Independent Contractor Status Internet Start-Up Taxpayer living Abroad Foreign-owned Patents[an error occurred while processing this directive][an error occurred while processing this directive] [an error occurred while processing this directive] I work as an independent contractor and was sent home after refusing a job request I did not have time to complete. Does this make me an employee or an independent contractor? [an error occurred while processing this directive] The issue of your status is not determined by this one incident alone, however, if you were working on the premises of the company and did work similar to others who are considered employees, then you are probably an employee. Use form W-8 (found at www.irs.gov) to determine your status. [an error occurred while processing this directive] Tax Prophet's Tax Class on Independent Contractors [an error occurred while processing this directive][an error occurred while processing this directive][an error occurred while processing this directive] [an error occurred while processing this directive] I am in the process of launching my online service and need advice on how and where to set-up my new company, either as a Corporation or an LLC in either California or Delaware. [an error occurred while processing this directive] The choice of entity and its location depends on a variety of factors. Because of California's gross receipts tax on LLCs, a start-up with high gross receipts relative to net income should not be a California LLC. A Delaware corporation is probably the best entity if one is seriously considering going public, but in the short run, it can be tax disadvantageous, especially if the company is subject to California taxes because it is based in California. A Delaware LLC is also a good choice, but you'll have to convert to a corporation if future investors or venture capitalists require stock instead of membership interests in an LLC. [an error occurred while processing this directive] Tax Prophet's Tax Class on Internet Taxation [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] I am retired and plan to move to Switzerland. I have retirement income of $2000 a month, plus income from rental property in California that I will spend in Switzerland. Where will I pay taxes? [an error occurred while processing this directive] As a U.S. citizen, you are taxed on your world-wide income, regardless of where you live, so you complete your tax returns (Federal and state) accordingly. If you are a non-California resident, then you file the 540NR to report your rental income and deductions. If you meet the foreign residency test, then certain income earned in the foreign country may be exempt from U.S. taxes (you must make a special election for this treatment on your Form 1040). If you are also subject to Swiss taxes, generally there is a foreign tax credit for taxes paid to a foreign country (in this case, U.S. taxes paid should provide for a tax credit against your Swiss tax obligation, if any). [an error occurred while processing this directive] Tax Prophet's Section on Foreign Taxpayers [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] A foreign corporation (BVI) with non-resident alien shareholders owns an information technology patent. The corporation does business with American financial institutions and receives royalties for the use of the patent. Does the 30% withholding tax apply? [an error occurred while processing this directive] It depends on sourcing issues and how the contract and agreements are drafted. If the patent is truly foreign source, there should not be withholding on the royalty payments. If the company is considered engaged in a trade or business in the U.S., then U.S. tax laws apply. [an error occurred while processing this directive] Tax Prophet's Tax Class on Foreign Taxpayers [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive]