How is the payment to be made? To Upwork and they pay the freelancers or directly to the freelancers? My problem is that the freelancer I'm in touch with is not based in the US and although the work is mine, the payment will be through my employer and there may be hassles if the payment needs to be to a foreigner with no US presence (e.g., taxpayer).
When you pay your freelancer on Upwork, you actually pay Upwork Escrow Inc., which is our licensed escrow subsidiary. Upwork Escrow Inc. acts as a “third-party settlement organization” under Section 6050W. This means we (not you) are required to report the payments we remit to your freelancer to the Internal Revenue Service (IRS) on Form 1099-K, in accordance with IRS regulations. You can learn more about Tax Requirements here and Billing Methods available here.
If you have any further questions feel free to ask!
Thank you, Andrea. I have one more question. As I mentioned earlier, my employer would be making the payment and they like to pay using a PO. This means that a proposal needs to be first submitted and they would then issue a PO for the amount. When the work is done to my satisfaction (as laid out in the proposal), my employer would then release the payment.
So I have two questions:
1. who would be proposal come from? Upwork or the freelancer? If it can come from Upwork, that will make it easy, because the freelancer is a foreigner with no US presence.
2. I suppose this follows from (1) above, but it would be so much easier if my company could pay Upwork and then Upwork would take care of paying the freelancer (without involving my employer). Is this possible?
The freelancer submits proposals to jobs. If you classify your freelancer as an independent contractor, you don’t need to file a Form 1099-NEC or 1099-MISC for your payments to them through Upwork. While all freelancers submit their information for Form W-9 (U.S.-based) or Form W-8BEN (international) to Upwork, Upwork doesn’t send freelancers Form 1099-MISC or 1099-NEC, either. We do file a Form 1099-K when applicable (to freelancers who are U.S. Persons and receive over $20,000 with more than 200 transactions through Upwork)
Thank you. I have one more question. The typical manner in which payments are made by my employer is that first, the contractor (in this case Upwork on behalf of the freelancer) emails me a quote, detailing the work that needs to be done, the hourly rate, the total amount, a time-frame, and the list of deliverables. I then get this quote approved by my employer. They then generate a PO for the amount and send it to Upwork who receives it on behalf of the freelancer. The freelancer then begins the work and delivers it to me. Once I am satisfied, I let my employer know and they release the funds to Upwork, which will receive the money on behalf of the freelancer.
Is this method possible here? It would make the payments so much easier.