Jun 9, 2020 01:46:59 PM Edited Jun 9, 2020 03:17:07 PM by Bojan S
Hi guys.
Look at these screenshots, and correct me if I don’t understand math so much.
How 250 minus 20% can become 190?
I started a $ 500 contract and completed the first milestone ($ 250).
**Edited for community guidelines**
After checking the stage, the customer paid the milestone amount.
**Edited for community guidelines**
And in the contract window the amount paid is also visible.
Total status Pending = $ 190.
**Edited for community guidelines**
But why only $ 190 went into pending status if, according to the rules of upwork, 250 * 0.8 = 200
Solved! Go to Solution.
Jun 9, 2020 02:08:04 PM by Christine A
Russia has VAT, don't they? So 20% of Upwork's $50 commission is another $10. But there should be a separate "VAT for service fee" showing in your transaction history (there is in mine).
Jun 9, 2020 02:08:01 PM Edited Jun 9, 2020 02:10:19 PM by Nichola L
If you don't have a VAT number, then you would pay VAT on the service charge, so if your VAT in Italy Russia is 20%, that would take it to $190.
Russia - sorry!
Jun 9, 2020 02:08:04 PM by Christine A
Russia has VAT, don't they? So 20% of Upwork's $50 commission is another $10. But there should be a separate "VAT for service fee" showing in your transaction history (there is in mine).
Jun 9, 2020 04:33:22 PM by Lucio Ricardo M
But, non US-based freelancer don't have VAT charged by Upwork, isn't it?. Except if they provide a U.S. VAT number when starting in Upwork.
Jun 9, 2020 04:36:01 PM by Lucio Ricardo M
Although the freelancer country has VAT, as most if not all countries have, Upwork cannot retain VAT for the US government if the freelancer is not US based. Unless Upwork had subsiduaries in other countries to then be able to retain local taxes in other countries.
Jun 9, 2020 05:22:43 PM by Christine A
Lucio Ricardo M wrote:Although the freelancer country has VAT, as most if not all countries have, Upwork cannot retain VAT for the US government if the freelancer is not US based. Unless Upwork had subsiduaries in other countries to then be able to retain local taxes in other countries.
They don't pay VAT to the U.S. government, they pay it to the country in which the freelancer is located. (There isn't any VAT in the U.S.)
Jun 9, 2020 07:11:03 PM by Amanda L
Christine A wrote:
Lucio Ricardo M wrote:Although the freelancer country has VAT, as most if not all countries have, Upwork cannot retain VAT for the US government if the freelancer is not US based. Unless Upwork had subsiduaries in other countries to then be able to retain local taxes in other countries.
They don't pay VAT to the U.S. government, they pay it to the country in which the freelancer is located. (There isn't any VAT in the U.S.)
No, we get other taxes and crummy healthcare instead. 🙂
Jun 10, 2020 02:16:24 AM by Anton L
In Russian banks, a new rule has now been introduced, if more than $ 1000 per month is transferred to my card, I will need to provide the bank with some kind of financial justification. If this money was earned, but not transferred by someone, I will have to pay a tax on this.
In this case, I can provide any data from your platform that the VAT is already paid? or for me is it just a double tax for everyone?
Jun 10, 2020 02:32:17 AM by Martina P
Anton L wrote:In Russian banks, a new rule has now been introduced, if more than $ 1000 per month is transferred to my card, I will need to provide the bank with some kind of financial justification. If this money was earned, but not transferred by someone, I will have to pay a tax on this.
In this case, I can provide any data from your platform that the VAT is already paid? or for me is it just a double tax for everyone?
You likely have to pay income tax on these earnings, not VAT? Totally different tax.
Jun 10, 2020 06:17:52 AM by Christine A
Anton L wrote:In Russian banks, a new rule has now been introduced, if more than $ 1000 per month is transferred to my card, I will need to provide the bank with some kind of financial justification. If this money was earned, but not transferred by someone, I will have to pay a tax on this.
In this case, I can provide any data from your platform that the VAT is already paid? or for me is it just a double tax for everyone?
The VAT that Upwork has charged you is a tax on THEIR earnings, not yours (in this case, it's VAT on the $50 that they earned from this project). You still need to pay VAT (if applicable) and any other taxes on your own earnings. In the UK, if a freelancer is VAT registered, we don't have to pay VAT on goods or services that we purchase for our businesses (or we can claim it back), although I'm not sure how this works in other countries. It sounds like you need to talk to an accountant or a tax adviser, since you need more information on running your business properly than we can provide you in the forum.
