Taxes and freelancers
In the past, I haven't had much need for a content writer. However, my new venture requires using content writers almost exclusively. I am curious of how those of you who hire content writers handle (US) taxes? The following is my understanding of how the tax laws operate:
Suppose that you hire both foreign (non-US individual, with all work being performed outside of the US) and domestic (US citizen, and performing the work in the US) freelancers. In the eyes of the IRS, you are thus paying an independent contractor on a per-job basis.
The foreign and domestic freelancers should be treated separately. For the foreign individual, since this is per article contract work (non-employee), they are not subject to 30% withholding and reporting on form 1042. However, it would be wise to have them fill out form W-8BEN (completing parts I and III on the new form), certifying their non-US status, in the case of an audit. Thus, no withholding, just have them complete W-8BEN.
The domestic freelancer, however, IS subject to withholding. If the total pay to the them is less than $600 for the year, then no reporting to the IRS is needed; $600 or more though, and then 1099-MISC should be completed BY YOU and filed with the IRS (again by you), and a copy provided to the freelancer.
Finally, the payment fees (e.g., paypal fees) are simply a business tax deduction, and are filed by the payer (of the fees) where appropriate (1040 Schedule C, etc.).
Is this how others handle their taxes in regards to freelancers? Thanks in advance.
Suppose that you hire both foreign (non-US individual, with all work being performed outside of the US) and domestic (US citizen, and performing the work in the US) freelancers. In the eyes of the IRS, you are thus paying an independent contractor on a per-job basis.
The foreign and domestic freelancers should be treated separately. For the foreign individual, since this is per article contract work (non-employee), they are not subject to 30% withholding and reporting on form 1042. However, it would be wise to have them fill out form W-8BEN (completing parts I and III on the new form), certifying their non-US status, in the case of an audit. Thus, no withholding, just have them complete W-8BEN.
The domestic freelancer, however, IS subject to withholding. If the total pay to the them is less than $600 for the year, then no reporting to the IRS is needed; $600 or more though, and then 1099-MISC should be completed BY YOU and filed with the IRS (again by you), and a copy provided to the freelancer.
Finally, the payment fees (e.g., paypal fees) are simply a business tax deduction, and are filed by the payer (of the fees) where appropriate (1040 Schedule C, etc.).
Is this how others handle their taxes in regards to freelancers? Thanks in advance.