Table of contents:
Reporting self-employment
You are considered self-employed if you are not an employee but work independently. This includes working as an independent contractor, freelancer, or owning a small business, such as a U.S. single-member Limited Liability Company (LLC). Refer to the IRS definition of an Independent Contractor (Self-Employed).
A single-member LLC is a business entity that provides limited liability protection to its owner (called a "member"). By default, it is disregarded for tax purposes and treated as a sole proprietorship unless the owner elects to have it taxed as a corporation (S corp or C corp).
If the LLC has more than one member, it is generally taxed as a partnership, unless an election is made to be taxed as a corporation. The required tax forms (e.g., Schedule C, Form 1120, or Form 1065) depend on the number of members and the tax classification elected with the IRS.
Note: If a non-U.S. person (nonresident alien, or NRA) owns a U.S. single-member LLC, the tax and reporting requirements differ and can be surprisingly extensive, even if the LLC doesn’t generate U.S.-source income. For more information on tax filing requirements for FOUSDE, refer to US single-member LLC owned by NRA.
To indicate that you are self-employed:
Navigate to Life & Income > Filing Goals TQ section and select Yes for the statement: I am looking for individual tax return preparation.
Navigate to Life & Income > Income Sources TQ section and select Yes for the statement: I am self-employed or an independent contractor.
This will automatically add a sub-section called Self-Employment under the Income TQ section:
Reporting income as a sole trader
Report it as self-employment income on Income > Self-Employment and indicate your service.
Reporting earnings from own business when not involved in day-to-day operations
We will determine your earnings based on the corporate return if your business is incorporated. Follow the steps:
Navigate to the Life & Income > Income Sources TQ section and select Yes for the statement: I have ownership in a corporation, partnership or trust.
Provide information about your business on Income > Corporation & Trust > Entity List.
Report earnings on Income > Self-Employment and indicate your service.
Is investment held in trust reportable on FBAR?
The need to file FBAR by the beneficiary of the foreign trust depends on the trust rules for income distribution to the U.S. beneficiary. The decision on whether to report it is determined using the following logic:
If the trust is discretionary (i.e., trust distributions are made as the trustee's decision), it is not reported.
If the trust is not discretionary (i.e., the beneficiary has discretion regarding distributions), it must ONLY be reported if the beneficiary receives more than 50% of the trust's current Income.
Required forms to report income distributed to beneficiaries of a family trust
If you are the beneficiary of a non-U.S. trust and there are no other U.S. grantors/settlors (trust owners), then the IRS considers you a U.S. owner of the foreign grantor trust. You may be required to report trust ownership annually using Form 3520-A.
If you received distributions from a foreign trust over the past year, you must also file Form 3520.
If you are a beneficiary of a foreign trust, but the trust has another U.S. year, you receive distributions from the trust. Grantor/settlor, then only the grantor/settlor is obligated to file Form 3520-A. However, you must file Form 3520 each year you receive distributions from the trust.
If there are multiple U.S. beneficiaries, then only one copy of the form must be filed. However, each U.S. beneficiary is responsible for ensuring that Form 3520-A is filed on behalf of the trust. If you are not the person filing Form 3520-A, you should get a copy to make sure the form has been filed.
To report income, follow the steps below:
Open your Tax Questionnaire.
Navigate to the Life & Income > Income Sources TQ sections and select Yes for the statement: I have ownership in a corporation, partnership or trust.
Provide information about your business on the Income > Corporation & Trust > Entity List tab.
Changes in ownership of a foreign trust if children are removed as beneficiaries
If children are removed as beneficiaries of a foreign trust and are not grantors of the trust, they are no longer considered owners. However, they may still be deemed owners (even if they are not beneficiaries) if they have certain powers that allow them to vest the trust's corpus (assets) or income solely in themselves, or if they have transferred property to the trust that includes at least one U.S. beneficiary.
