I work as a freelance artist in California. This year, I started working as a freelancer/contracted artist for a studio that is based in Canada. They pay me monthly and, in total, have paid me over $600. I know that in the US, freelancers need to get 1099 forms from companies that pay them over $600. I have a few questions about how to report this income.
1. What form do I use to report freelance income obtained from a company outside of the US?
2. Does the studio still need to send me a 1099 form?
3. Do I need to send the studio any tax forms? If so, which ones?
4. If the studio doesn't send me a 1099 form, what do I do?
I asked the studio, and they said they don't think they can/need to send me forms but said I should check with an accountant and let them know what the accountant says. Thanks.
1. You as a US citizen/Resident report this foreign income as if it is earned in the USA ( self-employment / consultant/sole proprietor ) on Schedule - C.
2. The gross income(s) and the associated expenses ( for this stream and any other self-employment incomes) are all shown on Schedule-C. All you have to do is to tell the TurboTax that you have self-employment income or business income -- it will walk you through the rest.
3.Your contractor/"employer", needs to provide you a statement showing the total amount of remuneration paid to you. They can use an official statement or tax form used in the local country -- you need this for your back-up ( if the IRS questions the income ).
4. If ( not likely in this case ) the foreign govt. charges you any taxes on this income, then that amount may be eligible for foreign tax credit / deduction.
If you need more on this , please feel welcome to ask ( in comments )
Thank you so much for the thorough response! Sorry for the late answer. Didn't log into my account over the holidays...
This clears up a lot, although I do have one last question about number 3: do I just need a "statement" from them that shows how much they paid me? Or does it NEED to be the Canadian equivalent of the 1099? When I asked the company, they said they typically do not send any forms to their foreign contractors. In the end, is having a from from them an absolute REQUIREMENT? Or is it just better to have, but not required by law?
@birdatiel31 , it is not essential that you have a tax form from the payor -- all you need is something from the payor that shows how much they paid you and for what. For example in the USA , a contractor/consultant may bill for services and get paid -- the invoice and the corresponding payment ( check or direct money transfer ) is sufficient to withstand an IRS audit ( if ). So whatever official or semi-official document ( showing the payor and payee., the date and amount ) that you can get to back-up your claim of the amount earned is good enough. Note that you are getting this for the "if come, may be " case -- generally IRS does not challenge income statements but there is always the odd case.