I have been contracted for several creative projects by a German company. I understand I will invoice them for my work but how do I proceed for US taxes? How much should I expect to pay? Should i open a small business account? What's the best way for me to proceed?
Provided that you work in the US, your taxes will be handled like any other self-employed taxpayer. Consult a CPA, tax attorney, or any tax professional for assistance. You are not required to have a separate bank account, although it is a good idea, unless you incorporate the business. The information presented herein is for general purposes only. It is not intended to, and may not be construed as legal, tax or accounting advice. For specific advice, please consult a tax attorney in person. Good luck. Zaher Fallahi, Tax Attorney, CPA (California).
A US person (e.g. citizen, resident alien) is taxed on world wide income. This income from the German company will be taxed the same whether it comes from Sacramento or Salzburg. If it is salary you will report it as such, if you are an independent contractor, you will report the income on your schedule C attached to your 1040. See the HRBlock website for checklists and tips for independent contractors. In fact, stop into one of the year round offices and chat with a tax professional. It is free.
This response is a general one, and does not constitute legal advice. There is no attorney client relationship absent a written agreement.
You should talk to a business or tax attorney or a CPA regarding what is the best structure for your individual situation. For example, some small businesses would benefit more as an LLC or an S-corporation. For some do not have to be anything other than a sole proprietorship. Regarding your question, your taxes will be taxed at normal rates depending on whether you are an independent contractor or an employee.
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