For reference I am asking this question from the point of a self-employed (freelance programmer) who lives in the United States but has been contacted by and asked to complete a small project for a foreign exchange student business based out of Mexico. They have no US based operations, entities, or the like.

My Questions

  1. As a sole-proprietor are there any tax rules or obligations I should be aware of?
  2. Is there a different process to reporting the income I gain from this business since they can't 1099 me?

Follow-up Questions

  1. If I become an LLC or maybe one day some type of corporation does this change things? (The answers to my original questions I mean)
  • Why can't they 1099 you? It's not really needed, you just need to state the income you received from them when you do your taxes. I work for a non-US company, while I am based in the US. They can still issue a 1099 (there are plenty of accountancy services that do this pretty cheaply).
    – Peter K.
    Commented May 17, 2017 at 20:55
  • @PeterK. I haven't found anything that says they could or could not. From my initial meeting I'm also going to assume that if there is no US law forcing them to their not going to bother. So this question is really about doing things legal and 100% for myself. Commented May 17, 2017 at 21:05
  • yes, if they have no US presence, then there's no compulsion or real need. And the IRS has to believe you, as that'll be their only source of information. My "employer" decided to bite the bullet, but only after a tax year or two.
    – Peter K.
    Commented May 17, 2017 at 23:24
  • @PeterK. , because a company outside the US has not the slightest idea what a 1099 is, and not the slightest reason to make one. The rest of the world works without 1099s.
    – Aganju
    Commented May 19, 2017 at 15:39
  • @Aganju : If they have any interest in the USA (which they do, they hired someone there), they'd better learn its tax rules tout de suite !
    – Peter K.
    Commented May 19, 2017 at 15:42

1 Answer 1


You can and are supposed to report self-employment income on Schedule C (or C-EZ if eligible, which a programmer likely is) even when the payer isn't required to give you 1099-MISC (or 1099-K for a payment network now). From there, after deducting permitted expenses, it flows to 1040 (for income tax) and Schedule SE (for self-employment tax). See https://www.irs.gov/individuals/self-employed for some basics and lots of useful links.

If this income is large enough your tax on it will be more than $1000, you may need to make quarterly estimated payments (OR if you also have a 'day job' have that employer increase your withholding) to avoid an underpayment penalty. But if this is the first year you have significant self-employment income (or other taxable but unwithheld income like realized capital gains) and your economic/tax situation is otherwise unchanged -- i.e. you have the same (or more) payroll income with the same (or more) withholding -- then there is a 'safe harbor': if your withholding plus estimated payments this year is too low to pay this year's tax but it is enough to pay last year's tax you escape the penalty. (You still need to pay the tax due, of course, so keep the funds available for that.) At the end of the first year when you prepare your return you will see how the numbers work out and can more easily do a good estimate for the following year(s).

A single-member LLC or 'S' corp is usually disregarded for tax purposes, although you can elect otherwise, while a (traditional) 'C' corp is more complicated and AIUI out-of-scope for this Stack; see https://www.irs.gov/businesses/small-businesses-self-employed/business-structures for more.

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