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!!!