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  • A question about taxes on giving freelance services

    Hello everyone! I'm a freelance graphic designer from India. I had a question about taxes to be filed by me.

    If I'm giving my service to clients outside of my home country, are there any taxes due on me by that country? For example, if my client is from USA, do I have to pay taxes to US government too?

    Hope I made myself clear. Cheers!

  • #2
    Re: A question about taxes on giving freelance services

    I did a search of the US IRS website and it's very confusing. I suggest you either call the IRS customer service number

    https://www.irs.gov/help/telephone-assistance

    or consult a tax pro in whatever country you provide services.

    Comment


    • #3
      Re: A question about taxes on giving freelance services

      I wish to inform you that your agreement and payment terms with the buyer will guide in the matter. In addition, that country may have a double taxation avoidance treaty with India and its terms will have jurisdiction in this matter. You may contact an attorney and seek guidance in this matter.

      AFF

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      • #4
        Re: A question about taxes on giving freelance services

        The income of the freelancer is categorized under the income head 'Business and Profession'. The first step to file the income tax returns is to calculate your gross income during the year. As most of the times the payment to a freelancer is done online these days, it is rather easy for a self styled professional to calculate his or her gross income.
        The gross income is to be calculated for a given financial year i.e., from 1 st April of a year, to the 31st March of the next year. Loans taken for any purpose do not count as an income.

        Incomes up to Rs. 2.5 lakhs are not taxed upon, income between the values 2.5 lakhs to 5 lakhs are taxed @ 10%. 5 to 10 lakhs @20% and above 10 lakhs @30%.

        If a person is not a U.S. citizen and they live and work outside the U.S., then any income they make from a U.S. company or person for services provided does not qualify as "U.S. Source income" according to the IRS. Therefore you wouldn't need to worry about withholding or providing tax forms for them for U.S. taxes.

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        • #5
          Re: A question about taxes on giving freelance services

          Thank you for the answer!

          Originally posted by Lexus View Post
          If a person is not a U.S. citizen and they live and work outside the U.S., then any income they make from a U.S. company or person for services provided does not qualify as "U.S. Source income" according to the IRS. Therefore you wouldn't need to worry about withholding or providing tax forms for them for U.S. taxes.
          I understood this part this way (please correct me if I'm wrong) - If I'm not a US citizen (& not based in the US), and I'm providing services to US based clients, then I don't have to pay taxes to the US government.

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          • #6
            Re: A question about taxes on giving freelance services

            Originally posted by Lexus View Post
            If a person is not a U.S. citizen and they live and work outside the U.S., then any income they make from a U.S. company or person for services provided does not qualify as "U.S. Source income" according to the IRS.
            Can you please tell me if IRS here means 'Indian Revenue Service' (of India) or 'Internal Revenue Service' (of USA)?

            And thanks a lot for answering the question!

            Comment


            • #7
              Re: A question about taxes on giving freelance services

              Originally posted by ShayaanKhan View Post
              Hello everyone! I'm a freelance graphic designer from India. I had a question about taxes to be filed by me.

              If I'm giving my service to clients outside of my home country, are there any taxes due on me by that country? For example, if my client is from USA, do I have to pay taxes to US government too?

              Hope I made myself clear. Cheers!

              No US taxes in that scenario normally. You just pay to your own country.

              Comment


              • #8
                Re: A question about taxes on giving freelance services

                Originally posted by Lexus View Post
                Incomes up to Rs. 2.5 lakhs are not taxed upon, income between the values 2.5 lakhs to 5 lakhs are taxed @ 10%. 5 to 10 lakhs @20% and above 10 lakhs @30%...

                This has nothing to do with what was asked. He asked about foreign taxes. Another example of you not reading.

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                • #9
                  Re: A question about taxes on giving freelance services

                  Originally posted by Highwayman View Post
                  This has nothing to do with what was asked. He asked about foreign taxes. Another example of you not reading.
                  Well the answer as I read it explained taxes due in the home country AND taxes due (none) from the the USA--to be precise.

                  Comment


                  • #10
                    Re: A question about taxes on giving freelance services

                    Thanks a lot to everyone who answered!

                    I have an additional query. In normal circumstances, when I'm providing freelance services outside my home country, should I check if I have any taxes due to the country where my client is located? Because generally it's hard to know.

                    Just being on the safe side...

                    Thanks again!

                    Comment


                    • #11
                      Re: A question about taxes on giving freelance services

                      Every person who is a resident of India must pay taxes in India on his or her global income. A person who is not an Indian resident must pay taxes in India on any income that is earned from a source in India. According to the US tax code, any person who is a resident of US must pay taxes in the US. A non-resident alien, that is, a person who is not a citizen or resident of the US but has a US source income on which tax has not been fully withheld at source, must file taxes in the US.

                      However, the provisions of the Double Taxation Avoidance Agreement (DTAA) will over ride the provisions of the income tax rules of both countries. The DTAA is a treaty that India has signed with the US and several other countries to ensure that its residents and citizens do not end up paying tax in two countries on the same income. According to DTAA provisions, if a person is resident of one country and earning income from a source in another country, then that income would be taxed only in the country of his or her residence.

                      Comment

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