[Alex84]

Dear experts,
Let's say am a student on a student visa in US.
I have an amateur website which generates some income since the times when I came from abroad. This website generates some modest income.
As a person on a student visa, I am aware that I am not allowed to be self employed in US.
(as in a question here, for instance: https://www.askmehelpdesk.com/taxes/international-student-sell-stuff-website-pay-tax-not-381461.html)

My questions are:
Does this kind of income considered as self employment in this country?
If not then it means that it is not legal to owe a website while on a student visa in US?
What is the proper way to pay the taxes from this kind income?
Can it be considered as business in another country abroad? (the website works irrespective of the owner's residence)
What if I start a new website while I am in US?
Can I sell a website while I am in US and how does the taxation work in this case?

Thank you for reading,
Alexander

[AtlantaTaxExpert]

If the website was up and running PRIOR to your arrival in the United States, then the income from that webskite is considered to be FOREIGN-SOURCED and thus NOT subject to U.S. income taxes.

However, if you start the website while IN the United States, then, regardless of your visa status, it is considered to be U.S.-sourced income and subject to U.S. income taxes.

Whether you are in violation of your visa is a LEGAL question, NOT a tax question. That said, In my opinion, you ARE in violation of your student visa. Whether the violation is major or not would probably depend on the amount of income earned.

[Alex84]

Thank you for your explanation.

I would like to know one more detail, if, for example, I start a website which does not generate any income. Is it considered as any kind of business?
When does it become a business? (Is it when I start using any advertisements to cover the expenses or at the moment the website is up?)

Alexander

[AtlantaTaxExpert]

Alexander:

The website becomes a business if and when it generates cash flow, be it from "donations", advertisement income, fees, etc.

If the website generates no cash, then it is NOT considered to be a business and the USCIS could care less about it.

[IntlTax]

ATE, Alexander is now located in the U.S. You state that income from the first website is foreign source because it was created when he was outside the U.S. and income from the second website would be U.S. source because it was created when he was inside the U.S. Under this analysis, would you maintain that income from the second website will continue to be U.S. source income after Alexander leaves the U.S.

Would it make more sense to source the income to the location where the website computer servers are, rather than where the creator is located when the website is created?

[AtlantaTaxExpert]

IntlTax:

If Alexander were here on a work (H or L) visa, then yes, the income earned while he is located inside the U.S. would be U.S.-sourced for the years he was a resident alien.

However, the OP states that he is a STUDENT, which is why I contend that his income is foreign-sourced.

The website was established while he was a resident in his home country, and I have successfully argued that suck website income is foreign-sourced in multiple tax returns of clients who established and managed websites where the server was in the U.S. (and thus had 30% of the income generated from those websites withheld by the server host and sent to the IRS), even though they have never set foot in the United States.

Under every tax treaty that I have reviewed, such income is taxable ONLY in the home country, and I have also successfully argued the same issue for foreign nationals in countries which have NO tax treaty with the U.S.

The argument is similar to when foreign nationals who trade stocks from their home country using U.S.-based brokerage accounts, and I normally can prevent the re-occurence of the 30% withholding by having the foreign national submit a W-8BEN with the server host.

BOTTOM-LINE: As long as the OP is a student, the website income remains foreign-sourced In my opinion. Once he becomes a resident, then the income becomes subject to U.S. taxes under the world-wide income requirement.