I am aware there are many other questions like this one, but from what I've seen the answer varies significantly based on which countries are involved. I'm a freelance contractor in the US, and I may soon be working with a New Zealand company. What are my tax obligations? I know of those intrinsic to working as an independent contractor in the US, but what changes or is added when the client is in New Zealand?
2
-
2Then I guess you have also seen that every single one of those questions includes a "get an accountant, don't ask this stuff on a forum, too important to rely on shoddy advice" answer?– user3244085Oct 24, 2017 at 17:37
-
Never saw one of those. I saw a whole bunch of actual answers though.– Dessa SimpsonOct 24, 2017 at 17:38
Add a comment
|
1 Answer
US taxes are based upon US INCOME. Where that income originates is irrelevant.
You live and work in the US... you drive on US roads... your children (if you have any) go to US schools... you pay US taxes on all money you earn, even if that income originates from outside the US or even Earth.
In many respects, as an example, it's similar to state taxes. If you live in State A you pay State A taxes on your income, even if you have a client living in State B. You don't pay taxes in State B just because a client happens to live in State B.
The only difference with overseas clients is the rate of exchange for the currency. If you charge $10 US the client sends you $10US, that means they are actually spending roughly $15 NZD. You still earn $10 US dollars though. So you pay taxes on the $10 US dollars you earned.
So, in this case, don't let the client talk you into receiving NZD... you'll make less. Make it clear that all invoices are in US Dollars. If you don't and the client sends you that $10 as NZD, you'll only earn ~$7.
And yeah.. hire an accountant. Or even just find one you can connect with from time to time to bounce stuff off of if needed.
-
Okay, so to clarify New Zealand doesn't charge the employer any taxes on my income? That's what seemed odd. Oct 24, 2017 at 20:24
-
Huh? Employer?? What's that got to do with Freelancing?? Freelancing doesn't have "employers".– ScottOct 24, 2017 at 20:24
-
Employer, client, in freelancing it's the same thing, or so I thought? This company is employing me as a contractor to do XYZ work. Oct 24, 2017 at 20:25
-
No "Employer" is not the same as "client" in the eyes of the law (and taxes [US]). In addition, "employers' generally must offer things like health benefits, vacation days, sick leave, etc. And all your work for an "employer" would be "work-for-hire" and you may not wish to relinquish your intellectual property under that arrangement.– ScottOct 24, 2017 at 20:28
-
Alright. But back to the point, New Zealand wouldn't want to claim any taxes based on the fact that my client is there? Oct 24, 2017 at 20:30