I think people are overcomplicating this. If you're just casually trading skins and occasionally making a small profit, it's hobby income. Report it on Line 8z of Schedule 1 as "Other Income" and call it a day. Only need Schedule C if you're truly running this as a business with regular, consistent activity aimed at making profit.

Based on what you've described, you're definitely running this as a business activity since you're systematically buying skins at below market value with the specific intent to resell for profit. The IRS doesn't distinguish between digital and physical goods when it comes to business income. You'll want to use Schedule C to report this activity. Track your gross receipts (all sales - so yes, that $2,000), then subtract your cost of goods sold (what you paid for the skins) to get your net profit. That $300-400 profit will be subject to both regular income tax and self-employment tax. Pro tip: Keep meticulous records going forward. Save screenshots of all transactions, PayPal receipts, and Steam transaction history. Also consider tracking any business expenses like platform fees, internet costs for trading, or storage costs if applicable. The IRS loves detailed documentation, especially for newer types of businesses like digital item trading. Since you're already 6 months in, I'd recommend gathering all your transaction history now before it becomes an overwhelming task. Most platforms let you export your transaction data, which makes record-keeping much easier than trying to reconstruct everything later.

This thread has been incredibly helpful! As someone who's been in a similar limbo situation with an L1 visa, I wanted to add one more consideration that hasn't been mentioned yet. Even though you don't have filing requirements now, it's worth starting to document everything related to your US travel and visa status. Keep records of: - Entry/exit dates from the US (I-94 records) - Purpose of each trip (business meetings, etc.) - Your UK tax returns showing UK-sourced income - Employment contracts/payroll records proving UK employment This documentation becomes invaluable later when you do make the transition to US tax residency. The IRS may ask about your prior tax status, especially for the first few years after you become a US resident. Having clear records that demonstrate you were correctly classified as a non-resident alien during your business travel period will save you potential headaches down the road. Also, once you do relocate, consider whether you'll need to report any UK bank accounts or investments on FBAR (Form 114) or Form 8938. The reporting thresholds are different for US residents vs non-residents, so accounts that didn't require reporting before might need to be disclosed after you move.

This has been an incredibly thorough discussion! I'm in a very similar situation - UK-based with an L1 visa that I haven't used yet but planning to relocate within the next 12-18 months. One thing I wanted to add that might be helpful for others in this position: I recently spoke with an international tax attorney who mentioned that even though we don't have US filing requirements now, it's worth understanding the "election to be treated as resident" option under IRC Section 6013(g). If you're married and your spouse will also be moving to the US (or is already a US citizen/resident), you might be able to elect to be treated as a US resident for tax purposes starting from your first day in the US, rather than waiting until you meet the substantial presence test. This can sometimes be beneficial for tax planning purposes, though it also means you'd be subject to US tax on worldwide income immediately. It's definitely something to discuss with a tax professional before making the move, as the election affects both spouses and can't easily be undone. But it's another consideration that might be relevant for people planning their transition timing. Has anyone else encountered this situation or have experience with the resident election?

Great thread everyone! As someone who's been dealing with PFIC reporting for my international portfolio, I wanted to add a few practical tips that have helped me streamline the process: 1. **Document everything throughout the year** - Don't wait until tax season to gather your PFIC information. I keep a simple folder with quarterly statements and note any distributions immediately. 2. **Currency conversion timing matters** - Make sure you're using the correct exchange rates for the specific dates (January 1st for beginning values, December 31st for ending values). The IRS has specific guidance on which rates to use. 3. **Consider the QEF election alternative** - While MTM is simpler for most people, if your foreign fund provides the necessary annual information statements, the QEF election might be more tax-efficient long-term, especially for funds you plan to hold for many years. 4. **State tax implications** - Don't forget that some states don't conform to federal PFIC elections, which can create additional complexity in your state returns. For those struggling with the technical aspects, the key is really having accurate beginning and ending values. Everything else on Form 8621 flows from those numbers. And yes, you can definitely e-file - I've done it successfully with both TaxAct and Drake Tax for several years now.

