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I recently moved out of the country but a us citizen. i have…

i recently moved out of...
i recently moved out of the country but a us citizen. i have small side activities on the side, i am not selling anything but things like website banner ad revenue, or book royalty. Question 1) when doing taxes, on schedule c if i write my foreign address what happens? will this considered as a foreign sole proprietorship now? all this income is from US sources and going to my US bank accounts. if it becomes foreign then i will need to do all paperwork for a foreign firm? 2) if i write a US address there, for example a mailbox i purchased at UPS. can I do this? again all income is from US sources and going to my US bank accounts. and I think about a no tax state like FL or WY or TX . can i do like this? if so, until i start selling something i dont do any paperwork, but when i start i register for tax, as sole proprietor, although i will have done no paperwork before? note: i will use my own name and last name
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10/15/2017
emc011075
emc011075, Master Tax Adviser
Category: Capital Gains and Losses
Satisfied Customers: 3,873
Experience: Master Tax Adviser and Enrolled Agent
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Hi. My name is ***** ***** I will be happy to help you.

A solo proprietorship is not a separate entity for tax purposes. It means that you are the business and the business is you. A foreign address does not make the business foreign, regardless where you are. You need to use an address where you can receive correspondence in case the IRS will mail you something.

It is possible that the income will be taxes in US and in the country you are moving. A US company can have foreign income that is taxed in US as well as foreign companies can have US income that is also taxed in US. As US citizen you have to report your worldwide income on your US tax return and you will have to check with the tax authorities in the country you are moving to what their tax rules are.

There's no special registration requirements for sole proprietorships. You will use your social security number for US reporting.

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Customer reply replied 9 months ago
for question 1, if i write my main foreign address on 1040 and the same foreign address on schedule C, that would not be considered as foreign company and the income i write on schedule C would not be considered as foreign, and this situation would be exactly the same as if i was in the US and used US address? In other words nothing extra foreign paperwork to be done because of this? Again all money goes to my US bank account.And question 2, again i write my main foreign address to 1040, but this time on schedule C, i write a US address. Id this possible ? Or the address on schedule c for a sole proprietor MUST be same as where he lives or what he writes on 1040?Yes i know i must write my ssn and must show all income, no matter where i live, i only want to know which address to write for what makes most sense, or, question 1 or 2 doesn't matter and all IRS cares is an address that i can receive mail, as long as i show all my income?

Unless your business has a different business location than your home, you do not use any address on Schedule C. The address on your tax return does not determine if your business is US based or foreign. The address is irrelevant. It is only used for contact purposes. A solo proprietorships is not a separate business entity. Your business is where you. It is like your dependent. It is there but everything is reported under your social security number.

Question #2, yes it is possible but why would you do that? If you have a store with a separate address, than you would write the store location. If you are running your business from home, than your business address is your home address.

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Customer reply replied 9 months ago
I asked 2, just because, i didn't know if i write my foreign adress on schedule c , then a year later irs will contact me and say " hey your address on schedule c is foreign, it means you had a foreign company, and where is your paperwork for foreign business?"....So then, to question 1, if you are saying that writing my foreign address does not cause such a thing, and everything would be as if i was in the US, then i do not need to use a US address of course.So ok then, whether i use a US or foreign address, it doesn't matter for my situation, and everything would be same like i was in the US right ?

Again, the address does not determine if the business is foreign or US base. Any business reported on Schedule C is not a separate entity for tax purposes. The IRS will never use the address to determine if the business was foreign or local, not for a schedule C business. Anything reported on Schedule C is a disregarded entity, meaning that you and the business is the same person. If your business is home based you cannot separate you and your business.

What paperwork for foreign business are you talking about? You do not own a Scorp or corporation that requires a separate tax filing. A sole proprietor type of business does not need to be separately reported as a business.

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Customer reply replied 9 months ago
you answered my question 1 already. i only wanted to confirm that foreign address will not create separate paperwork, just because it is foreign that is all. i am not talking about a special company here. i know sole proprietorship is same as me. my business consists of running a few websites and earning google or banner ad money, or receiving book royalties from amazon, or remote consulting fees that doesnt require any special license to all US based clients, and all goes to US bank account so everything is in the US.so then the only case i would still write US address on schedule C, only if it was a US based LLC that i fully owned then right? i mean, i can not be in a foreign country, and write a US based address on schedule C for a sole proprietorship then right?
Customer reply replied 9 months ago
ohh and for question 1, i realized, after you answer, that i was making wrong sentence, sorry about that. i didnt mean to say foreign company. i meant to say paperwork for foreign income. so if i write my foreign address as sole proprietorship on schedule c, is this going to generate paperwork for foreign income? again all money is coming from US sources and deposited in my US bank account

Unless your company has a separate physical address like an office or store, you do not write any address on Schedule C. Just leave it blank. If your business has an office outside your home that your regularly use to conduct business than list that address on Schedule C and your home address on 1040.

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Customer reply replied 9 months ago
okay and finally, even with my foreign address, the income on schedule C, is still not considered foreign income, because as i said, that money only comes from US sources.. correct? i will rate you after this and thanks for the help....

For the IRS purposes income is income. For most part it does not really matter where it is earned, inside or outside the US, the tax rate is the same. If you are US citizen or resident you do not report foreign income and US base income separately. If you run your business from your living room Canada than the income is earned in your living in Canada It is not where your clients are, it is where you are while earning it. If you reside in foreign country for an extended period of time you may claim foreign income exclusion. You may have US clients but if you earn it while residing in Turkey than the income qualifies for the exclusion. Again, the income does not necessarily need to originate in foreign country to qualify for the exclusion. You can work for an US company, be paid with US dollars while working on a project in Japan and the income will qualify for foreign earned income exclusion.

But again, you will need to check with the local tax authorities about their filing requirements. US tax laws end by the US borders. Just because the income is reported on your US tax return it does not mean that you will not be taxable in the country you reside.

emc011075
emc011075, Master Tax Adviser
Category: Capital Gains and Losses
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Experience: Master Tax Adviser and Enrolled Agent
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