I registered it as what they call an "individual enterprise" in Turkey, which is basically their version of a sole proprietorship. There's no separate legal entity - the business and I are the same for liability purposes. Does that change anything about how I should approach the US tax side?

That's good news! If it's truly equivalent to a US sole proprietorship with no separate legal entity status, then you're on the right track with Schedule C reporting. Just make sure you keep documentation showing the legal status in Turkey in case of any IRS questions. Just be aware that as your business grows, you might want to consider the implications of potential liability exposure since you're personally liable for the business. Many people with foreign operations eventually set up an LLC in the US that owns the foreign business operations to create some liability protection while still maintaining pass-through tax treatment.

I used TurboTax Self-Employed last year for my Canada-based consulting business and it handled the Schedule C foreign expenses fine. You just enter everything in USD after converting the amounts yourself. The software doesn't help with the currency conversion or FBAR filing though - you have to handle that separately.

I appreciate the suggestion! In this case, I actually paid the hospital directly rather than gifting money to my dad, but that's good to know for future reference. Would it have made any difference tax-wise if I had sent him the money first and then he paid the hospital? Or is the end result the same either way?

The end result would be exactly the same tax-wise. Whether you pay the hospital directly or give your father the money to pay, the IRS views it the same way - as a gift to your father. Neither approach would give you a tax deduction. The only practical difference is that paying directly ensures the money is used for its intended purpose, and sometimes hospitals offer cash discounts or payment plans when working directly with them. But from a tax perspective, there's no advantage to either approach.

This sounds like tax fraud. You can't just claim personal expenses as business expenses by making up fake work. The IRS specifically looks for this kind of thing in audits.

7 Omg thank you for mentioning this! I just checked my W2 and there's like $300 in box 4 and $75 in box 6. SPRINTAX never mentioned anything about this. Do I need to file something special to get these back??

9 You need to file Form 8843 along with a special statement requesting a refund of incorrectly withheld FICA taxes. SPRINTAX should have this capability, but sometimes you need to specifically indicate your FICA exempt status. If they missed this, you can either restart your SPRINTAX return and make sure to answer the FICA questions correctly, or use a different service that better handles J1 visa FICA exemptions. This could easily explain why your friends got larger refunds if they properly claimed their FICA exemptions and you didn't.

13 This is so confusing! I worked 4 months and made about $12,000 total. My employer is a big company that hires tons of J1s every year so I assumed they knew what they were doing with the withholding. Is there any way to know if they did it right?

Thanks for mentioning this! I'm in New York - do you know if I need to file anything special with the state here? I definitely have plenty of evidence (emails, company handbook they gave me, etc). Should I be reaching out to the company about this or just handle it on my tax forms?

New York has pretty strong worker protection laws. You'll want to look into filing the IT-2104 form which is NY's equivalent of the W-4 for your state taxes. Also consider filing a report with the NY Department of Labor about the misclassification - they take these cases seriously and can help recover the employer portion of taxes you shouldn't have to pay. Regarding contacting the company, it depends on your relationship with them. Some people have success simply explaining the situation to their former employer and requesting they issue a corrected W-2. Others find this creates conflict. If you need them as a reference, consider how approaching them might affect that relationship. Either way, you can still file correctly on your end using Form 8919 even if they refuse to correct their mistake.

Yes! I got a favorable determination but it took forever (9 months). The key was documenting everything thoroughly in the initial filing. I included copies of emails showing they controlled my schedule, photos of the company equipment I was required to use, their employee handbook they made me follow, etc. The more evidence you provide upfront, the faster and more likely you'll get a favorable ruling.

Thank you for that tip about separate envelopes! I definitely would have put them all in one package thinking I was being efficient. Did you receive any kind of confirmation when they received/processed the returns? I'm worried about them getting lost in the mail.

You should definitely send them certified mail with return receipt requested through USPS. That way you'll get confirmation they were delivered. As for processing, it took about 4-5 months before we saw any activity - they're very slow with paper returns. Eventually, we received notices for each return - either bills for what was owed (with penalties) or notices about refunds. If you're really concerned, you can check your husband's IRS transcript online about 6-8 weeks after sending them to see if they show as processed.

Yep, this is correct. I worked for a tax firm and we had clients who lost out on thousands in refunds because they waited too long. The 3-year rule for refunds is strict, but the IRS can come after you for taxes owed for much longer!