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ruhi23 · Dec 28, 2007, 05:48 AM

I'm on OPT right now and will apply for H1-B next year. I just started an Adsense account yesterday and haven't received any earnings.

I've been in the US since Fall 2005 on F-1 and pass the substantial test (more than 31 days in current year and more than 183 days in previous 3 years).

Can I use Adsense? If no, then can I let my Google Account collect all that money until my status changes to H1-B?

Any kind of help will be greatly appreciated. I'm really confused in this matter.

Thanks a ton!

The Texas Tax Expert · Dec 28, 2007, 08:47 AM

This is an interesting question but it is not really a tax question. From a tax point of view, you need to pay tax on this income.

From the immigration law point of view, I'm not an immigration attorney but my understanding is that it is not legal for you to operate a business of any form while you are in the US on an F1.

MukatA · Dec 29, 2007, 12:02 AM

Yes, as a tax point of view, you will report all your Adsense income. When you have H-1B view, then this income will also be subject to SE tax of 15.3%.
Yes, while on F1, you can't do any extra job or business for that you did not get approval. On H-1B visa also you normally work only for the company which applied for your H-1B.

AtlantaTaxExpert · Dec 29, 2007, 09:43 AM

I must respectfully disagree with both TTE's and MukatA's opinion on this issue.

Google AdSense, being Internet-based, could be conducted from ANYWHERE in the world and, for this reason should be treated as a business that is being conducted from his home country.

That does NOT relieve him of the taxes noted by MukatA, but I sincerely doubt that it will be a hindrance under the immigration laws.

This, BTW, is my OPINION. Suggest you contact an immigration lawyer to be sure.

The Texas Tax Expert · Dec 29, 2007, 12:22 PM

ATE, as I said, I'm not an immigration attorney. However, I assume the person will receive a 1099-MISC. Since the H1B very explicitly prohibits a person from working for anyone other than the sponsoring employer, and very clearly the person cannot operate as an independent contractor, I would think there is enough gray for it to be of concern.

In terms of calling it foreign income, I very much doubt that the income could be classified as foreign source.

AtlantaTaxExpert · Dec 30, 2007, 12:01 AM

Google Adsense will generate a Form 1099 only if the person registers to a U.S. address.

I know Google Adsense has the option to egister against a foreign address, which I assumed this person did because he will not be in the U.S. for the rest of his life.

But, you are right that it could be an issue, so consulting an immigration attorney is probably the best course of action.

The Texas Tax Expert · Dec 30, 2007, 07:27 AM

If a person is here on an H1-B, has a permanent US address and is a tax resident but enters a foreign address for Google tax record purposes, I would consider that fraudulent.

AtlantaTaxExpert · Dec 30, 2007, 08:44 AM

TTE, I must respectfully disagree.

Google Adsense is truly an international application. I believe this case is similar to the Thai gentlemen we worked on together earlier this year. The only difference is that he set up his Internet business before he came to the U.S.

Further, I do not say that Ruhi does not owe taxes on this money. Clearly, he DOES owe taxes, as U.S. tax law requires payment for ALL world-wide income. I just doubt that this situation falls in the realm of a true separate, U.S.-based business.

The Texas Tax Expert · Dec 30, 2007, 07:02 PM

ATE,

Let's look at this. Here's a person who resides in the US, and operates a blogging site which he uses to make advertising income. Assuming that the blogger writes his blog while here in the US, from his US computer etc, it would be difficult to suggest that this is not a US business. Furthermore, the H1-B permits him to engage in business (while in the US) only with the sponsoring employer - self-employment is definitely not an option. So unless he's flying back to his home country to write his blog/develop his website, I'd suggest that blogging and deriving income from the website consitutes a violation of the conditions of the visa. My expertise is in taxation - not immigration - and only an immigration attorney could give a truly accurate answer to this immigration question. However, there seems enough doubt to me to warrant further investigation.

As a point of clarification and for the record, I'm not sure your reference to us working on a client together is entirely accurate :) I seem to recall that you asked my opinion and I gave it. I don't recall the details but I think my opinion differed from what your client wanted it to be and we cooperated no further on it. Not a big deal, but just clarifying for the record. :)

Happy New Year.

TTE

AtlantaTaxExpert · Dec 31, 2007, 12:04 AM

Noted about the client. I did ask for a consult and you did provide an opinion. I cannot recall all of the details, and the emails in question have been lost so I will bow to your better memory.

The points about the blogger are noted. Next time I call the International Tax Hotline, I think I will address this issue with them and see what they say.

But I DO agree that this issue should be put to an immigration attorney for final resolution.