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Freelancing and taxes in USA
Thread poster: Joanna Wachowiak-Finlaison

Joanna Wachowiak-Finlaison
Malaysia
Local time: 17:02
English to Polish
+ ...
Jun 6, 2008

I'm a complete rookie when it comes to working as a freelancer in the US. I need to cut some invoices - some for companies within US and one for a company in Europe. Now, my question is - do I need to add a tax? At least for the US invoices? If so, how much?
Any help will be appreciated


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Henry Hinds  Identity Verified
United States
Local time: 03:02
English to Spanish
+ ...
No tax Jun 6, 2008

No tax is added, there are no formalities at all for the invoice itself except that the company being invoiced can ask you for your social security number and they do not have to pay until you supply it.

You do of course have a social security number, right?


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Joanna Wachowiak-Finlaison
Malaysia
Local time: 17:02
English to Polish
+ ...
TOPIC STARTER
Easy then Jun 6, 2008

Yup, I 'm happily socially secured

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Luisa Ramos, CT  Identity Verified
United States
Local time: 05:02
Member (2004)
English to Spanish
Gross up for taxes Jun 6, 2008

Although you do not add tax to the invoice, make sure you take your tax responsibility into consideration when establishing your rates. As a freelancer or independent contractor, you must file your tax return at the end of the year, and either get a reimbursement based on your losses or pay your share of taxes if your business was profitable.

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Daina Jauntirans  Identity Verified
Local time: 04:02
German to English
+ ...
Sole proprietor = quarterly Jun 6, 2008

In addition to what Luisa said, if you are a sole proprietor, you should be paying your taxes quarterly.

See http://www.allbusiness.com/business-planning/business-structures-sole-proprietorships/1028-1.html


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Henry Hinds  Identity Verified
United States
Local time: 03:02
English to Spanish
+ ...
Taxes Jun 6, 2008

So if you have a social security number, then you're set. Now, some clients may not even request it, many are informal about that. However, bear in mind that there is no tax withholding at the source, which means that you may have to pay it yourself four times per year, including what it termed "Self-Employment Tax"; that is if you have no other withholding from another income source that would cover it.

In fact, as I write, I am realizing that mine will come due in a bit over a week!

The dates are the 15th (or later if on a weekend, holiday) of January, April, June and September. Note that this is NOT quarterly.

What you pay each time is an estimated amount that should cover both your Income Tax liability and liability for "Self-Employment Tax", it is all paid together.

Now, what is this "Self-Employment Tax"? It is no more than your Social Security payment. Normally an employer pays half and the other half is withheld from your salary. But since you are self-employed, you pay ALL OF IT, it adds up to 15.3% of your total earnings. Your income tax will depend on your total situation at the end of the year; quite variable.

So don't take my advice on it, I'm no expert, I have just given you enough information to start studying up on it. It's really not all that hard to understand; just remember, all they want is the money!


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Joanna Wachowiak-Finlaison
Malaysia
Local time: 17:02
English to Polish
+ ...
TOPIC STARTER
Thank y'all Jun 11, 2008

I just got back from the taxes attorney that handles our "normal" taxes. According to him, I have nothing to worry about this year, I will start with the quarterly taxes next year. So I just need to keep all my expenses (here comes a new laptop:). Easy.
Thank you all for your help.


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LegalTransform  Identity Verified
United States
Local time: 05:02
Member (2002)
Spanish to English
+ ...
See this thread Jun 11, 2008

http://www.proz.com/forum/money_matters/101954-great_income_tax_tips_for_us_translators.html

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Joanna Wachowiak-Finlaison
Malaysia
Local time: 17:02
English to Polish
+ ...
TOPIC STARTER
Brilliant Jun 11, 2008

More food for thought

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