I went through this exact situation last year! As an F-1 OPT student working as an independent contractor, you'll most likely need Form W-8ECI. This form is specifically for foreign persons whose income is effectively connected with a US trade or business - which describes your contractor work perfectly. The key thing to understand is that W-8BEN is for passive income (like interest or dividends), while W-8ECI is for active business income from services you perform. Form 8233 is mainly for claiming tax treaty benefits on personal services income, so you'd only use that if your home country has a tax treaty with the US that provides specific exemptions for students. Regarding withholding - as an independent contractor, taxes typically aren't withheld automatically. Instead, you're responsible for making quarterly estimated tax payments using Form 1040-ES. This includes both regular income tax and self-employment tax (Social Security and Medicare). I'd recommend setting aside about 25-30% of each payment you receive to cover these taxes. One important note: make sure your work is actually allowed under your OPT authorization and that you're reporting it properly to maintain your immigration status. The work needs to be directly related to your field of study. If you're unsure about any of this, definitely consult with your school's international student services office - they're usually very knowledgeable about OPT tax requirements.

I just went through this process a few months ago as an F-1 OPT student, and it can definitely be confusing! Based on my experience, you'll most likely need Form W-8ECI since your contractor income is effectively connected with conducting business in the US. Here's what I learned: W-8BEN is for passive income (like dividends), W-8ECI is for active business income from services you perform in the US, and Form 8233 is specifically for claiming tax treaty benefits. Since you're doing actual work as a contractor, W-8ECI is usually the right choice. Regarding withholding - as an independent contractor, taxes typically won't be withheld from your payments. Instead, you'll need to handle this yourself through quarterly estimated tax payments using Form 1040-ES. I'd recommend setting aside about 25-30% of each payment to cover federal income tax, self-employment tax, and potential state taxes. One thing that really helped me was keeping detailed records of all payments and any business expenses from day one. You'll need these for both your quarterly payments and when you file your annual return. Also, make sure your contracting work is directly related to your field of study to stay compliant with OPT requirements. If you're still unsure, your school's international student services office should be able to provide guidance specific to your situation. They've usually dealt with these questions many times before!

I'm dealing with a very similar situation and this thread has been incredibly helpful! I have about $8,200 in tax debt from 2012-2014 and a traditional IRA worth around $19,500 that I've been terrified to touch. Reading through everyone's experiences, especially the points about "quick sale value" and how the IRS actually calculates retirement account equity, has completely changed my perspective. I was under the impression that having any retirement savings would automatically disqualify me from an OIC, but it sounds like that's not necessarily the case. The distinction between contributions and earnings in Roth accounts that Arjun mentioned is particularly relevant - I need to look into whether converting some of my traditional IRA to Roth might help with the penalty calculations, though I realize that could complicate things tax-wise. One thing I'm curious about - for those who successfully got OICs approved with retirement accounts, did you work with a tax professional or handle the application yourselves? I'm trying to decide if the complexity warrants professional help or if the process is manageable to DIY with the right preparation and documentation. Thanks to everyone sharing their experiences here - it's giving me hope that I might be able to resolve this debt without completely destroying my retirement savings!

I've been in a very similar position with tax debt and retirement accounts, and I want to share some key insights that might help you navigate this successfully. First, the IRS absolutely does consider retirement accounts in OIC evaluations, but not at face value. They use what's called "quick sale value" which factors in early withdrawal penalties, taxes, and other liquidation costs. For your Roth IRA established in 2013, you can withdraw contributions penalty-free, but earnings would face the 10% early withdrawal penalty plus taxes if you're under 59½. Given your debt will be around $6,300 after your refund applies, and assuming your $16,800 Roth might be valued at closer to $12,000-14,000 for OIC purposes (after considering penalties on earnings), you're actually in a much better position than the pre-qualifier suggested. The key to success will be your narrative. You need to clearly document: - Exact breakdown of contributions vs. earnings in your Roth - Specific penalties and taxes that would apply to early withdrawal - How liquidating your only retirement savings would create genuine long-term financial hardship - Your consistent payment history showing good faith effort Consider offering something in the $8,000-10,000 range that reflects partial use of your retirement assets while preserving your future financial security. The IRS looks for reasonable collection potential, not maximum extraction. Don't let the pre-qualifier discourage you - it's a basic tool that doesn't account for the nuances of retirement account valuations or hardship considerations that a full OIC application allows you to present.

Your best bet is to submit a W-4 with your information so they can properly pay you as an employee. If you're concerned about identity theft, monitor your credit reports after giving them your SSN. You can get free credit reports at AnnualCreditReport.com and even put a fraud alert on your accounts if you're really worried.

