Does a U.S.-based independent contractor have to file taxes if he or she received income from a U.K. company?

by Christopher R. Cicalese, CPA, MSTFP | Feb 15, 2019

Does an independent contractor based in the U.S. have to file taxes if he or she received income from a company based in the U.K.?

When working as an independent contractor, your income is sourced to where you are providing the services, regardless of the location or who is paying the taxpayer. The recipient will need to report the income on a U.S. tax return. If you provide the services in multiple states, you will need to allocate the income accordingly. As an individual, it is also important to remember the United States currently taxes citizens and resident aliens based on worldwide income. If you were to leave the country to do the work in the United Kingdom, you would still need to report the income on your U.S. taxes, but would receive a credit for foreign taxes paid in the other country on that same income.

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Answered by: Christopher R. Cicalese, CPA, MSTFP, is a manager at Alloy Silverstein Shapiro Adams Mulford Cicalese Wilson & Co. in Cherry Hill, N.J.

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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