Working as a freelance contractor from abroad

Topics: abroad contractors contribute-to-ira-from-abroad- freelance freelancing-from-abroad ira overseas roth-ira taxes tin

Hello, I am a Swiss national. I hold an E-2 visa which allows me to have a business here in the US. I have a C-corporation based in California and I am an employee of the corporation. I am considering selling the business and moving back to Switzerland.
I know someone who would be interested in buying my business in case I decide to sell it. If so, I would also be working remotely for the potential buyer from Switzerland, probably as a 1099.
I have been contributing to a Roth IRA for some years now, and I would like to keep contributing to it if possible.
My questions are:
1) Do I need to apply for a TIN to perform contract work from abroad, or can I use my SSN?
2) Would I be taxed in the US or in Switzerland? (in my case, I know since I am not a US citizen, nor do I have a green card, I'm not responsible for paying world wide income on money made in the US). The way I would get paid is in US dollars wired to my US bank account that I would keep open for this purpose (unless it would be more convenient to have it wired directly to my account in Switzerland for tax purposes and/or legal reasons I don't know of)
3) Can I keep contributing to my Roth IRA?

Asked Jul 24, 2010 17:44 PM by: GMP

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1-) You can use your SSN. You may have to file the Form W8BEN that grants a foreigner an exemption from certain U.S. information return reporting and backup withholding regulations. As a foreign contractor performing your services outside of the US, all you need to do is bill the company you are working for. The company will pay your invoice and they will not have to withhold any taxes.

2-) Again, since you are not a US citizen or green card holder, you will not be taxed in the US. You will be taxed in Switzerland. Having a bank account in the US is your choice but it may potentially complicate your taxes. Especially if you earn interest on your money.

Here is a good article for you to read: http://www.irs.gov/businesses/international/article/0,,id=164600,00.html

Question 4: What is U.S. sourced income?
4- Personal Services – If the services are performed in the U.S., the payment for those services is generally U.S. sourced.
The key in this answer is "If the services are performed in the U.S."

The way I read that is if the service is NOT performed in the U.S. it's not U.S. sourced thus not subject to U.S. tax.

3-) Short answer, No. For each year you contribute to a Roth IRA, you (or your spouse, if you file jointly) must have compensation or alimony income. If you don't have compensation or alimony income you can't contribute, even if you have other types of income. Since you will not have any compensation subject to US taxation, you will not be able to contribute to Roth or traditional IRA.

IRS Circular 230 Disclosure

To ensure compliance with requirements imposed by the IRS and applicable state and local tax provisions, please be aware that any federal, state and local tax advice contained in this correspondence is not intended or written to be used, and cannot be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or applicable state or local tax provisions, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Answered Jul 25, 2010 2:21 AM by: Rebu Financial Accounting & Tax Services

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