Self-employment tax in the USA
Thread poster: evadelmar
evadelmar
evadelmar
Spain
English to Spanish
+ ...
Jan 20, 2015

Hi fellow translators,

I have worked as a freelance translator in Spain for some years, and recently moved to the USA.

I am now working part-time in something that has little to do with Translation.
A person has contacted me requesting a translation, and I have agreed to do it.

I have never translated anything here in the USA, and I have read that I only have to pay the self-employment tax (it seems that it is possible to do it once, yearly) I think I
... See more
Hi fellow translators,

I have worked as a freelance translator in Spain for some years, and recently moved to the USA.

I am now working part-time in something that has little to do with Translation.
A person has contacted me requesting a translation, and I have agreed to do it.

I have never translated anything here in the USA, and I have read that I only have to pay the self-employment tax (it seems that it is possible to do it once, yearly) I think I don't need to become self-employed, or fill in any form in order to bill my customer.

In Spain it was different, as I first needed to go to Hacienda and become self-employed: I had to fill in a form (darme de alta en Hacienda). I also had to charge a tax to my customer (IVA tax), and declare that every three months.

Does anyone know if I have to do anything else, apart form paying the self-employment tax every year? Do I need to communicate an authority that I am going to work freelance?
Anyway, I don't think I am going to have lots of clients, as my main job in this moment is another...

Does my customer have to be billed for anything else, apart from my fee (any tax at all)?

Thanks a lot,
I knew all this kind of things when I worked in Spain, but now it seems I have to start over....

Eva
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Preston Decker
Preston Decker  Identity Verified
United States
Local time: 05:58
Chinese to English
May be able to treat this as a part time job Jan 20, 2015

I think you're confused about the meaning of self-employment tax in the US. In the US, self-employment tax commonly refers to an additional tax levied on persons who are self-employed. We are taxed additionally because we do not have employers paying taxes/social benefits for us, so we are basically taxed once as employers and then again (but for a lesser amount) as employees.

As I understand things, there may be some flexibility as to whether or not you have to pay self-employment
... See more
I think you're confused about the meaning of self-employment tax in the US. In the US, self-employment tax commonly refers to an additional tax levied on persons who are self-employed. We are taxed additionally because we do not have employers paying taxes/social benefits for us, so we are basically taxed once as employers and then again (but for a lesser amount) as employees.

As I understand things, there may be some flexibility as to whether or not you have to pay self-employment tax on part time earnings, but you will certainly have to pay a standard income tax on these. These rules also vary from state to state.

American tax law is a labyrinth that really only helps lawyers and accountants, so my best advice is to check with an accountant about what your real obligations are

The good news is (at least in the states I'm familiar with) you don't have to register as being self-employed, unless required when reporting your annual income to the IRS during tax season.
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Thomas Rebotier
Thomas Rebotier  Identity Verified
Local time: 02:58
English to French
you have to Jan 20, 2015

You should pay self-employment tax whatever the amount is that you make. Above a small threshold ($999 I think), the agencies or direct clients you work for will issue a form 1099 and they communicate this to the IRS. You won't see it until the end-of-year, but you should expect to pay self-employment tax. Even if you are a sole proprietorship, you get to deduct all professional expenses before computing your company gross.
The downside is a lot of paperwor comes april 15. Don't wait for
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You should pay self-employment tax whatever the amount is that you make. Above a small threshold ($999 I think), the agencies or direct clients you work for will issue a form 1099 and they communicate this to the IRS. You won't see it until the end-of-year, but you should expect to pay self-employment tax. Even if you are a sole proprietorship, you get to deduct all professional expenses before computing your company gross.
The downside is a lot of paperwor comes april 15. Don't wait for the last hour to do your tax report--you will be using the complete form 1040 instead of the EZ version, and self-employment adds a couple schedules (other forms) and sub-forms. The upside is that those 15% count towards your retirement.
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Thomas Rebotier
Thomas Rebotier  Identity Verified
Local time: 02:58
English to French
PS: get a business license Jan 20, 2015

I forgot that part of your question. Yes you should get a business license from your city of residence. That involves a small tax/fee.

 
evadelmar
evadelmar
Spain
English to Spanish
+ ...
TOPIC STARTER
Bussines license... I don't see it very clear... Jan 20, 2015

Hi, thanks,
I am a bit confused.
I only foresee a couple of translations a month. I work in the mornings-afternoons for a company. Then I take care of my children. If something comes up out of the blue, I normally accept the project (2-3 pages), but that is all. I don't have a lot of time to translate, as my children are still too young. On the other hand, I don't want to reject the projects.

I think it is a bit exagerated in my case, to be registered as a business, and
... See more
Hi, thanks,
I am a bit confused.
I only foresee a couple of translations a month. I work in the mornings-afternoons for a company. Then I take care of my children. If something comes up out of the blue, I normally accept the project (2-3 pages), but that is all. I don't have a lot of time to translate, as my children are still too young. On the other hand, I don't want to reject the projects.

I think it is a bit exagerated in my case, to be registered as a business, and to ask for a business license, to pay an accountant and fill in so many forms.... In addition, the only expenses I have are my sheets of paper, the ink and the electricity (few hours a month on the computer). So I think I will consult with an accountant, as I don't want to pay too much and not having any profit....

I am supposed to submit my translation in two days, and bill my client, so I would have to find an accountant very soon... by the way, I am based in Boston.

Thanks,
Eva

[Edited at 2015-01-20 16:38 GMT]
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The Misha
The Misha
Local time: 05:58
Russian to English
+ ...
You don't need a business license and you don't need an accountant Jan 20, 2015

Not even in Taxachusetts. Some of the advice offered in this thread is plain out ridiculous. Under your circumstances, you don't need anything, especially in your first year. Don't worry about a thing and just do your thing. If you file your taxes yourself, using TurboTax or something similar, just declare your translation income as miscellaneous income and whatever tax liability you may have (if you do have it) will get deducted from the refund you are most likely due for what you had withheld ... See more
Not even in Taxachusetts. Some of the advice offered in this thread is plain out ridiculous. Under your circumstances, you don't need anything, especially in your first year. Don't worry about a thing and just do your thing. If you file your taxes yourself, using TurboTax or something similar, just declare your translation income as miscellaneous income and whatever tax liability you may have (if you do have it) will get deducted from the refund you are most likely due for what you had withheld at your regular job. If you hire a preparer, tell him about the side business and he'll take care of it. If it all amounts to a few hundred dollars altogether, don't even bother declaring it (shhhhh! I never said that). If it's a few thousand, go see a tax accountant, pay him a hundred bucks and ask for guidance on how to maximize lawful deductions from your business income. He will also tell you all you need to know about filing quarterly estimated taxes next year - that's what you were actually asking about. Alternatively, you can save yourself that hundred bucks by doing a little research on Google about estimated taxes and, possibly, filing a Schedule C with your personal return. That's it. Welcome to the (still) beautiful, good, old US of A.Collapse


 
LilianNekipelov
LilianNekipelov  Identity Verified
United States
Local time: 05:58
Russian to English
+ ...
As far as i know there is no tax on transltion services in the US, so you cannot charge Jan 21, 2015

your customer any tax--maybe in some states some local taxes, but not a Federal tax. As to the self employment tax--yes, you have to pay it regardless of anything unless you earned less than $400 a year.

I agree, consult an accountant or the IRS.

[Edited at 2015-01-21 10:15 GMT]


 


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Self-employment tax in the USA







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