How to properly file a 1099-NEC from a Canadian company?
I'm hitting a roadblock with our taxes this year. My wife does consulting work and got a 1099-NEC from a company in Montreal, Quebec. The payment was around $2,700, nothing huge, but I'm stuck on how to properly report it. We're using CashApp for our tax filing this year, and when I try to enter this 1099-NEC, the system won't accept it because the address is in Canada, not the US. Has anyone dealt with this before? Do I need to report this differently since it's from a foreign company? I'm worried about missing something important and messing up our filing. Any advice on the correct way to include this income would be super helpful!
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Quinn Herbert
This comes up more often than you'd think! When you receive a 1099-NEC from a foreign company, you still need to report the income, but there are some differences in how you handle it. Since CashApp's tax software isn't letting you enter a non-US address, you'll need to report this income as "Other Income" on Schedule 1, Line 8z. Make sure to include a note that it's foreign income from consulting work that would normally be reported on a 1099-NEC. You should also consider if you need to report any business expenses against this income on Schedule C. Additionally, you might want to check if there are tax treaties between the US and Canada that could affect how this income is taxed. In most cases though, you'll just pay regular US income tax on it since it's relatively small.
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Salim Nasir
•But wouldn't this income still need to go on Schedule C since it's self-employment income? I thought "Other Income" was for things like gambling winnings and prizes, not consulting work. Wouldn't putting it on line 8z mean missing out on business deductions?
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Quinn Herbert
•You're absolutely right, and I should have been more clear. Since this is consulting income, it should indeed go on Schedule C as self-employment income, not as "Other Income." This allows your wife to deduct legitimate business expenses against the income and properly calculate self-employment tax. The issue is just with entering the foreign address in your tax software. You can either manually create a Schedule C without using the 1099-NEC entry screen, or switch to a tax software that allows foreign addresses. Some people in similar situations have just put the company name and written "Foreign" for the address when the software doesn't accept Canadian postal codes.
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Hazel Garcia
I had almost the exact same situation last year with a client in Toronto. After struggling with my usual tax software, I found taxr.ai (https://taxr.ai) which was a lifesaver for handling foreign income documents like your 1099-NEC. Their system actually recognized my Canadian 1099 right away and guided me through properly reporting it on Schedule C without the address validation errors I was getting elsewhere. The best part was they explained exactly why CashApp and similar platforms struggle with foreign addresses - it's a common software limitation, not a tax law issue. They also flagged that I needed to report the income in USD after converting from CAD (which I had totally forgotten about), and checked if I qualified for Foreign Earned Income Exclusion (didn't apply in my case but might for some people).
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Laila Fury
•That sounds interesting but I'm confused about something - if it's just $2k of income, wouldn't the fees for a service like that eat up a big chunk of the money? Is it really worth it for such a small amount? Or is this a free tool?
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Geoff Richards
•I've never heard of this before. How exactly does it work with Schedule C? Does it somehow override the address validation that other software has, or does it just tell you what to do and you still have to figure out how to enter it?
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Hazel Garcia
•For a small amount like $2k, I was concerned about that too, but it was completely worth it for the peace of mind. The service wasn't expensive compared to the alternatives of potentially filing incorrectly or paying a CPA for a consultation on this one issue. It works by analyzing your tax documents and providing specific guidance. For my Canadian 1099-NEC, it identified exactly which fields in Schedule C needed to be completed and provided clear instructions for entering the information in a way that would bypass the address validation issues. It doesn't override your tax software directly - instead, it gives you precise instructions on how to work around the limitations.
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Geoff Richards
Just wanted to update after trying taxr.ai for my foreign income situation. It was surprisingly straightforward! Uploaded my documents, and within minutes I had clear instructions for handling my Canadian 1099-NEC in CashApp taxes. The system showed me exactly how to record the income in Schedule C without needing the address validation to work. It also pointed out that I needed to convert the CAD to USD using the average exchange rate for the period when the work was performed (something I would have definitely gotten wrong). I was skeptical at first but after struggling for hours with CashApp's limitations, having clear step-by-step guidance saved me so much time and stress. Definitely the right solution for this specific problem.
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Simon White
Had the same issue but with a UK client last year. Spent FOUR DAYS trying to get through to the IRS for clarification. Finally discovered Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c) - they got me connected to an actual IRS agent in under 45 minutes! The agent confirmed I needed to report the income on Schedule C and convert to USD using the yearly average exchange rate. She also explained that the software limitation with foreign addresses is common but doesn't impact tax compliance as long as you report the income correctly. Before finding Claimyr, I was getting those automated IRS messages saying "high call volume" and hanging up on me. Was literally about to give up and pay a CPA $300+ just to ask this one question.
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Hugo Kass
•Wait, I don't understand. How does this work? Isn't this just paying to call the IRS? Couldn't you just keep calling them yourself?
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Nasira Ibanez
•Sounds like a scam tbh. The IRS doesn't let third parties jump their phone queue. And even if you do get through, most agents give different answers to the same question anyway. I've stopped trusting anything they say over the phone.
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Simon White
•It's not paying to call the IRS - it's a service that navigates the IRS phone system and holds your place in line. When they reach an agent, they connect the call to you. So you're not wasting hours listening to hold music or getting disconnected. I was also skeptical before trying it. But after being hung up on by the IRS automated system 9+ times over several days, I was desperate. The difference is their system knows exactly which prompts to use and when to call for shortest wait times. And regarding different answers from different agents - that's always a risk, but I took detailed notes and the advice matched what my accountant friend told me later.
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Nasira Ibanez
Ok I'm eating my words here. After posting that skeptical comment, I decided to try Claimyr for my own tax question about foreign income reporting. Not gonna lie, I was 100% prepared to come back and report it was a waste of money. But... I got through to an IRS agent in 37 minutes. THIRTY-SEVEN MINUTES. After trying for literally weeks on my own. The agent walked me through exactly how to report my foreign contractor income and confirmed that the address validation issue in tax software is just a software limitation, not a tax compliance problem. For the OP's specific 1099-NEC situation, the agent I spoke with confirmed you should report it on Schedule C and indicated the company is foreign. If your software won't accept a Canadian postal code, you can enter "Foreign" in the zip code field or use "00000" as many tax professionals do for foreign addresses.
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Khalil Urso
Something no one has mentioned yet - make sure the $2,700 is in USD and not CAD! If the payment was in Canadian dollars, you need to convert it using the appropriate exchange rate for when you received the payment. The IRS accepts the yearly average exchange rate for simplicity, which you can find on the IRS website or just Google "CAD to USD average exchange rate 2024". Also check if your wife needs to make estimated tax payments going forward if she's continuing to do consulting work. Self-employment tax can sneak up on you!
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Myles Regis
•Where exactly do you enter the exchange rate information on the tax form? I'm in a similar situation but with payments from the UK, and I'm not seeing any place to note the conversion.
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Khalil Urso
•You don't actually enter the exchange rate itself on the tax form. You just convert the amount from foreign currency to USD before entering it on your Schedule C. So if your wife was paid 3,700 CAD, you'd calculate what that equals in USD using the appropriate exchange rate, and enter that USD amount on your tax forms. For documentation purposes, it's good to keep a note of which exchange rate you used (daily, monthly, or annual average) in your tax records in case of questions later. The IRS accepts any reasonable exchange rate method as long as you apply it consistently.
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Brian Downey
Has anyone successfully entered a foreign 1099-NEC in TurboTax? I'm having the same issue but with a client in Germany, and wondering if switching from CashApp to TurboTax would help or if I'd run into the same address validation problems.
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Jacinda Yu
•I used TurboTax last year for a similar situation with a Japanese client. TurboTax let me enter "Foreign" as the country and then I could skip the zip code validation. It took some digging through the help menus to figure it out though - there's a special workflow for foreign addresses.
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Landon Flounder
Don't forget to check if Canada withheld any taxes from your wife's payment! If they did, you might be eligible for a foreign tax credit on Form 1116. This is especially important for larger amounts, but even for $2,700 it could make a difference. Also, since this is consulting work, make sure your wife keeps good records of any business expenses related to this income - home office, supplies, software subscriptions, etc. Those are all deductible on Schedule C against this income.
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