My friend is an international student from India, studying in the US (F1 student VISA).

I work from India and U.S. client is about to pay me for some writing services. The U.S client agreed to pay the money in my friend's US account, which he can then transfer to my Indian account.

Please do not suggest alternatives to this payment route. I am aware of them.

The friend is trustworthy. Period.

I am asking whether this is alright to do. And that he wouldn't have to show this as "taxable income" when he files for taxes at year end?

He is just acting as an intermediary in this case.

Would this be a problem with the IRS or immigration's?

  • Ask your US client if it will be issuing a Form 1099 to your friend for 2014 showing that this amount was paid to your friend. (Quick check: will the US client ask for your friend's Social Security Number before making the payment). If the answer is Yes, the IRS will definitely ask if your friend does not report this amount on his/her income tax return. – Dilip Sarwate Nov 6 '14 at 14:26
  • I asked the client. They would not require an SSN. And will not file for 1099 since the worker (that is, me) is in India. 1099 is not filed for independent contractors working from out of US I guess. – learnerX Nov 7 '14 at 7:55

There might be a problem.

Some reporting paperwork will have to be done for the IRS, obviously, but technically it will be business income zeroed out by business expense.

Withholding requirements will shift to your friend, which is a mess. Talk to a licensed tax adviser (EA/CPA) about these.

But the immigration may consider this arrangement as employment, which is in violation of the visa conditions. You need to talk to an immigration attorney.

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