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Ask L Dietz CPA Your Own Question

L Dietz CPA
L Dietz CPA, Accountant
Category: Tax
Satisfied Customers: 31
Experience:  Tax accountant with 27 years experience.
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As an American citizen, I am about to start consulting for

Customer Question

As an American citizen, I am about to start consulting for a company located in Switzerland. Sometimes, I would need to travel there and conduct meetings but for 90% of the time - I would live and consult out of NYC.

Question: How should the contract be constructed between my employer and I. Will my employer pay taxes? In US or Switzerland?

I need help constructing such contract, can someone help?
Submitted: 2 years ago.
Category: Tax
Expert:  L Dietz CPA replied 2 years ago.

L Dietz :

Hello and welcome to Just Answer. I have 20 plus years experience in all areas of US taxation including multi-state and international issues.

L Dietz :

Are you consulting as an employee for a US company, or will you be consulting directly with the Switzerland company as an individual?

Customer :

Hi, thank you for your time. I would consult with a Switzerland company as an individual

Customer :

kind of like freelancer where I would bill them with a invoice for my service

L Dietz :

Will this company be your only employer, or do you have other consulting clients?

Customer :

This will be the only employer out of Switzerland, but I might have another consulting job in US as well

L Dietz :

Whether you are an employee or an independent contractor (freelancer) is a factual question, so that is why I asked. If your intent is to be an independent contractor and self-employed, it helps to make your case if you have more than one client. Other factors include how much control the employer has over your activity. For a detailed explanation of the 20 factors the IRS considers in determining employee or independent contractor status, you can download Form SS-8 and its instructions from www.irs.gov. The tax court did rule in May 2010 that a US contractor to a Great Britain was an employee, and so disallowed the taxpayer's Schedule C deductions and retirement plan contributions as a result. So you do want to read what you can on this topic.

L Dietz :

You may also find IRS Publications 54, 593 and 901 helpful. They also can be downloaded from http://www.irs.gov/publications/index.html

L Dietz :

You will also want to review the U.S.-Switzerland tax treaty http://www.irs.gov/businesses/international/article/0,,id=169682,00.html

L Dietz :

Okay, that was for background information.

Customer :

Ok I see, thank you for the details. I will certainly read all of the publications and see what I can find. Does my empoyer needs to pay taxes for me as well? I also was hoping to receive a legal letter (out of US)for my employer so they understand the contract. How would I be able to get that. his is my first time using this program

L Dietz :

Assuming the Switzerland company has no U.S. source income, you may well be considered an independent contractor rather than an employee. If the Switzerland company does have U.S. source income, and you will essentially be their US representative, you will probably be considered their employee--depending upon all the facts as mentioned above.

Customer :

ok, i understand - that makes sense. They dont have US source of income.

L Dietz :

Just Answer is for general information only, and this is not a resource for legal services or legal contracts. The background information above will give you some ideas of what to include in the contract, and give you a starting point for consulting with an attorney for drafting the agreement with the Switzerland company, to be sure you include points regarding employment status.

Customer :

ok thank you. I appreciate your help. does your company provides services, such as, drafting the agreement?

L Dietz :

As an independent contractor, you are required to make estimated tax payments to the IRS, using Form 1040-ES (also available fromw www.irs.gov; New York state also has estimated tax payment requirements, and their forms can be downloaded from the New York Dept. of Revenue website. . You may also be required to pay taxes to Switzerland, as you will have Switzerland source income.

L Dietz :

No, I am a CPA, not an attorney, and as a Just Answer expert, I would not be allowed to provide such services directly to you anyway.

L Dietz :

Do you have any further questions at this time?

Customer :

ok i understand, thank you for your help. i appreciate it very much

L Dietz :

You are very welcome.

Expert:  L Dietz CPA replied 2 years ago.
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