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Taxes: I am from and live in Argentina - I provide services to US
should outsource providers pay US taxes?
argentinamaria




msg:4314945
 9:49 pm on May 19, 2011 (gmt 0)

Hello,


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.


Thanks.

 

bw100




msg:4315536
 10:33 pm on May 20, 2011 (gmt 0)

You are presenting multiple issues; let's address the fundamental issues first, and then maybe the other will resolve.

the government is claiming taxes for the complete amount she billed the client throughout the period we worked


This does not sound like the tax return was filed correctly. Regardless of the business status (Sole Proprietor, LLC, Sub-S corp, etc.), the expenses of the business, which would include outsourced work, should have been included in the return. Just guessing, but this sounds like someone issued her a 1099 for the entire amount, but she did not claim the amount she paid you as income, and either failed to file the proper forms, or supporting documentation. The amount of money involved might also have something to do with it.

she needs to find a way to deduct the money she paid me

Every month, I sent her an invoice

That's the way she can deduct the money she paid you as a business expense.

Your friend might want to consult a competent local accountant to review her situation, the recently filed tax return, and help her deal with this issue. This seems to be a fairly basic issue, based on what is stated here, and could probably be resolved with an amended filing. The accountant will be the definitive source of advice re that.

At the same time, that accountant could probably advise on your personal tax issues. I am presuming that would not be imposing, since you are friends. That type of advice is best received from a financial and tax professional.

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