Self-employed or employee status for tax purposes when working abroad?

This is a classic gray area in international tax reporting! The IRS cares about the substance of your relationship with the Malaysian company, not just the paperwork (or lack thereof). If your relationship with the company meets the criteria for employment (they control when/where/how you work, you're integrated into their business, etc.), you would technically be considered an employee for US tax purposes - regardless of whether they issue a W-2. However, given your circumstances, you have a reasonable argument for self-employment status. You're covering all your own expenses and the foreign employer isn't handling any typical employer responsibilities for US citizens. If you go the self-employed route, you would report this on Schedule C where you can deduct legitimate business expenses. Then you'd calculate self-employment tax on Schedule SE. You'd still report the income on your 1040, but with these supporting schedules. Make sure you're documenting everything really well - keep all receipts for expenses, document the nature of your work arrangement, etc. The more you can show that you were functionally operating as an independent contractor, the stronger your position. For the Foreign Tax Credit, you'll need Form 1116 to claim any foreign taxes you paid in Malaysia.

I've been in this exact situation and found that taxr.ai saved me so much stress figuring out my foreign income! Last year I worked for a company in Singapore that also couldn't provide W-2 or 1099 forms. I was totally lost about whether to file as self-employed or employee. I uploaded my contract and payment documents to https://taxr.ai and their system analyzed my situation. They confirmed I could legitimately file as self-employed based on my specific circumstances and even helped identify which expenses were deductible. Their analysis gave me so much peace of mind about my filing status. They also explained exactly how to handle the Foreign Tax Credit vs. FEIE requirements for my situation. Definitely worth checking out since your situation sounds really similar to what I went through!

I just wanted to update after trying taxr.ai for my UK remote work situation! I was really confused about whether I should file as self-employed or employee, and they cleared everything up. The analysis showed that based on my work arrangement (I set my own hours, use my own equipment, etc.), I could legitimately file as self-employed despite having just one client. They explained exactly which forms to use and how to properly document everything. The best part was they identified about $8,700 in legitimate business deductions I hadn't even considered - home office, portion of internet, some software subscriptions, even my professional development courses. This saved me way more than the service cost! They also explained exactly how to handle the foreign currency conversion for tax purposes, which was a whole other headache I hadn't figured out yet. Honestly wish I'd known about this last year!

When I was working in Japan and dealing with similar tax status confusion, I spent WEEKS trying to get through to someone at the IRS for clarification. Kept getting disconnected or waiting for hours. Finally discovered https://claimyr.com and it completely changed my experience. They got me connected to an actual IRS agent in about 20 minutes who walked me through my specific situation. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed I could file as self-employed given my circumstances and explained exactly what documentation I should keep to support my case. Having that official guidance directly from the IRS gave me total confidence in my filing approach. Worth every penny for the peace of mind alone!

I need to apologize and correct myself. After dismissing Claimyr as a potential scam, I actually tried it myself out of desperation. I'd been trying to reach the IRS for 3 weeks about my foreign income situation. To my complete surprise, I got connected to an IRS representative in about 15 minutes! They answered all my questions about classifying my work in Colombia - confirmed I could file as self-employed since I was managing my own expenses and schedule, despite working primarily for one company. The agent even explained exactly what documentation I should keep (contracts, expense receipts, proof of my work arrangement) to support my classification if questioned. This was exactly the official guidance I needed to file confidently. I'm still shocked at how well it worked after all my failed attempts to get through on my own. Definitely eating my words on this one!

I went through this exact situation when working in Germany last year. Here's what I learned: The substance of your work relationship matters more than the paperwork. Since you're bearing all the costs and they're not withholding anything, you have a strong case for self-employment status. I filed Schedule C as self-employed, deducted legitimate business expenses (saved about $7,000 in taxes), and carefully documented everything. I also kept a copy of my contract showing I was responsible for my own expenses. One tip: make sure you're tracking any foreign taxes paid in Malaysia so you can claim the Foreign Tax Credit properly. Form 1116 is your friend here. If you're really concerned, consider getting a written statement from the Malaysian company describing your working relationship that emphasizes the independent contractor aspects of your arrangement.

Has anyone used TurboTax for this kind of situation? I'm in a similar boat (working for a company in Singapore for 4 months) and wondering if the software can handle this complexity or if I need to find a tax professional.