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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.

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