Unfortunately, paying training shifts "under the table" is illegal, even though it's common in the restaurant industry. All hours worked, including training time, must be properly documented and paid through payroll with appropriate tax withholdings. The fact that multiple restaurants have done this doesn't make it legal - it just shows how widespread wage violations are in food service. Employers often justify this by saying training shifts are "unpaid" or "trials," but the Department of Labor is clear that if you're performing any work that benefits the business, you must be compensated as an employee. This is exactly why you should be cautious about the restaurant in your original post. Places that cut corners on basic employment law (like proper payroll processing) often have other violations too. Document your hours worked and consider filing a wage complaint with your state's labor department if they won't pay you properly.

I've dealt with a few similar partnership structures, and I'd strongly recommend getting a private letter ruling (PLR) from the IRS if this is a significant client. The economic substance issues raised here are real, and the potential for recharacterization as debt or reallocation of profits/losses could create major problems down the road. One additional consideration - make sure you're thinking about the partnership's ability to make distributions. With Partner A getting 100% of profits but Partner B maintaining 50% capital interest, how will distributions work? If the partnership makes significant profits but can't distribute them because of Partner B's capital account requirements, you could end up with phantom income problems for Partner A. Also, double-check your state's partnership laws. Some states have requirements about profit sharing in partnerships that could conflict with this arrangement, potentially invalidating the federal tax treatment even if it passes IRS scrutiny. The $135,000 capital at risk helps your case, but document everything about Partner B's ongoing contribution to the partnership's success - even if they're not actively working, are they still providing value through guarantees, connections, or reputation?

I've been following this thread with great interest as a tax practitioner who's dealt with several challenging partnership allocations. The concerns raised about economic substance are absolutely valid, and I wanted to add a few practical considerations. First, regarding the documentation everyone's discussing - make sure you're creating a contemporaneous record of Partner B's ongoing contributions beyond just capital. The personal guarantees and industry reputation mentioned are valuable, but quantify them where possible. What's the value of those loan guarantees? How much business has come through Partner B's connections even after they stepped back? Second, consider implementing a "lookback" provision in your partnership agreement. This would require the partners to true-up allocations if the IRS successfully challenges the arrangement. While not foolproof, it demonstrates good faith and can help with penalties if you're audited. Third, I'd recommend having the partnership pay for an independent business valuation that supports the economic rationale for this arrangement. A third-party expert opinion that Partner B's capital contribution and ongoing value justifies their loss allocation (even without profit participation) strengthens your position significantly. The PLR suggestion is excellent for a situation this complex. Yes, it's expensive, but compared to the potential cost of an audit and recharacterization, it's probably worth it for peace of mind.

This is unfortunately more common than it should be, and you're right to be concerned about the lack of communication. Many CPAs do file automatic extensions as a protective measure, especially for clients with complex returns involving K-1s, but the professional standard should be to inform clients beforehand. The bigger issue here is the potential financial impact. Since you mentioned you paid your Q4 2023 estimated taxes late in April 2024, there's a good chance you might owe additional tax for 2023. If your CPA filed the extension without making an estimated payment and you end up owing money, you could face failure-to-pay penalties and interest from the original April 15 deadline. I'd recommend: 1) Contact your CPA immediately to clarify what they did and why, 2) Ask if they made any estimated payment with the extension, and 3) If not, calculate whether you owe additional tax and consider making a payment now to minimize penalties. This situation highlights why clear communication agreements with tax professionals are so important. You might want to establish upfront expectations about notifications for any filings made on your behalf.

I work as a tax preparer and want to address some of the concerns raised here. While it's true that many firms file automatic extensions for clients with complex returns (especially K-1 recipients), the lack of communication you experienced is definitely not acceptable professional practice. Here's what should have happened: Your CPA should have either 1) obtained written authorization to file extensions on your behalf as part of your engagement letter, or 2) contacted you before filing to explain why an extension was necessary and discuss any potential tax payment requirements. The fact that you found out by accident when trying to file your own extension suggests poor client communication protocols at that firm. This is particularly concerning because if you owe tax for 2023 and no estimated payment was made with the extension, you're now facing penalties and interest from April 15. I'd strongly recommend getting a copy of your engagement letter with this CPA to see what authorities you actually granted them. If extension filing wasn't explicitly covered, you may have grounds to hold them responsible for any penalties that result from their unauthorized filing. For immediate next steps: Check your 2023 tax liability estimate and consider making a payment ASAP if you think you'll owe money. The sooner you pay, the less penalty and interest will accumulate.