Do I report income as an independent contractor for a foreign online company?

by Susan E. S. Howe, CPA | Nov 21, 2018

I am an independent contractor for an online company in another country. I am paid in that country’s currency. Do I have to report that income on my taxes? If so, how would I do that since the company does not do any tax forms at all?

As a U.S. citizen, you are liable for income tax on all income from any source. Assuming you are performing the work from a location within the United States, your income from the online company is treated the same way income from any U.S. payer would be treated. Translate the income to U.S. dollars using either an annual average exchange rate or the exchange rate in place on each payment.

Report the U.S. dollar equivalent on either a Schedule C or as Other Income on line 21 of your tax return. As an independent contractor, your net income is also subject to U.S. FICA and Medicare taxes, so the net income will also go to Schedule SE.

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Answered by: Susan E. S. Howe, CPA, is principal of Howe Advisory in Strafford, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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