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As a US lawful permanent resident, I'm filing for my taxes in the US. If I receive x USD and the source of the money is expecting me to entirely redistribute this x USD to a few other people, which I do, do I have to pay any taxes on this x USD?

Example: If a company or an individual sends me 50kUSD for me to pay freelancers on Upwork, which I do (i.e., I kept 0 USD, and spent 50kUSD on freelancers on Upwork). Do I have to pay any taxes on that?

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    This sets off anti-money-laundering (AML) bells for me. But maybe that's just because I did some AML training recently.
    – Doug Deden
    Nov 23, 2021 at 22:37
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    No taxes, but it smells like a scam. The money they sent you will disappear, and the money you sent on is gone. Net result: you are out of 50k$…
    – Aganju
    Nov 23, 2021 at 22:54
  • @DougDeden Do your AML bells mean high probability to get IRS audit? And can they have other consequences?
    – Franck Dernoncourt
    Nov 27, 2021 at 23:30

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Ignoring that it it might be a scam.

Example: If a company or an individual sends me 50kUSD for me to pay freelancers on Upwork, which I do (i.e., I kept 0 USD, and spent 50kUSD on freelancers on Upwork). Do I have to pay any taxes on that?

You will have to account for it on your tax forms. The company will be sending you a 1099 so that they can claim the expense on their taxes. That means the IRS will be looking for those numbers on your tax forms.

Of course if you pay anybody $600 or more during the year you will have to send them a 1099, so that you can include the expense on your tax forms.

So if you distribute all the money by the end of the year, the result should be zero. But if the year ends with some money not fully distributed, then you could have taxable income.

Of course while doing this you will document all your income and expenses for your corporation.

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  • Thanks! "you can include the expense on your tax forms." -> on which form?
    – Franck Dernoncourt
    Nov 24, 2021 at 0:00
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    @Franck Dernoncourt: Probably Schedule C, if you're filing as a sole proprietor. Possibly others if you operated as an LLC or something. But you would normally be expected to keep part of the money yourself, e.g. you're paid $10K for a job, and sub-contract it to someone for $8K. irs.gov/forms-pubs/about-schedule-c-form-1040
    – jamesqf
    Nov 24, 2021 at 3:02

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