If you have an ongoing self-employment activity abroad (not a one-off freelancing gig), we strongly recommend that you include Form 8858 in your filings.
Here’s an overview of what we’ll cover—click any section to jump ahead
- What is Form 8858?
- Who This Applies To
- Who needs to file Form 8858?
- How Do I Include Form 8858 on MyExpatTaxes?
What is Form 8858?
Form 8858 is an IRS information return used to report certain foreign business operations—most commonly a foreign branch (and in some cases foreign “disregarded entities”)—owned by a US taxpayer. The purpose isn’t to calculate extra tax by itself, but to disclose how the foreign operation is organized and how its income/expenses are recorded, so the IRS can properly apply US international tax rules. It’s typically filed with your US tax return when you meet the reporting requirement.
Who This Applies To
This may apply to:
US citizens and Green Card holders
Self-employed Americans living and working abroad
Freelancers and contractors with ongoing foreign business activity
Digital nomads operating outside the US
Who needs to file Form 8858?
Many taxpayers who are self-employed outside the US end up with a Form 8858 filing requirement because their activity can be treated as operating a foreign branch. The IRS definitions are broad enough that “no office and no employees” does not automatically exclude you from the foreign branch concept.
A key factor the IRS looks at is whether there is a “separate set of books and records.” For self-employed taxpayers, it’s often assumed that you will maintain local accounting and tax records under local law to track income and expenses. In many cases, local business bookkeeping can be enough for the IRS to view the activity as having a separate set of books and records—triggering a Form 8858 filing requirement.
As a practical rule of thumb: if you have an ongoing self-employment activity abroad (not a one-off freelancing gig), you should strongly consider filing Form 8858.
Be aware that failure to report required information on Form 8858 can result in penalties of up to $10,000.
How Do I Include Form 8858 on MyExpatTaxes?
After you have unlocked the Self-employment section and confirmed the type of Self-employment you have (Freelance, Single-member LLC, Registered company, etc), you will be asked, “Do you want to include Form 8858 with your return?”
Once you click “Yes” the Form will be automatically added to your tax package.
Please note that adding Form 8858 will require you to upgrade to the Reviewed plan https://www.myexpattaxes.com/pricing/
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