What are the "applicable taxes" when converting a 2-year client off of the Upwork platform?

[rkornblum2]

I have reached out to Upwork asking exactly WHAT is being taxed when converting a 2-year client off of the Upwork platform. The Help Center explains that when doing this conversion, the cost is $1 plus "applicable taxes." The Upwork person helping me just keeps explaining to me how to figure out what my tax rate is (which I do not need any help with but thanks) rather than telling me what to apply that rate to regarding the "applicable taxes" during conversion. It's so frustrating to keep asking; it's almost painful.

Has anyone done this? Anyone know? It's been three really frustrating days trying to get an answer to what I think should be a simple question. Before I convert this project, I would like to know what the cost is.

[kochubei_valeria]

Hi Rebecca,

Our collection of state and local sales tax varies depending on the state and local jurisdiction where our users are located. We have more information about various taxes in this section of the Help Center. 

For example, sales tax is imposed by the government on a sale of tangible property products, digital goods, and services purchased in the United States. Upwork’s fees may be subject to sales tax if the client's state requires us to collect it.

[rkornblum2]

Hi Valeria,

Thank you for responding. I have read all of the available information about taxes. I want to know WHAT Upwork is taxing when I convert my project off of the platform. The goal is to determine what will be owed once I convert before I do it. Common sense as people like to know the cost of things before buying. What I can't figure it is WHAT is Upwork taxing when I convert? What is there to tax?
Thank you,

Rebecca

[kochubei_valeria]

Rebecca,

Taxes may apply to the Conversion Fee that either the client or freelancer pay when they go through the contract conversion process. If the relationship has been maintained on the platform for at least 2 years, that fee is $1. If not, then the Conversion Fee is 13.5% of estimated earnings over a 12-month period in each specific client-freelancer relationship. 

[rkornblum2]

Hi Valeria,

So, to confirm, the "applicable taxes" referenced are only on the $1 contract conversion fee that is charged for moving a 2-year contract off of the Upwork platform?

Thanks,

Rebecca

[kochubei_valeria]

Hi Rebecca, 

That is correct. It's a tax on the conversion fee (which in this case would be $1.)

[rkornblum2]

Hi Valeria,

Is my last statement correct?

Thanks,

Rebecca