Independent Contractor from Overseas

[ConradYeung]

I have a few tax questions and read some articles from the IRS but still got confused, hoping anyone in this forum could help me out a bit.

Scenario

I am a Hong Kong permanent resident without US citizenship nor US permanent resident status (no SSN, TIN, or EIN) trying to establish a sole proprietorship located in Hong Kong. This entity will provide service online daily (without any physical or tangible products) to a US corporation in Illinois as an overseas independent contractor. Payment for the service will be made either weekly or bi-weekly with a company check (drawn on a bank in US) mailed to Hong Kong and deposited by me into my personal local bank account in Hong Kong.

Questions

1) Under such a scenario, will I be subject to US taxation? If yes, how do I report my income to both US federal and state government?

2) Will I be subject to the economic nexus legislation of Illinois State? If yes, what would be the threshold to trigger the economic nexus?

[Critter-3]

Short answers are NO  & NO. 

The payer  should get a form W-8BEN signed by You ...  the foreign contractor.  By signing Form W-8BEN, the foreign contractor is certifying that he or she is not a U.S. person. The Form W-8BEN is not filed with the I.R.S. It is kept on file with the U.S. payor in case the U.S. payor is audited. If audited, the Form W-8BEN supports why no Form 1099 was issued and why no tax was withheld.

https://www.kahnlitwin.com/news/articles/Reporting-U.S.-Business-Payments-To-Foreign-Individuals-for...