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I've recently begun work for a company based in Norway. Right now, I'm an "independent contractor" but in a few months I'll be made full time. I invoice them my hours on the 1st of each month, and I am paid via international wire transfer directly to my bank. So, obviously I need to pay taxes on this but I'm entirely unsure about how to go about doing so. My primary concern is that I don't want to stiff the government and be hit with fines or anything, as that can very easily negate the whole of the money that I've earned.

Would it be best to go ahead and find an international tax specialist? Or is this common enough that I can handle it myself?

If it helps, I'm a US citizen, always have been (born here). I do not own a business, or use a "doing business as" name, I invoice using my own name, and am paid to my personal checking account.

  • Since when do employers outside the U.S. issue U.S. tax forms? (1099, W2, etc) Doesn't this person simply include the income under misc. income? It is income that doesn't come with a 1099 misc or a W-2. – fujica Apr 9 '17 at 1:25
  • Restating more clearly, you are a US citizen and also resident in the US. And presumably you're using a US bank, and the account is denominated in USD (not EUR or NOK). Something else you didn't ask, but presumably you invoice and get paid in USD (not NOK)? The USD-NOK exchange rate fluctuates a bit, so for taxes should you use the exchange rate from each pay period, calendar month, quarterly (self-employed), yearly average, or what? – smci Jul 5 '18 at 20:19
  • Also, sounds like they have no corporate presence in the US, and presumably you'll be the only US-based employee. When you say "company based in Norway... in a few months I'll be made full time", are they aware they will also have to comply with US federal tax laws (and maybe your state too), OSHA, SSA. Sounds like you're both looking for a turnkey payroll processor like maybe ADP, esp. that handles foreign companies. – smci Jul 5 '18 at 20:29
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If you are paid by foreigners then it is quite possible they don't file anything with the IRS.

All of this income you are required to report as business income on schedule C. There are opportunities on schedule C to deduct expenses like your health insurance, travel, telephone calls, capital expenses like a new computer, etc... You will be charged both the employees and employers share of social security/medicare, around ~17% or so, and that will be added onto your 1040.

You may still need a local business license to do the work locally, and may require a home business permit in some cities. In some places, cities subscribe to data services based on your IRS tax return.... and will find out a year or two later that someone is running an unlicensed business. This could result in a fine, or perhaps just a nice letter from the city attorneys office that it would be a good time to get the right licenses.

Generally, tax treaties exist to avoid or limit double taxation. For instance, if you travel to Norway to give a report and are paid during this time, the treaty would explain whether that is taxable in Norway. You can usually get a credit for taxes paid to foreign countries against your US taxes, which helps avoid paying double taxes in the USA.

If you were to go live in Norway for more than a year, the first $80,000/year or so is completely wiped off your US income. This does NOT apply if you live in the USA and are paid from Norway.

If you have a bank account overseas with more than $10,000 of value in it at any time during the year, you owe the US Government a FinCEN Form 114 (FBAR). This is pretty important, there are some large fines for not doing it. It could occur if you needed an account to get paid in Norway and then send the money here... If the Norwegian company wires the money to you from their account or sends a check in US$, and you don't have a foreign bank account, then this would not apply.

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    DON'T get paid in Norway. Have them pay you in the US, in US dollars. – littleadv May 22 '13 at 6:30
  • Wow, this looks like what I've been looking for. I assumed I would need to pay their share of the taxes. It's annoying, but considerably less annoying than dealing with an audit and/or fines. - @littleadv they wire the money in USD directly to my US bank account, so luckily that's taken care of – user10093 May 23 '13 at 1:22
  • "If you were to go live in Norway for > 1yr, the first ~$80K/yr is completely wiped off your US income." Well, for US non-resident tax purposes. But then you'll be paying Norwegian taxes, which will be higher. And sales taxes are 25% on top of that. And things cost 50-100% more. You really should consult a cost-of-living comparison, you may be looking at at 20% worsening. – smci Jul 5 '18 at 20:51
  • @smci Plus, it can get really, really cold. And there's trolls. – Paul Jul 6 '18 at 7:56
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I don't see why you would need an "international tax specialist". You need a tax specialist to give you a consultation and training on your situation, but it doesn't seem too complicated to me. You invoice your client and get paid - you're a 1099 contractor. They should issue you a 1099 at the end of the year on everything they paid you. Once you become full-time employee - you become a W2 employee and will get a W2 at the end of the year on the amounts paid as such.

From your perspective there's nothing international here, regular business. You have to pay your own taxes on the 1099 income (including SE taxes), they have to withhold taxes from your W2 income (including FICA). Since they're foreign employers, they might not do that latter part, and you'll have to deal with that on your tax return, any decent EA/CPA will be able to accommodate you with that.

For the employer there's an issue of international taxation. They might have to register as a foreign business in your state, they might be liable for some payroll taxes and State taxes, etc etc. They might not be aware of all that. They might also be liable (or exempt) for Federal taxes, depending on the treaty provisions.

But that's their problem. Your only concern is whether they're going to issue you a proper W2 and do all the withholdings or not when the time comes.

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