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RGMacEsq
RGMacEsq, Attorney
Category: Business Law
Satisfied Customers: 11696
Experience:  Licensed Texas General Practice Attorney
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My wife and I are self publishing a childrens book and are

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My wife and I are self publishing a children's book and are in the process of doing business with a "freelance" illustrator from Australia (my wife and I live in Minnesota). My question is specifically concerning taxes as well as the FTA the US has with AU: What are taxes going to look like as we "import" a service from AU to the US?? I don't know the details concerning the FTA between AU and USA, so is there anything we need to be concerned about?
Submitted: 1 year ago.
Category: Business Law
Expert:  RGMacEsq replied 1 year ago.

RGMacEsq :

Thank you for using JustAnswer. I am researching your issue and will respond shortly.

RGMacEsq :

Congratulations on this business venture! The situation where you hire a freelancer overseas actually is pretty simple (which is why it's often preferred over other forms of employment. If your freelancer is a US citizen or US resident (regardless of where he or she lives) you would have to send them a 1099 tax form. Otherwise, you don't have any obligations to employment taxes, income taxes, etc...

RGMacEsq :

As far as import / export taxes go, nonphysical "goods" are not subject to import / export fees.

RGMacEsq :

Now if the illustrator published physical copies, or there was a publication of books, etc... it could be subject to import taxes.

RGMacEsq :

But if it's the electronic version of this, you don't have to worry about that.

RGMacEsq :

The contractor would still be subject to income taxes in his/her country. But you don't have any obligation to provide an Australian tax form to this contractor. That's entirely within the contractor's duties and obligations, as Australia would not have any jurisdiction over you.

RGMacEsq :

The one thing to be concerned about would be the copyright status of the illustrations.

RGMacEsq :

I would get the contract in writing, signed by the illustrator, that specifically states that this is a "work for hire"

RGMacEsq :

A work for hire contract is where the illustrations provided are your copyright, not the copyright of the illustrator.

RGMacEsq :

The contract has to specifically say that it's a "work for hire" (those are the magical words) for the copyright to be owned initially by you.

Customer:

Yes, we are in the process of having the contract written up under "work for hire". The illustrator has agreed to give us the copyright.

RGMacEsq :

The contract should also include a provision that there will be an assignment of any copyrights not covered by "work for hire".

RGMacEsq :

In that situation, the illustrator does have the copyright, either because it's not work for hire or it's a situation where that is not contemplated, but the illustrator is under contractual obligations to transfer the copyright to you. The difference is that in "work for hire" you already own it, initially, when it's created.

RGMacEsq :

In a transfer, the illustrator owns it but transfers it.

RGMacEsq :

It's good to have both of these provisions in the contract, just in case the work for hire (for whatever reason) does not actually work.

RGMacEsq :

But in terms of the taxes, fees, etc... you don't have to worry about this unless the freelancer is either (a) working in the US, or (b) working outside the US but is a US citizen or US resident.

RGMacEsq :

Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX luck to you!

Customer:

Thanks for the help!

RGMacEsq :

My pleasure! If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX good luck to you!

Customer:

Oh, one more thing! So there is no special "permit" or license needed to hire someone outside the US?

RGMacEsq :

Not generally. For certain situations (such as contracting for software that could be used in classified situations, etc...) there could be, but not for what you're doing.

Customer:

Sounds good. Take care! Yes, I will make sure to rate this; you did a good job. Very quick!

RGMacEsq :

You're welcome, and again, good luck to you!

RGMacEsq :

Did you have any other questions before you rate this answer?

RGMacEsq, Attorney
Category: Business Law
Satisfied Customers: 11696
Experience: Licensed Texas General Practice Attorney
RGMacEsq and 8 other Business Law Specialists are ready to help you

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