Reporting investment income: dividends, interest, capital gains, etc.
Dividends
US dividends
If you’re a U.S. person (citizen, resident, or resident alien), your broker will typically issue Form 1099-DIV, Dividends and Distributions. This form reports dividends (ordinary and qualified), capital gain distributions, and any foreign taxes paid on dividends from U.S. and non-U.S. stocks held with a U.S. broker (e.g., Charles Schwab, Fidelity).
Form 1099-DIV shows the total amount of dividends (ordinary and qualified) and capital gains that you received from stocks, mutual funds, or other investments during the tax year.
Key information on the form:
Box 1a: Ordinary Dividends – Total amount of dividends paid.
Box 1b: Qualified Dividends – Dividends taxed at lower capital gains rates.
Box 2a: Total Capital Gains Distributions – Shows capital gains from investments.
Other boxes may report foreign taxes paid, federal income tax withheld, or specific dividend types.
Box 7: Foreign tax withheld (if any).
If you receive Form 1099-DIV, report your dividends in your tax questionnaire:
Navigate to the Life & Income > Other Sources TQ section on the left side and click Yes next to the statement: I receive dividend income.
Navigate to Income > Passive Income > Dividends tab at the top.
Click Yes to the question "Did you receive U.S. dividends?" and upload your 1099-DIV form(s) under the "Please upload Form 1099-DIV".
⚠ Note: If you have ONE consolidated Form 1099-DIV, upload it once.
Non-US dividends
If you use a non-U.S. broker (e.g., Interactive Brokers Ireland, DEGIRO, etc.), you may get:
A year-end tax summary or dividend statement in PDF or CSV format.
Separate records for each dividend payment.
Possibly local forms (e.g., Consolidated Tax Statement, Annual Activity Report) depending on the broker and country.
If you don't receive Form 1099-DIV from your foreign broker, report your foreign dividends in your tax questionnaire:
Navigate to the Life & Income > Other Sources TQ section on the left side and click Yes next to the statement: I receive dividend income.
Navigate to Income > Passive Income > Dividends tab at the top.
Click Yes to the question "Did you receive non-U.S. dividends?" and fill in the "Non-U.S. Dividends" table.
Interest income
US interest income
If you’re a U.S. person (citizen, green card holder, or resident alien) and you earn $10 or more in interest from a U.S. financial institution or U.S.-based broker, you receive Form 1099-INT, Interest Income. This IRS tax form reports interest income (savings/checking account interest, interest on U.S. Treasuries, CDs, bonds, etc.) paid to individuals, businesses, and other entities. If you earned interest from multiple institutions, you will receive separate 1099-INT forms from each.
Key information on the form:
Box 1: Taxable interest – Interest paid by banks, credit unions, or other sources.
Box 3: U.S. Savings Bond interest – Interest from Series EE and I bonds.
Box 4: Federal income tax withheld – If backup withholding was applied.
Box 6: Foreign tax paid – Taxes paid to a foreign country on interest income.
Box 8: Tax-exempt interest – Interest from municipal bonds or other tax-free investments.
If you receive Form 1099-INT, report your interest income in your tax questionnaire:
Navigate to the Life & Income > Other Sources TQ section on the left side and click Yes next to the statement: I receive interest income.
Navigate to Income > Passive Income > Interest tab at the top.
Click Yes to the question "Did you receive U.S. interest income?" and upload your 1099-INT form(s) under the "Please upload Form 1099-INT".
⚠ Note: If you have ONE consolidated Form 1099-INT, upload it once.
Non-US interest income
If you earn any interest from a non-U.S. financial institution or broker, you may receive a local annual interest statement, year-end summary, or bank statement showing:
Amount of interest earned
Currency received
Any foreign tax withheld
Foreign currency must be converted to USD (your tax preparer can do it) and reported on your U.S. tax return (Form 1040, Schedule B, and potentially Form 1116 if foreign tax was paid).
