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.