Status in USA
Thread poster: fmthac

fmthac
United States
Local time: 11:23
Member (2009)
English to French
Mar 13, 2009

What is the best status in USA to work as a translator?
Am I a self-employed, a contractor or an employee?
Do I need to fill all the forms to pay SS and Heathcare?
I know for my taxes and how it works...
Some helpl will be welcome...and so kind.
Merci d'avance!


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Katalin Horváth McClure  Identity Verified
United States
Local time: 11:23
Member (2002)
English to Hungarian
+ ...
You are the only one who can answer your questions Mar 13, 2009

First of all, I am not a lawyer and not a tax expert.
I am not sure what your situation is: you are the only one that knows it.
Are you asking because you are thinking about starting translation as a profession/business, or are you asking because you have been doing it and it is about time to file your taxes?
For specifics on filing your taxes your best bet is to consult with a tax accountant.

If you are just thinking about starting out:
From your questions it seems to me that you are not familiar with some of the basic things in the US, which is OK if you are a newcomer.
In this case, the very first thing is to make sure you are legally allowed to work in the US.
This depends on your immigration status, the type of visa you have.
There are certain immigration statuses that forbid working in the US.

As to whether you are an employee - well, are you employed by a company, where you are on their payroll? If yes, you get regular salary, and they give you a document called W2 for tax purposes. They probably pay part of your SS for you, and they may offer health care, retirement and other benefits. If they do not offer health care, you need to buy your own health insurance, if you want to be covered. (Unless your spouse has a job where they offer family health care coverage, including you.)

If you are not employed by a company, but work as a freelancer, then you definitely need to make sure you have proper health care coverage - either through your spouse, buy your own, or in some states, if you are below a minimum income level, you may qualify for state-sponsored health care. If you are not employed by a company, you need to pay your entire SS contribution, as well as any retirement savings, if you want to have that.
When you freelance (self-employed, sole proprietor), you get 1099 forms from your clients: the form lists the amount of money they paid you during the tax year and this is what they report to the IRS (there is a minimum level, and below that they are not required to issue a 1099).

You can also establish a company (there are many forms, you need to get legal/tax advice if you want to know your options on that) and work through that.

I am sorry for the long reply but your posting was kind if cryptic, so I had to list various options. Again, you are the only one familiar with your own legal situation, and since you have to file taxes if you are in the US, regardless of whether you are an employee or self-employed or a company, the short answer to the "do I have to fill all the forms" is YES. For the details, please get professional legal/tax advice.

[Módosítva: 2009-03-13 14:06 GMT]


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sarandor  Identity Verified
United States
Local time: 11:23
English to Russian
+ ...
Get a reference book Mar 13, 2009

I would suggest to buy (or borrow from your local library) some books on the subject. I recommend Steven Fishman's "Working for Yourself. Laws and Taxes for Independent Contractors, Freelancers & Consultants". I read it from cover to cover when I decided to plunge into freelancing.

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fmthac
United States
Local time: 11:23
Member (2009)
English to French
TOPIC STARTER
Thank you but... Mar 13, 2009

I knew almost everything about W2, 1099, health care and SS but my question was about the best status and not the legal side of our job.
If you take a look on the IRS website, they explain the difference between employee and the other status of self employment, contractor, self employment and company.
It seems we are employee because we do not choose the job we received even we choosed to apply for this job, we do not control the flow of work and we do not choose how to do it, software and CAT tools needed.
In this case we do not have to pay anything about SS and we have to take care of ourself with the health insurance. For the taxes, we need absolutly to declare and pay...
Yes I just get started as a freelance translator but I am here for 5 years and my visa allows me to work for myself or for a company.
Did you hear anything about that?
Thanks again for you prompt answer.
Sincerely


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Kevin Fulton  Identity Verified
United States
Local time: 11:23
German to English
Receiving a salary? Mar 13, 2009

You really haven't made it clear how you're earning a living. In very broad strokes, without going into details of labor law in the US, an employee has a fixed relationship with an employer who is required to withhold tax for Social Security, Medicare, federal income tax and any applicable local and state taxes. If the entity paying you does not make these deductions, you are considered a contractor, and under most tax provisions, you are self-employed. It doesn't matter whether the contracting entity specifies your work load, the tools required, deadlines or even the venue for performing your services (lots of contractors, such as programmers, tech writers, etc. work at the premises of their client). Under most circumstances, an employer will report your income to the government and send you a W-2 statement. Freelancers (contractors) receive a 1099.

Look at the checks you are receiving. Are there any statutory deductions?

Since you seem unclear about your status, it's probably safe to assume that you're self-employed.


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Terry Richards
France
Local time: 17:23
French to English
+ ...
Get an accountant Mar 14, 2009

Really, get a tax accountant. They don't cost that much and will often save you more than their fee. Often, the initial consultation is free and they will show you how they want your books etc. set up and will advise you on how to protect your status. They will also go with you if you are ever audited by the IRS.

Having said that, the general guidline is that you want to be independant and the government wants you to be a contractor or, even more so, an employee. As an independant, you can deduct a lot more expenses and thus pay less taxes and Social Security.

There are various tests to determine your independant status and, as a translator, you should find it fairly easy to meet them. The main ones are:

- Multiple customers.
- You perform most of the work at your own office (home office is OK if you pass the other tests).
- You provide the tools.
- You have (at least some) control over which tools you use.

As you can see, some of these tests are a bit vague and they may have changed since I was last working in the USA (seven years ago). That is why you need an accountant.

Honestly, I can't stress this enough. You can manage without a lawyer but a good tax accountant (a real one, not one of the national chains who are just about useless) is essential. They can save you a lot of money and keep you out of a lot of trouble.

Terry.


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James McVay  Identity Verified
United States
Local time: 11:23
Russian to English
+ ...
More advice Mar 14, 2009

fmthac wrote:

If you take a look on the IRS website, they explain the difference between employee and the other status of self employment, contractor, self employment and company.
It seems we are employee because we do not choose the job we received even we choosed to apply for this job, we do not control the flow of work and we do not choose how to do it, software and CAT tools needed.


Terry's advice to consult a tax accountant right on the mark. The IRS guidelines are difficult to understand and apply for the non-specialist.

But briefly -- as a freelancer, you are self-employed, according to the IRS definition. Any company you work for as a freelance translator will consider you a contractor. US companies will send you a 1099 in January or February for work you did for them the previous year (if they pay you over the minimum). They won't send you a W-2, and they won't pay Social Security Tax, Medicare, or state and federal income tax withholding for you. As a self-employed individual or sole proprietor of a company (assuming you incorporate), you will need to pay self-employment tax. Also, you might need to pay estimated taxes quarterly.

Another consideration -- the state and city you live in might have taxes and license fees you will need to pay.

Find yourself an accountant and follow his/her advice.


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Nicole Schnell  Identity Verified
United States
Local time: 08:23
English to German
+ ...
Well, have you registered your business? Mar 14, 2009

fmthac wrote:

What is the best status in USA to work as a translator?
Am I a self-employed, a contractor or an employee?



Just interested.


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