US Based Employee Contracting with Foreign Company - Tax Treaty Implications

Thanks for the thorough response! So I don't need to provide them with any special tax forms since they're foreign? And they don't need to send me anything equivalent to a 1099? Also, how exactly do I make those quarterly estimated tax payments? Is there a form or website for that? Sorry for the basic questions, but I've only ever had regular W-2 jobs where taxes were automatically withheld.

You typically don't need to provide them with any special US tax forms since they're foreign and not subject to US reporting requirements. However, they might need documentation for their country's tax purposes, so ask what they need from you. For quarterly estimated taxes, you'll use Form 1040-ES. You can pay online through the IRS Direct Pay system at IRS.gov or through the Electronic Federal Tax Payment System (EFTPS). Payments are generally due April 15, June 15, September 15, and January 15 of the following year. The amount should cover both income tax and self-employment tax based on your projected earnings.

How long did it take to get your personalized plan? I'm about to start contracting with a company in Singapore next month and I'm freaking out about getting everything set up correctly from day one.

Does it actually help with the foreign company side too? Like can it tell you what forms you need to provide to them based on which country they're in? My potential client in Germany keeps asking me for tax forms I've never heard of.

It took less than 24 hours to get my personalized plan. I submitted everything in the evening and had it the next afternoon. They analyzed my situation really quickly and the plan was super detailed. Yes, it actually does help with the foreign company side too. When I input the country my client was based in (UK in my case), it specifically told me what forms were typically required for their compliance and gave me templates. For Germany, they'd likely cover their specific requirements too since they handle tax treaty implications.

Wait, how does this actually work? I've literally spent hours on hold with the IRS and eventually just gave up. Is this legit or just another scam?

Sounds too good to be true. The IRS is notoriously impossible to reach. Why would they let some service jump the queue when millions of people are waiting? I'm calling BS on this.

It works by using an automated system that continually calls the IRS and navigates through their phone tree until it reaches a human agent. When an agent is reached, you get a call connecting you to them. It's not cutting in line exactly - it's just automating the frustrating process of calling repeatedly. I understand the skepticism - I felt the same way. But it's completely legitimate. They don't have special access to the IRS; they just have technology that handles the tedious part of repeatedly calling and navigating the system. The IRS has no idea you're using a service - when you're connected, it's just you and the IRS agent having a normal conversation.

Would you mind explaining a bit more about the state tax issue? I'm in New York working for a UK company and didn't even think about state taxes being different from federal for foreign income.

New York, like California, can be aggressive about taxing worldwide income for residents. While federal tax treaties might reduce or eliminate federal tax on certain foreign income, New York doesn't always honor these same provisions. For example, if you qualify for the Foreign Earned Income Exclusion federally, New York might still require you to pay state tax on that same income. Also, any foreign tax credits you take federally might be calculated differently at the state level or not available at all. I'd recommend checking with a NY tax professional who understands international taxation. Each state has its own rules, and you definitely don't want a surprise tax bill!

I've been using QuickBooks Self-Employed for the past two years for my international clients. It handles multiple currencies pretty well and even lets you set different exchange rates for different dates if needed. The receipt tracking feature is great too - just snap a photo and it categorizes business expenses. The quarterly tax estimate feature has been really helpful since I no longer have to guess how much to send the IRS every quarter. It's not perfect with some of the really specific international stuff, but way better than spreadsheets.

Thanks for the suggestion! Does QuickBooks help with figuring out deductions for home office and other business expenses too? I work from my apartment and I'm never sure what percentage I can safely claim without triggering an audit.

Yes, QuickBooks Self-Employed does help with home office deductions! It has a simplified home office calculator that walks you through the square footage method vs. actual expense method. For the simplified method, you can deduct $5 per square foot up to 300 sq ft (so max $1,500). The key is being consistent and reasonable - if you use 20% of your apartment exclusively for work, then 20% is generally safe. Just make sure you're actually using that space only for business and keep good records. QuickBooks will track your home office percentage and apply it to utilities, rent/mortgage interest, etc. The software also flags common deductions you might miss - like internet bills, phone bills, office supplies, even that ergonomic chair you bought. Much better than trying to remember everything in a spreadsheet!