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sasssssha
Member

Income tax for US-citizen

Hi everyone, one thing is not clear for me
I immigrated to USA a few months ago and now I'm in process of getting work documents (work permit, ssn etc.)
And i can't realize purpose of taking 20% from my income by Upwork service. Does service pay my taxes, or I should pay taxes by myself from the remaining 80% of the income?

Thank you for your attention

ACCEPTED SOLUTION
aocumen
Community Manager
Community Manager

Hi Alex, 


The freelancer service fees help raise awareness with the clients (to get them to Upwork), to get them to sign up on the platform, to offer services and functionality so that you and they can negotiate and agree to a contract, and to give you confidence (through payment protection and our support teams) that if something goes wrong, we'll be there to help. These service fees help Upwork to invest more significantly in these services in the long run. 

Please know that once you reach a certain earning treshold, your service fees will decrease to 10%, and eventually to 5%. You may learn more about it here


~ Avery
Upwork

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8 REPLIES 8
jacksmith31
Member

Hi, Alex.

As far as I am concerned, you should pay taxes by yourself from the remaining 80% of the income.

**edited for Community Guidelines**

Thanks, Jack.

tlsanders
Member

Upwork takes 20% of the first $500 with a client and 10% from there on out as its fee. The purpose is so that Upwork can pay its employees, pay for infrastructure, spend a huge amount of money advertising to draw in clients, etc., and also make a profit, because it's a business. It has nothing to do with taxes.

 

However, your Upwork fee is a deductible business expense, so you are only paying taxes on the portion you actually receive.

I have always itemized deductions in the past but may just report the income and take the standard deduction this year. With the standard deduction increasing to $12,000 that is likely greater than itemizing (in my case).


@Christopher B wrote:

I have always itemized deductions in the past but may just report the income and take the standard deduction this year. With the standard deduction increasing to $12,000 that is likely greater than itemizing (in my case).


 This is one of the few places where a self-employed person has an advantage when it comes to taxes--your business expenses come off the top and then you can still take the standard deduction.


@Christopher B wrote:

I have always itemized deductions in the past but may just report the income and take the standard deduction this year. With the standard deduction increasing to $12,000 that is likely greater than itemizing (in my case).


As Tiffany suggests, you are comparing apples and cheeseburgers. 

I did not know that. I guess I better keep my tax guy after all!

aocumen
Community Manager
Community Manager

Hi Alex, 


The freelancer service fees help raise awareness with the clients (to get them to Upwork), to get them to sign up on the platform, to offer services and functionality so that you and they can negotiate and agree to a contract, and to give you confidence (through payment protection and our support teams) that if something goes wrong, we'll be there to help. These service fees help Upwork to invest more significantly in these services in the long run. 

Please know that once you reach a certain earning treshold, your service fees will decrease to 10%, and eventually to 5%. You may learn more about it here


~ Avery
Upwork

Alex,

You have been correctly told that Upwork fees are not taxes, but business expenses, and that you must pay taxes on your net income from Upwork (what the client pays less Upwork fees). There are two correct ways to report your income; people here will advocate one or the other; your best bet is to consult a tax professional for your particular situation (that’s another deductible business expense).

Your post is a little confusing, because you refer both to citizenship and a work permit; those are mutually exclusive. You may also need to consult an immigration specialist; if you in fact need a work permit, you should not be working until you have one.

Best,

Michael

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