Private Clients and Taxes

[SuzieQueue]

For those of you who have private clients you write for, how do you handle taxes on your invoices? Do you break out state and federal taxes on your invoices, or do you roll the taxes you have to collect into the price you offer clients? Thanks.

[Kiernansmom]

I don't charge my clients taxes. I don't think most people do. I guess you could just build those taxes into your prices. I don't really think about it, though. I just set aside a portion of my payments to pay my taxes every quarter if I think I'll owe that year.

[beanandpumpkin]

I don't charge tax on my services at all.

[SuzieQueue]

Thank you for the replies so far; appreciate it.

I should clarify:

I don't mean income tax, i.e. income tax on your freelance writing income. My question is regarding charging sales tax on your services. Do you not charge sales tax because you don't earn enough on an annual basis from your freelance writing or is there another reason it's okay to not charge sales tax for services rendered?

[Jenna P]

It depends on your state. Some states expect us to collect sales tax and bill it separately (Sorry your invoice is higher than your quote). Some don't. You need to check with your state's revenue department.

(I honestly hate having to say "This book is $9.44 or $10 with tax" instead of "This book is $10" - if I charge $10 plus tax I run out of cash...I feel as if I'm being penalized for being honest and not doing my cash sales under the table. But that's another rant).

[beanandpumpkin]

It looks like it depends on your state, but the types of services that freelance writers provide seem to be exempt in most cases: https://blog.freelancersunion.org/20...ers-need-know/

If you sell physical goods and ship them to someone in your same state, then you have to collect (charge the buyer) sales tax and pay that tax to your state. However, if you ship these goods to another state where you do not have a tax nexus (see the explanation of tax nexus below) you do not have to collect sales tax on sales where goods are delivered to an out-of-state address. For professional services, it is generally safe to assume that your sales are tax-exempt unless your state’s regulations rule otherwise, but it is still a good idea to double check and become familiar with the sales tax regulations of the state(s) in which you do business.

[SuzieQueue]

Thank you for the additional info, gang.

To further muddy the waters, would be interesting to find out whether selling articles to international buyers influences the sales taxes you must charge.

Time to have a sit down with a small business accountant.

[Kiernansmom]

Originally Posted by SuzieQueue

Thank you for the replies so far; appreciate it.

I should clarify:

I don't mean income tax, i.e. income tax on your freelance writing income. My question is regarding charging sales tax on your services. Do you not charge sales tax because you don't earn enough on an annual basis from your freelance writing or is there another reason it's okay to not charge sales tax for services rendered?

I earn a full-time income from freelancing so it's not that. I've just never heard of charging sales tax on a service like this, and none of the freelancers I know do. Kind of like when I get my hair cut, the stylists don't add tax. They just tell me the total. So apparently not all services require tax.

[SuzieQueue]

Looks like it depends where you live as to whether you should be charging sales tax on your services, as well as the type of writing services you offer:

https://fitsmallbusiness.com/sales-and-use-tax/ (Government considers freelance writers small business owners?)

https://www.canada.ca/en/revenue-age...e-gst-hst.html

https://www.thebalancesmb.com/how-to...rvices-2948150

https://turbotax.intuit.com/tax-tips...hors/L1v0lGVru


I'm getting more confused the deeper I dig.

[SuzieQueue]

Originally Posted by Kiernansmom

I earn a full-time income from freelancing so it's not that. I've just never heard of charging sales tax on a service like this, and none of the freelancers I know do. Kind of like when I get my hair cut, the stylists don't add tax. They just tell me the total. So apparently not all services require tax.

Is your full-time income from platforms like UpWork or is it from individual private clients? Wondering what would happen if the IRS were to audit your freelance writing business and ask why you weren't charging sales tax on your services. Apparently in Canada, you have to earn over $30,000 from your business before you have to charge taxes.
https://canadabusiness.ca/government...ing-sales-tax/