Self employed being paid from US

Adlibjac

My daughter is planning to set herself up as self employed.

She is doing some work for an American man who is using her expertise and wants her to invoice him for work done every month as he said otherwise she may be liable for double income tax. Is this right?

She has met the man and it is all above board - it is a specific kind of computer skill which she has which he is impressed by and wants her to do some work on programming for him. He will pay well.

She is happy to work on a self employed basis and send an e mailed invoice every month but I am confused.

Are there any potential pitfalls with this arrangement?

I assume she just keeps a record of all income and expenditure and completes a tax return at the end of the year? It should be very straightforward? Are we missing anything?

asajj

What he meant probably is that if she becomes an employee of his company, part of US payroll, then she would face a double tax bill. He is talking from US perspective probably and perhaps had the same issue before. Not sure how double taxation agreement works between the two countries.

If she is self-employed and submitting her tax returns, she should be fine. It is better however to ask someone who is a specialist if you have doubts, rather than here.

itchyfeet123

It's not strictly true that she *has* to do it, but it will create headaches if she doesn't. If she's an employee then there'd need to be income tax withheld from her salary/wages in the US, but presumably she doesn't have a social security number and won't be able to get one. Without the SSN, she won't be able to finish her US tax return each year, and won't be able to benefit from the tax treaty preventing double taxation.

She'll also need to send the company she'll be doing work for a W8-BEN.