What is Unauthorized Employment?
Working without DHS authorization is considered a violation of status for those in immigrant status that require such authorization, e.g. F1, H1. It is not necessary to work for an existing organization or business as an employee in order to be considered engaged in unauthorized employment. When one establishes a business, even on a part-time basis from home, s/he is considered to be working. This is the case even for passive involvement, e.g. internet-based businesses (data entry, web based businesses) and certain multi-level marketing operations.

Who are affected by this situation?
Non-immigrant status holders who are required to obtain DHS ( formerly INS) authorization before taking any employment. Those immigrants with such status who desire to earn extra mbecha (money).

What are the tricky areas?

  • home-based businesses
  • Internet based businesses
  • some multi-level marketing schemes.


Why do these “extra-income” activities appear innocent?
Because there is no direct employer-employee relationship, most immigrants commonly believe, incorrectly, that this does not engage them in any form of unauthorized employment. Secondly, one does not receive an IRS W-2 Form for any money that they make. In some situations, where the earnings are over a certain amount, an individual must receive an IRS Form 1099 for non-employee compensation.

What if i do not formally Incorporate my operation?
It is not necessary to have formed a corporation or LLC or a partnership or even operating in a DBA mode. Even if no legal business entity is created, there can be self-employment without authorization.

When will the problem bite me?
At those instances in which it is necessary to provide income tax returns. If these returns show income from unauthorized employment, you may be in trouble.

    Two such situations include:

  • Visa applications at the U.S. consulates
  • When filing Form I-485 applications to adjust status to permanent residence (Green Card).

In order to obtain a visa at the consulate, the consular officer must be convinced that the applicant will comply with the terms of the requested visa. If the officer sees a history of past violations in the form of unauthorized employment, the visa may be denied.

In order to adjust status, it is generally necessary to be in status at the time of filing. (There are exceptions under Section 245(k) for employment-based cases, when 180 days of violation can be disregarded, and under Section 245(i) for qualifying cases filed prior to April 30, 2001.)

OK, what if i do not receive a paycheck or do not include the earnings in my tax return?
It is still a violation even if a paycheck is not received. If you choose this path, you may have complicated matters even more, since, the failure to pay taxes on money earned is a legal violation. You would then have violated two separate laws.

What about stock/money market(passive) Investments?
Yes, it is allowed to make financial investments as long as the investments are passive in nature.

 

  • This includes investing in the stock market, mutual funds or bonds, where your involvement passive and not the result of working .
  • You can invest in a private enterprise or company, as long as your role is as a passive investor.OK, i may be guilty, now what?
    As with most immigration matters with so many gray areas, your best action is to obtain the advice of an immigration attorney. There may be a solution for you, but timing can be important, since working beyond 180 days could put you in a serious non solvable problem in most employment-based cases.
    Source | This information is based on advice from experienced immigration attorneys who have dealt with similar cases before. Your situation may be unique. If in doubt, always seek the advice of an experienced immigration attorney.
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