of facts on a small business should arrive at roughly the same results. It’s why in auditing financial statements, auditors hire their own tax accountants to recalculate the return and provision. There’s some judgement, but the work is largely reperformable.
 

If you’re talking about forward looking tax planning, yeah, that does change depending on your advisor, but you can’t change the facts of the past year when filing.

 

14 minutes ago, W199 said:

Going back to this OP, we have no idea whether he has just a simple business or a complex setup that his CPA did ..

 

But ok, I admit, this sounds like something very simple .. and I bet we don't have all the facts and truth's about what both the CPAs really said and whats really going on ...  So all our speculating is just making a huge set of assumptions .. But I bet this is all about him trying to manipulate things to qualify ;...

Edited 10 minutes ago by W199

His total income is at most $36,000. It’d be very hard for that to be a complex setup. Two different trained professionals should arrive at roughly the same result unless the information provided to one is different than the information provided to the other.

 

You don’t get that material a swing on that small an amount of income without the information drastically changing or the second guy massaging numbers like you suggest. That’s why talking to the first one to see the reason for the difference is critical. People don’t sign their names on returns they know are going to cost their clients thousands.