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How do I pay income tax, SS, medicare?
Thread poster: S. D.

S. D.  Identity Verified
United States
Local time: 18:16
English to Japanese
Sep 8, 2010

Hi! I am new to this forum here, so I might need lots of help from other expert translators on board.
This spring I started working as a translator in the US. I am permanent resident here, not US citizen. So far I received two payments, one from India and one from Japan, for my translation work. Now I do not know what to do with tax, social security, medicare, etc. which usually get deducted or withheld from your paycheck through the company you work for.

I just spoke to IRS officer and was told to include the income as business income for line 12 on 1040 and attach schdule C. If it is more than $400 (in my case it is), I also need to pay self emplyment tax on line 56 which I need to figure out using schdule SE. Is it what everyone does during tax filing season? I thought that I do not have to pay self employment tax because of my permanent resident status....

I got to call social security office to figure out how to handle the rest, but I was just wondering if anyone can give me some information or share some thoughts/experience with me. I know this site is not for tax help but I do appreciate any help that you can provide to me. Thank you very much!


 

Nicole Schnell  Identity Verified
United States
Local time: 15:16
English to German
+ ...
Hm. Sep 8, 2010

spockally wrote:
I thought that I do not have to pay self employment tax because of my permanent resident status....


What precisely made you think that you are exempt from paying taxes simply because you don't have the citizenship?

Please contact a tax accountant like everybody else. Calling the authorities won't help, they have other things to do than filling out your tax forms for you.

icon_smile.gif

I looked at your profile page - you are not new to the USA and you are also specializing in finance and accounting. Hm...


 

Katalin Horváth McClure  Identity Verified
United States
Local time: 18:16
Member (2002)
English to Hungarian
+ ...
Hm here too Sep 8, 2010

Hm...

 

S. D.  Identity Verified
United States
Local time: 18:16
English to Japanese
TOPIC STARTER
thank you Sep 8, 2010

thank you for your replies to both of you.
Yes, I know that I should just contact accountant, but I was just wondering if anyone can share some thoughts or experience.
My background is finance and accounting but I am not familiar with tax. That is why I wanted to make sure with other freelancers. BTW, I will start taking tax classes from next week to broaden my epxerience. Maybe I will be able to ask my teacher, too. Thank you for advice.

[Edited at 2010-09-08 18:58 GMT]


 
Post removed: This post was hidden by a moderator or staff member for the following reason: Empty post

Carolyn Denoncourt  Identity Verified
United States
Local time: 18:16
Member (2004)
French to English
+ ...
try TurboTax software Sep 8, 2010

You probably don't need to go to an accountant. If you are a sole-proprietor (have not formed a corporation), TurboTax software will ask you the right questions and prepare your tax forms for you. What you reported that the IRS office told you is essentially correct except that the "income" that you put on the 1040 form is your NET income after expenses are deducted using Schedule C to calculate them. You may be able to deduct something for a home office also. I find TurboTax does a very good job covering all the options.

[Edited at 2010-09-09 18:58 GMT]


 

Sabine Akabayov, PhD
Israel
Local time: 01:16
Member (2011)
English to German
+ ...
Estimated Taxes Sep 8, 2010

You would need to pay quarterly estimated taxes on any self-employment income to avoid penalties. These would include the self-employment taxes (social security and medicare). Turbotax will be useful to prepare your tax return or estimate the amount of taxes you should pay quarterly.

 

Benno Groeneveld  Identity Verified
United States
Local time: 18:16
English to Dutch
+ ...
As a resident alien Sep 8, 2010

in the US you have to pay US taxes on your income from all over the world. If taxes are withheld elsewhere, you probably don't have to pay those taxes again (and vice versa if you pay taxes in the US). But you have to give the information to the US tax people.

Using tax software as a freelance translator is probably enough. Or use a tax accountant the first year and then put those forms next to computer when you do everything yourself using tax softeare in the following years.


 

Sara Senft  Identity Verified
United States
Local time: 18:16
Spanish to English
+ ...
I agree Sep 8, 2010

I agree with Carolyn. I have used TurboTax for years now and it really simplifies things. All the deductions and such are done automatically.

Carolyn Denoncourt wrote:

You probably don't need to go to an accountant. If you are a sole-proprietor (have not formed a corporation), TurboTax software will ask you the right questions and prepare your tax forms for you. What you reported that the IRS office told you is essentially correct except that the "income" that you put on the 1040 form is your NET income after expenses are deducted using Schedule C to calculate them. You may be able to deduct something for a home office also. I find TurboTax does a very good job covering all the options.


[Edited at 2010-09-09 15:09 GMT]


 

S. D.  Identity Verified
United States
Local time: 18:16
English to Japanese
TOPIC STARTER
Thank you again! Sep 8, 2010

Carolyn, Benno, Sara:

Thank you very much for great suggestions. Every year I file income tax by myself instead of bringing it to accountant or tax service place, so using software such as Turbo Tax will help. I think I used it once before. I am sure it will be very useful next year to file for 2010 income tax. I am still not sure how to handle SS and medicare etc. but I was told by SS office to contact IRS again to ask about it. I will do and then work with Turbo Tax. I wanted to have some thoughts from other experienced freelancers since I am new as freelancer before I will be put in prison or deported for not doing the right thing!!!! Thank you so much again for your time and kindness.

[Edited at 2010-09-08 21:27 GMT]


 

LegalTransform  Identity Verified
United States
Local time: 18:16
Member (2002)
Spanish to English
+ ...
Taxes for translators Sep 8, 2010

Take a look at this site. It was written by a professional tax consultant specifically for freelance translators:

http://www.johnmatthews.us/Tax%20Tips%20for%20Translators.htm


 

S. D.  Identity Verified
United States
Local time: 18:16
English to Japanese
TOPIC STARTER
Thank you, Jeff! Sep 8, 2010

Jeff:
I checked the link that you attached briefly. It is amazing that you knew such a site and somebody actually posted such a detailed example! Thank you so much for reading my posting and replying to me with the link. I am very sure that it will be very helpful. Thank you for your time and kindnessicon_smile.gif


 

S. D.  Identity Verified
United States
Local time: 18:16
English to Japanese
TOPIC STARTER
Sibsab, thank you! Sep 8, 2010

Sibsab, thank you so much for reminding me about the estimated tax. Yes, the IRS officer mentioned about that, too. He was suggesting to use some IRS form to figure it out but I did not know Turbo Tax will do also. Thank you for telling me about it. I do not want to pay penalties of course, so I will work on that. Thank you again for your time and suggestionicon_smile.gif

 

LegalTransform  Identity Verified
United States
Local time: 18:16
Member (2002)
Spanish to English
+ ...
Estimated Taxes Sep 8, 2010

Sibsab:

You do not have to pay estimated taxes for the first year you are in business.

spockally wrote:

Sibsab, thank you so much for reminding me about the estimated tax. Yes, the IRS officer mentioned about that, too. He was suggesting to use some IRS form to figure it out but I did not know Turbo Tax will do also. Thank you for telling me about it. I do not want to pay penalties of course, so I will work on that. Thank you again for your time and suggestionicon_smile.gif


[Edited at 2010-09-08 21:55 GMT]


 

Henry Hinds  Identity Verified
United States
Local time: 16:16
English to Spanish
+ ...
1040-ES Sep 8, 2010

For the self-employed it's called Form 1040-ES. The next one is due on Sept. 15, next week. You pay what is called "self-employment tax" that combines income tax, social security and medicare. It is very easy to understand. The hard part is coming up with the money, but you'd better do it.

 
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