Jun 10, 2020 07:34:20 AM Edited Jun 10, 2020 07:36:18 AM by Anton L
Christine A wrote:
Anton L wrote:In Russian banks, a new rule has now been introduced, if more than $ 1000 per month ...
The VAT that Upwork has charged you is a tax on THEIR earnings, not yours (in this case, it's VAT on the $50 that they earned from this project). ...
Thank you Christina. You have a clear and understandable answer. But I don’t understand why I pay tax on my income and income upwork?
If you take into account the rules for paying fees(By the way, there is not a word about VAT), it turns out that the freelancer is not from the United States, gets 250 * 0.8 = 200 withdraws money and pays taxes. And Upwork gets 50 * 0.8 = 40. Isn't that logical?
Value Added Tax (VAT). Who add this price?
On the initial screen of the contract and in the hourly payment window, we put down how much we want to receive, and the system considers how much to add and show to the client, and it considers +25%. That is, this is the added value that the system will receive from the client.
Accordingly, this is their added cost, their profit, their tax.
If it was my mandatory expense, the hourly pay window would say
Hourly rate - Total amount the client will see 32.85 / hr
24% Upwork Service Fee -7.85 / hr
You'll receive 25.00 / hr
and only then would the phrase You'll Receive $ 25 / hr be true
At the moment I have to pay 20% of the amount received. This is $ 50, not $ 60.
Jun 10, 2020 08:10:24 AM Edited Jun 10, 2020 08:19:29 AM by Christine A
I already explained why $60 was deducted from your earnings. Upwork charges you a 20% service charge - so they get $50. Then they have to charge an additional 20% of this fee - $10 - which goes to YOUR government, as required by YOUR government. This is a tax on Upwork's earnings - they don't profit from it - and it has nothing to do with the taxes that you owe to your government. Your own income - $190 - has not been taxed by Upwork, so you need to pay taxes on that.
Upwork doesn't control how much tax you pay or how much tax they have to pay to your government. There's nothing that they can do about that. Bottom line, if you're not making enough money after paying taxes and service charges and other expenses, then you need to raise your prices.
But you're right, the initial screen when you bid on a project doesn't show any deduction for VAT. That's because Upwork is an international marketplace, so not all freelancers have to pay VAT, and not all freelancers have to pay the same amount of VAT. Upwork can't set up separate project pages for every different country in the world, so you will just have to take this into account when you're bidding.
You seem very confused, so I would strongly suggest that you hire an accountant to do your bookkeeping and ensure that everything is in order. It's a very serious matter if you're not paying your taxes correctly.
Jun 10, 2020 11:31:41 AM Edited Jun 10, 2020 11:36:57 AM by Martina P
Anton L wrote:
Christine A wrote:
Anton L wrote:In Russian banks, a new rule has now been introduced, if more than $ 1000 per month ...
The VAT that Upwork has charged you is a tax on THEIR earnings, not yours (in this case, it's VAT on the $50 that they earned from this project). ...
Thank you Christina. You have a clear and understandable answer. But I don’t understand why I pay tax on my income and income upwork?
If you take into account the rules for paying fees(By the way, there is not a word about VAT), it turns out that the freelancer is not from the United States, gets 250 * 0.8 = 200 withdraws money and pays taxes. And Upwork gets 50 * 0.8 = 40. Isn't that logical?
Value Added Tax (VAT). Who add this price?
On the initial screen of the contract and in the hourly payment window, we put down how much we want to receive, and the system considers how much to add and show to the client, and it considers +25%. That is, this is the added value that the system will receive from the client.
Accordingly, this is their added cost, their profit, their tax.
If it was my mandatory expense, the hourly pay window would say
Hourly rate - Total amount the client will see 32.85 / hr
24% Upwork Service Fee -7.85 / hr
You'll receive 25.00 / hr
and only then would the phrase You'll Receive $ 25 / hr be true
At the moment I have to pay 20% of the amount received. This is $ 50, not $ 60.
The VAT that upwork charges on their fee is not an income tax. It is a tax on goods and services like any other VAT. If you had a VAT number of your own, you would not need to pay this tax, so maybe something to think about. This is for you a cost factor only if you have no VAT number and are not paying VAT on your other local sales. Upwork can't show you this amount or cost upfront because at this point they don't take into consideration if you have a VAT number or not, this is only calculated at the point of payment of the fee or the purchase of connects.
Upwork as well as yourself has to pay income tax on your net earnings, like any other company or business.
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