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Ask HN: Folks who work remotely for US companies, how do you handle money?

13 points by thro1237 ↗ HN
I know there are many people here who work for US companies from outside the US. Do you guys primarily work as contractors? If you are regular employees, do you get a US W-2? If you are not a US Citizen, I guess you will be treated as a non-resident for tax purposes? Is that favorable to you? Let us discuss these financial aspects here.

11 comments

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err4nt
I am a Canadian Citizen who owns my own business (registered as a Sole Proprietorship) and I do contract work and consulting for US clients sometimes.

I am living outside the US as well so thankfully I don't have US tax, the biggest difference for me is that I don't need to charge US clients sales tax where I live, but for local clients I do need to collect an additional tax and pass that on to the government.

rubayeet
I am in a similar situation (Canadian PR working for a US company as a 'consultant'). How do you calculate CPP (Canadian Pension Plan) tax?
[dead] adsfasdfsad111
Do you need to register as a Sole proprietorship?
itamarst
My impression is that if you are an employee, you are typically hired by local company in country you live. This local company will be structured as a subsidiary of the US corporation. So US taxes are irrelevant.
briandear
That's completely not the case much of the time. Frequently, non-US-citizen remote people are hired as contractors rather than permenant employees. Otherwise, it gets ridiculous -- I hire a Serbian guy and a Ukrainian guy and a French guy -- that would, under your scenario, require 3 different subsidiaries and all of the bureaucratic nonsense that would entail -- opening a French subsidiary, for exsample would be next to hell in terms of trouble -- especially for an American company with no physical presence in the country. No way. Most companies would never do it that way.

The best and easiest way is to simply hire the "employee" as a consultant/contractor -- then that person can handle taxes/etc however they need to. For example, what if you're a Serbian citizen working remotely from Thailand for a US company while getting paid into an EU bank account?

It gets ridiculous in a hurry -- unless you're paying remote overseas employees as independent contractors.

Balero
Can they not be simply hired as a foreign worker? Then the employee would pay taxes wherever they are a resident?

Does the location of the bank account matter?

itamarst
That's why I said "if you are hired as an employee". Choices are contractor or local employee, you're never a US employee.
thro1237
So, there is a no way you could be a regular (non-contractor employee) of a US company if you are living outside the US? How does companies like Github and Stripe, who have a lot of remote employees work?
bckygldstn
When I did this as a contractor I gave my employer a W8-BEN form, which affirms you are a non-resident from a country with a tax treaty with the US. Then I was paid my full rate by my US employer (no tax withheld), and I paid tax at the end of the year in my own country at the self-employed rate.

I believe this will differ greatly based on how your company prefers likes to handle things, how your government likes to tax things, and whether you set yourself up as self-employed, contractor, employee, corp, sole tradership etc. I'd highly recommend seeing a local accountant or similar.

carlsborg
I am not a lawyer. My understanding is: non-citizens non-residents are contractors and the work is carried out outside of the US so it is "non US sourced". If any of the three above conditions are not true, then the US based company must withhold taxes. The contractor must submit the correct WBEN forms to the US co, to declare this.
desaiguddu
We are a registered company in India.

We work as a Freelancer or Contractor with USA based companies.

We do not need to file any US Taxes or do not require a W8-BEN form.

When we work with India based clients we need to charge them GST or Local Taxes.

We receive Client payments in terms of Remittance & need to declare payment is against the Software Services extended to an organisation or individual outside India.

Our taxation is handled by Charter Accountants.