[Jack198]

(10-31-2014 12:18 PM)Enigma Wrote:  

My situation is I will be living abroad more than 330 days (at least) out of the year.

But, as a freelancer, a decent portion of my income comes from US-based clients.

As far as I can tell, I am NOT eligible for the foreign based exception on those earnings?

But the thing is, most clients are not reporting that income (I'm sure many are claiming the money paid as a business expense, but they haven't had me fill out a W9 and don't have my tax information). Neither is the third party they pay me through (freelancing sites).

Also, I pay the third party fees out of any money I make there. Technically, I pay the client's fees as well based on how I price my work. I believe it's about 8.5% for each side.

I'm guessing that would be deductible? Seems like paying 17% out of every dollar in business expenses would lead to a decent break.

Or would I simply report the income minus the fees?

Obviously I'm not going to file my taxes solely off the advice of people from an internet forum, I'm just trying to get a general idea of how hard I'm going to get fucked and I know I'm not the only person in this situation.

If anyone has any tips or workarounds on how I could reduce my tax burden in the future, that'd be awesome too. I actually don't think it's that hard for Americans to get a bank account in the Phils, though I may be completely wrong.

I worked for a US company while overseas for 330 days and was eligible for the exception. As to what your clients are or are not reporting, all of it counts as income to you as far as the IRS is concerned. Those fees you mention sound like business expenses and should probably be handled as such versus deducting their amount from your gross revenue per transaction.

But I am not a tax expert by a long shot so you should find an accountant experienced with overseas Americans such as yourself. In the process he might recommend setting up an LLC versus continuing the way you are. All good questions for the right expert. Things are going to get worse before they get better in terms of putting the screws to income wherever the IRS sees it. Good luck.