This has been such a helpful thread! I'm dealing with a similar situation where I have PFICs in both taxable and retirement accounts. Just wanted to confirm what @Andre Dupont mentioned earlier - PFICs held in traditional IRAs, Roth IRAs, and 401(k)s are indeed exempt from Form 8621 reporting requirements under IRC Section 1298(f). This exemption can save a lot of headaches if you're able to hold your foreign investments in retirement accounts instead of taxable accounts. For those who are stuck with taxable PFIC holdings, I've found that keeping a simple annual calendar reminder to capture January 1st and December 31st values makes the whole process much smoother. I set alerts to screenshot the relevant fund pages on those specific dates, which eliminates the scramble to find historical data later. One last tip - if you're considering selling your PFIC investments to avoid the reporting complexity (as @AstroAdventurer mentioned), be aware that you'll still need to file Form 8621 for the year you sell, and you might face some additional complications if you haven't been compliant with PFIC reporting in previous years. Sometimes it's worth getting everything properly reported first before making the decision to divest.

Just throwing this out there - have you considered whether this accounting method change is really necessary? Switching from cash to accrual is a big deal and creates a lot of complexity. My CPA advised against it for my business because the ongoing compliance burden wasn't worth the temporary tax benefits.

I actually went through this exact situation with a client last year and can confirm what others have said - you CAN file Form 3115 with your 2023 return as long as it's timely filed (including extensions). The critical thing is making sure you qualify for the automatic change procedures. Most cash-to-accrual changes for businesses under the $27 million threshold qualify, but you need to be careful about the Section 481(a) adjustment calculation. One thing I'd add that I haven't seen mentioned - if your client has a positive Section 481(a) adjustment (meaning they'll owe more tax), they can spread it over 4 years to soften the impact. If it's negative (tax savings), they get the full benefit in the year of change. Also make sure you send the duplicate copy to the IRS National Office within the required timeframe - that's a common mistake that can cause the whole method change to be rejected. The address and timing requirements are in the Form 3115 instructions.

I've been researching virtual mailbox options for my own expat tax situation and this thread has been incredibly helpful! One thing I want to add based on my research is the importance of choosing a virtual mailbox service that's been in business for several years and has good financial stability. I came across some horror stories of people whose virtual mailbox companies suddenly went out of business, leaving them scrambling to update their address with the IRS mid-year. This could create serious complications, especially if you miss important notices during the transition period. When evaluating providers, I now ask about their business history, insurance coverage, and what contingency plans they have if they cease operations. Some of the more established services will even help transfer your mail to a new provider if they ever shut down, though obviously you'd want to avoid that situation entirely. Also, I've found it helpful to read the fine print about what happens to your mail if you're temporarily unable to pay your monthly fees while abroad. Some services will hold your mail for a grace period, while others might return everything to sender immediately. Given how crucial tax correspondence can be, it's worth paying a bit extra for a service that offers more flexibility during payment interruptions.

As someone who has been using a virtual mailbox for tax purposes while living internationally, I can confirm this is absolutely acceptable practice. The key factors that have made this work smoothly for me: **Choose the right service**: Look for a provider that's CMRA-certified (Commercial Mail Receiving Agency) and has been in business for several years. This gives you credibility with the IRS and ensures reliability. **Address formatting matters**: Make sure your virtual mailbox includes a unique identifier (Suite #, PMB #, etc.) so your mail doesn't get mixed up with other customers at the same facility. **Set up proper notifications**: Configure immediate alerts (SMS, email, app notifications) when any mail arrives, especially certified or priority mail. IRS notices have tight deadlines and you can't afford delays in receiving them. **Test the system**: Before tax season, send yourself a certified letter to test forwarding speed and reliability. International forwarding can take 5-10 business days even with expedited service. **Maintain consistency**: Use the same virtual mailbox address across all your tax documents, bank accounts, and government correspondence. This helps establish a clear paper trail for your US domicile status. The IRS primarily cares about being able to communicate with you reliably. As long as your virtual mailbox provides that, you should have no issues using it on your 1040. I've been doing this for three years without any problems from either federal or state tax authorities.