Self-Employment Taxes When Working Outside the US
Are you a contractor or an employee? This tax self-identity crisis will depend on how your income is reported. Depending on where you are employed, IRS reporting requirements vary.
You are paid by a U.S firm
If payment for services rendered is listed in box 7 of Form 1099-MISC, Miscellaneous Income, the payer is treating you as a self-employed worker, also referred to as an independent contractor.
What does this mean for your filing requirements?
If you are in a self-employed trade or business, you must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship).
You also need to complete Schedule SE (Form 1040), Self-Employment Tax, and pay self-employment tax on your net earnings from self-employment of $400 or more.
- Unlike a traditional employer, there is no withholding of tax from self-employment income by the payor.
- As a self-employed individual, you may need to make estimated tax payments during the year to cover your tax liabilities.
Whole Story at TFX.