Tax and free-lancers
2 Answers
The answer is no, its not up to you. Its their income, so they pay their own taxes. They are not your employees, they are contractors. As contractors you dont have to pay any SS or Medicare taxes. Your tax burden is ZERO dollars.
The IRS in the states has strict rules about who is a contractor. Make sure you review those before hiring these freelancers.
Last, unless you are hiring Companies to do the work, you are required to have them fill out paperwork so that you can file your 1099 at the end of the year. Otherwise you are not able to write off the expenses of hiring these folks or will face penalties.
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Going back to that google ad question. What if someone just earns $10, do I still have to fill in forms? – Nami 14 years ago
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There is a cutoff amount. Its near $800 but you have to check. I think Obama might have lowered it. But you do want to collect the W forms. They are different based on your publishers country of residency, but very simple. Could easily have them fill out an online form, e-signature, and create pdfs if required. Side note, try to keep countries such as IRAN, SYRIA, LIBYA & BELARUS as countries who cannot participate. Sending money to ALM countries will get you audited instantly. – Frank 14 years ago
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How does google cope with all these forms paying all the people who display their adword ads? – Nami 14 years ago
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Last time i checked google made a healthy margin on the advertising. Its just a cost of doing business. – Frank 14 years ago
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What if i used some sort of credit system, i.e. if they earn $10, it is displayed on the website, and they can transfer it to their bank account or ask for a cheque or ask for a paypal payment when they earn above $100. Then when they want to take the money out, they have to fill in the required forms. Could that work? – Nami 14 years ago
Generally, you leave it to them. In the US - you have to file 1099's on behalf of any contractor you pay more than 600 to. You'll have to see what the local laws are for the UK and EU - I had freelancers in scandinavia and had to pay an equivalent 'payroll tax' on top of their wages.
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What if they get paid $100 at a time and within a month they earn over $1000 adding up all the $100 payments. Do I still have to do the 1099 forms? – Nami 14 years ago
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My CPA said that if the total paid >=600 for the year needs a 1099 – Nicko 14 years ago
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pretty much when you hit that 600 dollar threshold then they are required to be sent a 1099. If you use a service like oDesk you can avoid the 1099. Its free to you, your freelancer pays to use Odesk from their earnings. oDesk also has tax support. – Frank 14 years ago