If you don't receive Form 1099-INT from your foreign financial institution, report your foreign interest income in your tax questionnaire:
Navigate to the Life & Income > Other Sources TQ section on the left side and click Yes next to the statement: I receive interest income.
Navigate to Income > Passive Income > Interest tab at the top.
Click Yes to the question "Did you receive U.S. interest income?" and fill in the "Foreign (i.e non-U.S.) Interest Income".
You may aggregate all your bank account interests in one line and report the gross amount before withholding as gross interest and the withheld portion as a foreign tax.
⚠Note: If you are married but are filing an individual return without your spouse, for the joint accounts that you own together with your spouse, please report 50% of the total interest earned. Unless you live in a country with the community property marital regime. In that case, you have to report 100%.
Other investment income
To report other investment income:
Open your Tax Questionnaire.
Navigate to the Life & Income > Income Sources TQ section and click Yes next to the statement: I have investments.
Navigate to Income > Investments.
Note: if you are filing jointly, the questions in these sections apply to both you AND your spouse.
Reporting owners' draw of dividends
To report dividends:
Open your Tax Questionnaire.
Navigate to the Life & Income > Other Sources TQ section on the left side and click Yes next to the statement: I receive dividend income.
Navigate to Income > Passive Income > Dividends tab at the top.
Depending on the type of dividends received, select the appropriate option:
If dividends are from a U.S. business, click Yes under Did you receive U.S. dividends?
If dividends are from a Controlled Foreign Corporation, click Yes under Did you receive non-U.S. dividends?
Reporting carried interest while working in private equity
Open your Tax Questionnaire.
Navigate to the Life & Income > Income Sources TQ section and click Yes next to the statement: I have investments.
Navigate to Income > Investments.
Report it under the question Did you sell any type of securities during the filing year? Stocks, bonds, mutual funds, options, cryptocurrency (ie bitcoin, etc), etc?
Reporting the stock sale
Report it as investments under the question Did you sell any type of securities during the filing year? Stocks, bonds, mutual funds, options, cryptocurrency (ie bitcoin, etc), etc?
Note: if you sold a stock and know the sale price but not the original purchase price, you have four options to report the cost basis of the transaction:
Look up the historical share price online if the share was issued by a publicly traded company (U.S. or foreign), and report the share price when you purchased the shares.
Contact the company directly if the share was sold by a private company, and request the historical price of the share.
If options 1 and 2 are not feasible (e.g., due to changes in ownership or name of the issuing company or inability to find the historical rate), report a cost basis of zero for the sale.
If options 1 and 2 are not feasible and you prefer not to report a cost basis of zero, you will be subject to a long-term capital gains tax of 10% to 20% (depending on your tax bracket) on the entire sale amount. Alternatively, you can estimate the initial price of the share but be prepared to explain to the IRS (if asked) how you arrived at this price.
Reporting a U.K. ISA/OEIC in stock
OEICS are collective investment schemes that are treated as PFICs in the U.S. Each trust or unit share must be reported on a separate PFIC Form 8621.
Reporting income from Schedule K-1 after investing in a master limited partnership (MLP)
Report it on Income > Other Income > Do you own a share (interest) in a Corporation or Partnership (whether U.S. or Foreign)?
Note: in the U.S., you would have received a Schedule K-1 for it.
Reporting performance-based shares that vested from an employer
Open your Tax Questionnaire.
Navigate to the Life & Income > Income Sources TQ section and click Yes next to the statement: I receive payments from an employer.
In the Income > Wages TQ section, click Yes to the question Did you receive payments during the tax year from a non-U.S. employer?
Report it under the question Are you a participant in any kind of stock-based compensation arrangement with your employer? RSUs, stock options, etc. and upload supporting documentation.
What is included in gross wages / gross income?
Gross wages mean the total amount earned before contributions or deductions are taken from that income. For example, it means income before working expenses AND before taxes.