My friend and I are thinking about doing some freelance graphic design. We won't really have a physical office or anything, just a webpage and probably use our cell phone. We haven't really thought about the payment methods either, probably check or paypal.
To do something like this, do we have to pay taxes?
2007-05-25 05:05:47 · 11 answers · asked by Neo 1 in Business & Finance ➔ Taxes ➔ United States
Now, what if the company(or whatever it is) is based in other country, let's say HongKong. Do we still have to pay taxes then? It'd be like selling things(service) online like ebay and what not.
2007-05-25 05:12:36 · update #1
Thanks guys.
However, both my friend and I are not US citizens. I'll be working full-time with an H1-B and he will do the same with an OPT. This is just a something we want to do on the side. We really have no problem with paying taxes. It's just that we're not sure if we can do thing the right way, since we're not US citizens. That's why I thought if the company is set in HongKong, it'd be ok.
2007-05-25 05:21:50 · update #2
Of course you have to pay taxes! Whatever gives you the idea that "freelance" income isn't taxable? It's no different from any other self-employment income and all self-employment income in excess of $400 per year is fully taxable in the US.
If you are a US citizen or resident, your world-wide income from all sources is subject to taxation by the US. So it doesn't matter where you plant your website, all income is taxable in the US.
If you are in the US on an H1B visa (or your friend doing OPT on a student visa), that will be outside the scope of your visa and you will risk loss of status and deportation unless the work is completed entirely outside US borders. Tread VERY carefully on this one! There is a lot of hard feelings on H1B visa holders in the US right now, especially in the tech sector. Do NOT do anything that could jeopardize your status! Consult with an attorney who specializes in foreign worker employment law BEFORE you do anything!
2007-05-25 05:16:13 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 1⤋
Everyone who earns an income over the minimum threshold (I believe it is 10,500 for an unmarried person) may be responsible for paying income taxes. It doesn't matter if you are self-employed or employed by a corporation you still must pay taxes. There is also a self-employment tax. You begin paying taxes when you begin earning an income. There is no age limit. Federal taxes are between 10% and 35% of your total income depending on your "tax bracket". The more you make the higher your "tax bracket". If you have deductions as most self-employed people do that will limit your tax exposure. For example of you paint portraits the cost of your supplies, your smocks, the space you use in your home, travel costs to go to art shows, etc. may all be tax deductions. For the best and most reliable information see a tax professional in your immediate area. Best to you! Nothing, in my opinion, beats self-employment.
2016-04-01 07:46:09 · answer #2 · answered by ? 4 · 0⤊ 0⤋
Yes, of course you have to pay taxes. The IRS requires you to keep careful records of your business income and your business expenses. You must file Schedule C, which calculates your profits. You must pay income tax on the profits and also pay self-employment tax, which means both the employee and the employer portion of the FICA.
Furthermore, you have to pay quarterly installments of your estimated taxes during the year prior to filing your actual tax return. If you file your return and owe taxes and have not paid sufficient in estimates during the year, you will owe additional penalties.
Bottom line, be sure you read up on the requirements before you start, and be absolutely sure that you keep good records.
A good rule of thumb for a part-time freelance start-up would be to set aside about one-third of your revenues for taxes. You'll never get to spend it, and if you do you'll be in big trouble.
If you get more successful and turn it into a full-time income, be prepared to set aside half your revenues.
2007-05-25 05:16:01 · answer #3 · answered by Anonymous · 0⤊ 0⤋
If you are working in the USA, you pay taxes.
Are you physically located in the USA? If so, most states have taxes you pay and so does the IRS.
If you are not located in the USA that may be a different story, however, I"m not a CPA/EA/Accountant, so I cannot provide you with information.
Depending on your situation, look at the IRS website and do some research on export/import, too.
I live in WA State. If I do work physically in NY (like speak for money) I'm to pay NY taxes and do a tax return on that in NY and also report it to WA. So this work stuff gets complicated ;)
Maria Marsala
http://www.ElevatingYourBusiness.com
2007-05-25 05:27:48 · answer #4 · answered by Anonymous · 0⤊ 1⤋
Yes you do have to pay taxes on all income regardless of source. You can contact the IRS or check out their website and you will get the information on how to file as self employed.
2007-05-25 05:10:05 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Yes. You'll have to pay taxes. Just like everybody.
If you are able to build a cool website, earn little more money with advertising : http://openadsense.com
Your project is good anyways, and taxes shouldnt keep you of making money.
Good luck !
2007-05-25 05:16:34 · answer #6 · answered by Jimmy John 3 · 0⤊ 0⤋
That is a big fat YES. You have to pay taxes on any income that you make. You can subtract all the costs relating to the business, but if you make profit, you pay taxes.
2007-05-25 05:11:15 · answer #7 · answered by butrcupps 6 · 0⤊ 0⤋
There are only 2 things in life that are definites...
Death and taxes.
2007-05-25 05:13:42 · answer #8 · answered by Anonymous · 0⤊ 0⤋
Yes, of course you'd pay taxes, if you are US residents, even if you aren't citizens.
2007-05-25 14:08:09 · answer #9 · answered by Judy 7 · 0⤊ 0⤋
Yes.
2007-05-25 05:08:38 · answer #10 · answered by Michael B 5 · 0⤊ 0⤋