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USTaxAdvising
USTaxAdvising, CPA
Category: Tax
Satisfied Customers: 1111
Experience:  US Taxation specialist.
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I am using Turbo Tax since it is one of a handful that allow

Resolved Question:

I am using Turbo Tax since it is one of a handful that allow U.S. citizens to file electronically with residential address in a foreign country.

Relevant Background:

I closed a business in the tax year 2011 (with an EIN). However, I received commissions/payments that I did not expect under the business name (sole proprietorship) and recently received a 1099-Misc with my name, a Maine Address, and the recipients number field includes the EIN in the format of SSN (xxx-xxx-xxx vs xx-). This is my only U.S. derived income and I meet the bona fide residence test for another country.

Associated Questions:

- Do I file a schedule C, with 0 expenses or what is the appropriate manner to handle this? My understanding is that requesting an amendment to this form from the is is potentially an option, but eliminates the e-file option, and likely only complicates the matter. I do not want to end up with an audit (like anyone). Thus is filing a schedule C with 0 expenses (this as my only income for the now closed business [closed last tax year] ) the appropriate action??????

- Does this require to file a state return? I purposely cut off ties with all states in the U.S. to avoid such. However, does the 1099-misc with a Bangor address require me to now file a state tax form? This is a huge price tag if such is the case since I then likely owe an income tax on all my foreign income earned to a state that I posses no ties (with exception to the information submitted on this form)???

Side question:

I own a few shares in a traditional IRA that are part of a trust. The brokerage furnishes information to the IRS on this (I cannot recall the for name). Do I need to report this anywhere? I receive no income from this since it is all in an IRA, but do I owe taxes or need to report any type of information associated with this???

Please let me know if you need further information to appropriately answer all my questions. I already reviewed the IRS site in a fair amount of detail, but this is not my area of expert or profession.Hence, the reason for asking a professional or advice. Thanks in advance for your help.

Cheers
Submitted: 1 year ago.
Category: Tax
Expert:  USTaxAdvising replied 1 year ago.

USTaxAdvising :

Hello, Thank you for using justanswer. I can assist you with your questions today.

USTaxAdvising :

Yes the appropriate thing here to do would be to file the Schedule C declaring the income and zero expenses if that is the case

USTaxAdvising :

I assume the 1099 is for the current year and not the 2011 year correct?

Customer:

Yes the 1099 is for 2012, but I did end an notify the end of the end of the business (if I recall correctly) on my 2011 return

Customer:

*end and at the end of the busineess

USTaxAdvising :

OK good, the 1099 is for 2012 therefore no further action required on your 2011 return. It is ok if you checked the box on the 2011 Schedule C declaring it disposed and then file another Schedule C again in 2012. Just check the box again. This will not cause an audit.

Customer:

O.k., so basically just check the box again. It does not raise an audit flag that I did such twice?

Customer:

Per my second part of the question: Do I carry any state tax obligations as a result?

Customer:

I appreciate your fast, accurate and prompt replies

USTaxAdvising :

Exactly, no this will not cause an audit flag. If you have the option to put a note on the Schedule C then I would explain the facts as to why you are filing but if you don't have the option to make such a note I would not worry about it at all.

USTaxAdvising :

Regarding the state implications - it depends on where the income was earned. If you earned it in the respective state and you meet the filing requirements for that state then yes you would need to file a state non resident return to declare the income.

Customer:

I reside(d) in Australia the entire 2012 tax year. Before leaving for Australia my residence is in VA. I updated my my addy to a relatives in ME in case I did receive anything unexpected (such as this)

Customer:

thus I am slightly confused if I am required to file a state return + the appropriate state and does this open the door to me owing the state income tax on all income earned abroad?

USTaxAdvising :

No only the income earned in that state, thus you would be filing a non resident state return for VA

Customer:

As mentioned I wanted to avoid any state ties. e.g. not registered to vote, sold all U.S. assets, etc.

USTaxAdvising :

How much was the 1099 for and was it earned in VA?

Customer:

only 1,200

Customer:

but foriegn income is ~90k

Customer:

that is why I care ;)

Customer:

so basically I file a non resident return for VA?

Customer:

I assume that there is a box or something along those lines to check?

USTaxAdvising :

Exactly - hang on while I check the filing requirements for a VA non resident return.

Customer:

Thank you.

USTaxAdvising :

no filing requirement as your income is below the threshold - see the attached page 6: http://www.tax.virginia.gov/taxforms/Individual/Income%20Tax/2011/763Instr.pdf

USTaxAdvising :

you're golden

Customer:

- The two side questions while you are looking that up 1) Does it matter that the 1099 misc is issued with EIN in the format of an SSN? 2) Do I need to do anything regarding the IRA info furnished to the IRS?

Customer:

3. How much would you charge to send me an opinion letter with this transcript/details ?

USTaxAdvising :

1. No, it does not matter 2. IRA info? a 1099 or 5398? 3. Sorry I can't send an opinion letter but you can save this link and always come back to it.

USTaxAdvising :

Just Answer does not allow me to work directly for customers unless they contact me directly, I cannot negotiate an engagement through just answer.

Customer:

I do not recall the form number...

USTaxAdvising :

sometimes you can google an expert's name and find their professional website...hint hint

USTaxAdvising :

Generally no reporting for an IRA unless you received a 1099R

Customer:

I purchased only $250 of an EFT in my IRA and now receiving this annoying document that the EFT is a trust and provides income details re: the trust that amount to a few dollars

Customer:

but their are no disbursements or anything I am actually taking from the ira

Customer:

hence no 1099-r

USTaxAdvising :

OK it sounds to me as if there is nothing to report. So long as there are no distributions and no 1099R = no filing

USTaxAdvising :

sorry = nothing to report

Customer:

Sweet, that easy...

Customer:

happy news...

Customer:

why do they furnish info to the irs then?

Customer:

or is that a moot point?

USTaxAdvising :

It's merely a reporting to the IRA trustee because the IRA trustee has to file a form to report the income of the IRAs it manages

USTaxAdvising :

the U.S. loves it's reporting....

Customer:

Also, you obviously know your stuff, why do you bother working on just answer (obviously I am glad you chose to do such)? No need to answer if you rather not.

Customer:

That is true. I purposely need to avoid ever going over $10k in foreign accounts

USTaxAdvising :

I just do it to keep up with individual based taxes. I specialize in investment funds such as hedge and private equity funds. Plus it's a good way to earn an extra buck or two instead of melting my brain in front of the tele.

Customer:

Makes sense. Should I ever need more advanced legal/tax advice, besides the trivial fee paid for this service, can I contact you?

USTaxAdvising :

Certainly it would be my pleasure.

Customer:

I imagine finding your details on Google is relatively simple...

Customer:

Can you provide me your office's physical addy to make my lie eaier?

Customer:

*lie

Customer:

*life - need new keyboard

USTaxAdvising :

sorry but I can't, part of the justanswer policy...

USTaxAdvising :

www.ustaxadvising.com

Customer:

Understandable. Thank you all the excellent assistance and time. I certainly may reach out to you later.

USTaxAdvising, CPA
Category: Tax
Satisfied Customers: 1111
Experience: US Taxation specialist.
USTaxAdvising and 2 other Tax Specialists are ready to help you

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