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How can I tell if I am self-employed?

If you are working as a freelancer or a small business owner rather than an employer, then you are self-employed.

IRS has an extensive write-up about this, but if you are uncertain, ask us, and we will tell you if you should be considered self-employed.

Reporting Your Investments

Earnings from a business I am an owner of but not directly involved in daily business.

We will determine your earnings based on the corporate return if the business is incorporated. Report in on Income > Corporation & Trust > Foreign Corporation tab.

Please report it on the Income> Self-Employment tab. Indicate your service.

I own a business and draw dividends.

Owners' draw of dividends is reported the same way as other dividends ( Income > Passive Income > Dividends).

If U.S. business - section U.S. dividends.

If Controlled Foreign Corporation - section Foreign dividends.

Where do I enter K1 information from my Master Limited Partnership (MLP)?

Report it on Income> Other Income, question Do you own a share (interest) in S-Corp or Partnership (whether U.S. or Foreign)? In the U.S., you would have received a K-1 Form for it.

I'm a Sole Trader in the U.K. How should I report my Income?

The sole trader is reported as having self-employment income. Please report it on the Income > Self-Employment tab. Indicate your service.

How do I report performance-based shares that vested this year from my employer?

Report it on Income> Wages > Income Outside of the U.S. tab, question Did you receive stock-based compensation from your employer? Please upload supporting documentation.

Investment income - dividends, interest, capital gains, etc.

Report it on Income > Passive Income > Interest, Dividends, or Income > Investments tabs. Please note: if you are filing jointly, there are subtabs for both primary and spouse.

I work in private equity and receive carried interest

Report on Income> Investments, question Did you sell any securities (i.e., stocks or bonds) during the filing year?

Sale of stock holdings

Report it on Passive Income> Investments, question Did you sell any securities (i.e., stocks or bonds) during the filing year?

I have an investment held in trust for me. Do I have to report it on FBAR?

The need to file FBAR by the beneficiary of the foreign trust depends on the trust rules for income distribution to the U.S. beneficiary.

The decision on whether to report it is arrived at using the following logic:

  • If the trust is discretionary (i.e., trust distributions are made as the trustee's decision) ==>, then the trust is not reported.

  • If the trust is not discretionary (i.e., the beneficiary has discretion about distributions), then it must ONLY be reported if the beneficiary receives more than 50% of the trust's current Income.

What is included in gross wages / gross income?

Gross wages mean the total amount earned before contributions or deductions are taken from that Income.

For example, it means Income before working expenses AND before taxes.

Where can I find the Self-employment tab?

As you start the Tax Questionnaire, please indicate that you're self-employed. You may also add information about your self-employment income while working on your T.Q. Click the Change Income Types button at the left.

Next, you will see the Self-Employment tab in the Income section at the left.

You’re the beneficiary of a family trust. How should you report it?

  1. If you are the beneficiary of a non-U.S. trust and there are no other U.S. grantors/settlors (trust owners), then the IRS considers you a U.S. owner of the foreign grantor trust. You may be required to report trust ownership annually using Form 3520-A.

  2. If you received distributions from a foreign trust over the past year, you must also file Form 3520.

  3. If you are a beneficiary of a foreign trust, but the trust has another U.S. year, you receive distributions from the trust. Grantor/settlor, then only the grantor/settlor is obligated to file Form 3520-A. However, you must file Form 3520 each year you receive distributions from the trust.

  4. If there are multiple U.S. beneficiaries, then only one copy of the form must be filed. However, each U.S. beneficiary is responsible for ensuring that Form 3520-A is filed on behalf of the trust. If you are not the person filing Form 3520-A, you should obtain a copy to ensure the form has been filed.

TFX will be happy to assist.

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