I live in Argentina and have been providing Web Design / Web Programming and Social Media Marketing services for individuals and companies in the US. I have the following questions.
Recently, a friend of mine (who is a US citizen and lives in Denver) got a client to whom we provided social media marketing services. She earned 60% of what we made and I earned 40%. Every month, I sent her an invoice and she was the one sending her own invoice (On her name) for the total amount to the client.
She now says that the government is claiming taxes for the complete amount she billed the client throughout the period we worked and that she needs to find a way to deduct the money she paid me. The way she used to pay me was via PayPal so she is saying that showing that may be a proof. I never issued invoice through paypal, the invoice I sent was a word document printed in PDF. She just sent me money through paypal.
So, can the US government come to me and ask for tax money?
Can they freeze my PayPal account?
Do I have to pay taxes to the US government?
As you can imagine, I am very concerned about this. I am currently paying taxes in my country (Argentina).
Any info you have is highly appreciated.