W9 there or pesos here?

[allcraz]

The facts: I have a full-time, en blanco, contract job here. I'm a permanent resident.

I also translate for a guy in the States and he has always paid me in dollars in my US bank account. I have been doing more work than normal recently, and he said he would have to send me a W9 if he keeps paying me in dollars.

My question is - would there be any issues with being a permanent resident here, paying taxes here, yet also paying taxes on a W9 in the States?

He can also pay me in pesos since he is Argentine and has a bank account here. But obviously, I prefer the dollars since I use the job as extra savings.

? Thank you.

 

[allcraz]

Well I just found this website where it looks like a few people were asking similar questions: http://taxes.about.com/b/2008/01/27/whats-form-w-9.htm

Looks as though there is a self-employment tax involved. Up to 15%. Hmm.

Perhaps it would be more beneficial to just accept the pesos...

 

[JWB]

The facts: I have a full-time, en blanco, contract job here. I'm a permanent resident.

I also translate for a guy in the States and he has always paid me in dollars in my US bank account. I have been doing more work than normal recently, and he said he would have to send me a W9 if he keeps paying me in dollars.

My question is - would there be any issues with being a permanent resident here, paying taxes here, yet also paying taxes on a W9 in the States?

He can also pay me in pesos since he is Argentine and has a bank account here. But obviously, I prefer the dollars since I use the job as extra savings.

? Thank you.

Unless you are declaring your income IN Argentina FROM the States, you don't need to pay any taxes here. Notice I said you don't need to...you are supposed to, but chances are good that AFIP won't come knocking on your door so I would W-9 and only pay taxes in the states...THEN, make sure to claim the tax break for living abroad...around 90K

 

[allcraz]

Thanks JWB. But what I read about that (concerning the W9) was:

As a citizen living abroad, you are likely eligible for the foreign earned income exclusion, which allows you to earn up to $91,400 tax-free. The catch is this applies only to the income tax. You are still responsible for paying the Self-Employment Tax, which is 15.3 percent of your net income from these types of self-employment activities.

Sounds as though the 90K exclusion doesn't cover that particular tax.

 

[citygirl]

When you are self employed, you must pay not only the employee taxes but also the employer taxes.

The foreign income exemption only applies to the employee, not employer.

AFAIK, there is no way around that so while you could take an exclusion for the employee portion, no luck on avoiding the employer taxes.

 

[henryb]

The foreign income exemption only applies to the employee, not employer.

I believe self employment taxes are calculated from the net profit from business (without any difference where it was performed) and has nothing to do with foreign income exemption. One-half of self-employment tax is deducted, but it is a different story.

So basically, he writes off the amount he pays to you as business expenses and does not pay taxes on it. You in turn have to pay 15.3% self employment taxes on this amount.

 

[kurtdillard]

There's a good reason to pay the SET: it funds Social Security and Medicare, if you want to be elligible for those programs later in your life you ought to keep paying SET.

 

[allcraz]

That's another good point Kurt, thank you.