I started doing freelance translations for foreign clients a few months ago and received the payments directly into my account. I have no idea how I'm supposed to declare this to the IRS this year. Do I need to ask for some kind of documentation from my clients or how exactly does this work?
I don't work with translations but since I'm always making deliveries I see a lot of people in this situation and it's really annoying. The important thing is that you do have to declare it, because that counts as your income, but it doesn't need to be complicated - basically keep the bank statements showing the payments and then put it all in your tax return. If they're clients abroad, they might not give you documentation, but you have proof of the payments, that's what matters. The tip I always hear is to talk to an accountant or even call the Tax Authority because depending on the amount and other things like whether you register as self-employed, there can be differences, but in most cases it's just registering it in your return and done.
Oh man, international freelancing is really complicated. So yeah, you do need to declare all that stuff to the IRS, and usually you ask the client for a W-9 form (if they're in the US) or equivalent documentation depending on where they're from, but honestly the best move is to talk to an accountant who deals with this stuff because every country has its own rules and you might end up needing an EIN or some other paperwork that I honestly wouldn't know how to explain properly. I did some freelance design gigs for foreigners last year and it was a mess, so it's totally worth getting professional help so you don't get screwed with taxes later.
I'm not an accountant but from my experience as an electrician when I do some freelance work here and there, basically you have to declare everything even if it's freelance. If your clients are foreign, ask them for an invoice or proof of payment - like a transfer reference, amount and date - because the IRS wants to know where the money is coming from. Best thing is to really consult an accountant or go to Social Security because this changes depending on whether you earn a lot or a little and if you need to register as self-employed; with the self-employment stuff I'm always uncertain, so it's better to be sure than to mess up, you know.
So basically you do need to declare it, but it depends a bit on where your clients are from. If they're from the US, they're gonna want a W-9 or a TIN (tax identification number) from you so they can pay you properly. Now, if they're from other countries, things get a little looser, but you still need to declare your earnings to the IRS anyway.
What you do is keep all the documentation you have - bank statements, emails with the agreed amount, invoices if you issue them, basically any proof that you received that money. With the IRS you're gonna declare it as self-employment income, and you'll probably need to fill out a Schedule C (if you're in the US) or the equivalent, depending on how you're set up. The truth is the IRS wants to see everything that comes in, so the more organized documentation you have, the better it is for you.
One thing a lot of people don't do but should is set aside money already to pay taxes, because if you're getting a lot of freelance income, by the end of the year you could owe a considerable amount. Some people create a structured business to make it clearer, but being honest, if it's just been a few months still, you can try to sort everything out when you file. I recommend talking to an accountant who understands international freelancers, because they know exactly how to make this less complicated and not leave room for problems later.
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