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Free Lancer Taxes: Working for foreign country

This is a discussion on Free Lancer Taxes: Working for foreign country within the General Discussions forums, part of the Community Boards category; Hi everybody, I know there is a lot of freelance programmer here and would like to hear everybody experience. I ...

  1. #1
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    Free Lancer Taxes: Working for foreign country

    Hi everybody, I know there is a lot of freelance programmer here and would like to hear everybody experience. I am programming a software for a south america country in ecuador from home in Ohio. This will be my first time programming as my side job while I still have a full-time job.
    Currently, to get paid from them I can charge them two ways.

    1) Either by hourly and get charged by their country 25% foreign tax

    2) Charged it as selling them a software and it is consider a asset to them. Then here I won't be taxed by their foreign country.

    Now the questions I have here is:
    1) If I were to follow step 1 and get taxed by their country. Do I still have to pay tax here? If so, do I allocate according the tax bracket by adding my current salary + side income?

    2) If i were to sell software (email them the program). Will I have to register a sales license with my state? Will I have to charge them sales tax, and pay the US gov. the sales tax?

    Please help this noob here resolve this dilemma freelancers!!!

  2. #2
    Guest Sebastiani's Avatar
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    Quote Originally Posted by AmazingTrans View Post
    Hi everybody, I know there is a lot of freelance programmer here and would like to hear everybody experience. I am programming a software for a south america country in ecuador from home in Ohio. This will be my first time programming as my side job while I still have a full-time job.
    Currently, to get paid from them I can charge them two ways.

    1) Either by hourly and get charged by their country 25% foreign tax

    2) Charged it as selling them a software and it is consider a asset to them. Then here I won't be taxed by their foreign country.

    Now the questions I have here is:
    1) If I were to follow step 1 and get taxed by their country. Do I still have to pay tax here? If so, do I allocate according the tax bracket by adding my current salary + side income?

    2) If i were to sell software (email them the program). Will I have to register a sales license with my state? Will I have to charge them sales tax, and pay the US gov. the sales tax?

    Please help this noob here resolve this dilemma freelancers!!!
    I wouldn't recommend seeking that sort of advice on an online forum. Contact a local lawyer or tax counselor to be sure that you have all your bases covered.
    Salem and Epy like this.



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  3. #3
    Unregistered User Yarin's Avatar
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    Quote Originally Posted by AmazingTrans View Post
    1) If I were to follow step 1 and get taxed by their country. Do I still have to pay tax here?
    That depends on the details of the US-Ecuador tax treaty, whatever they may be.
    Quote Originally Posted by AmazingTrans View Post
    If so, do I allocate according the tax bracket by adding my current salary + side income?
    For personal income tax, yes.

    Quote Originally Posted by AmazingTrans View Post
    2) If i were to sell software (email them the program). Will I have to register a sales license with my state? Will I have to charge them sales tax, and pay the US gov. the sales tax?
    No, US sales tax does not apply to software sold out of country.
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