My FULL salary is wired to my bank after I submit a monthly invoice. I do not receive a receipt for my Monthly Salary, i just the deposit in my bank. Do I owe standard Fed/State Taxes? What about Social Security, Medicare, etc..?
Since I don't get a W2 form, what document must I request from my employer to provide to my Tax Consultant to show my total Salary for the time employed? Thanks.
You are not an employee of the German company, you are a contractor. That means you are in business for yourself. You owe "standard" federal and state income taxes, plus self-employment tax, which covers Social Security and Medicare.
The German company is your client, not your employer. The money that they pay you is not salary, it's payments to your business. You do not need any documents from them. (A U.S. company would be required to send you a Form 1099-MISC, but I don't think an overseas company is required to.) You can show your tax consultant the records you keep of how much you receive, and your bank statements showing the deposits.
You should have been making estimated tax payments during the year, since no tax is withheld from the payments you receive. You will have to pay a penalty if you have not been paying estimated tax.
You need to sit down with your tax consultant and discuss how you should be handling your taxes and your record keeping.
Bob Sandler
Yes, of course. You owe all of the same taxes as any US resident.
Well, maybe. The IRS has rules for determining who's a contractor and who's an employee. Roughly speaking, the less discretion you have about when and how you do your work, the more likely it is that you're an employee.
If you're a contractor, you're responsible for paying all of your own state and federal income tax and FICA, with payments made quarterly. If you're an employee, your employer is responsible for half of the FICA and should be deducting and remitting all the other taxes on your behalf. (Even though they're in Germany, this happens all the time, typically with a specialist personnel company as a middleman.)
I agree that you should contact a tax expert pronto and get this sorted out. The penalties for not paying your taxes on time are severe and "I didn't know" is not a persuasive excuse.
While the OP MAY be a contractor, the use of the term "invoice" doesn't guarantee that relationship. What if the term "time card" had been used instead.
I do agree that the OP needs to sit down with a local tax profession. The income is definitely taxable.
I might think this is important if I were arguing Form over Substance.
For sure.
We still don't know if the foreign company withholds money for the payment of German or US federal/state taxes. It most likely does not, but it would be good to find out if it does. Also, is the FULL salary equal to the amount of your monthly invoice, or is it more?
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.