Tuesday, February 26, 2008

Freelance Income from Portugal

Hello June,

My husband is a self-employed journalist. He has income coming from an employer in Portugal we live in the USA. We have a home office that he works in at least 12 hours everyday. I have been writing off the income as self-employed income. There are no taxes taken out on this income from the foreign country.

I call IRS several different times they said two things use a form 1116 or write it off as self-employed income. One person said he was not sure and went to ask someone else. I wanted to hire and accountant this year but our income seem to drop each year.

Therefore, we do not make enough income to afford an accountant or tax officer. I have had an accounting and tax course in the pass but as you know the laws are always changing. My question is how to file this income? Should we get Portugal to take taxes out on this income?

Evone from Orange, NJ


Dear Evone,

I assume you used "employer" incorrectly and that you mean the person or business in Portugal that paid your husband for his freelance services.

Your husband's income from Portugal is treated the same as his freelance income from any other place. It is all his self-employed income.

Do not request that taxes be withheld for Portugal. That's their job! If the payer did withhold Portugal taxes then you would file Form 1116 to get credit for taxes paid to a foreign government.

Best,
June

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2 comments:

randeviji said...

Hello June
Thank you for the answer to my question regarding foreign self-employment tax it was very helpful and makes filing taxes easier since I now understand what to do.
Again, thank you
Regards,
Evone

June Walker said...

Dear Evone,

You are most welcome! It is interesting, or perhaps telling -- I answer many, many questions some here on my blog and some directly via email. So few send a thank you.

Years ago when I went to a function at my son's university I introduced myself to one of the professors, the professor responded: Oh yes, I know your son, he's the boy who sent a thank you note to the scholarship committee.

Small gestures, or the lack of, can have unsuspected impact.

Best,
June