Income Tax Withholding for 1099-K Reporting
In compliance with IRS’ 1099-K reporting requirement, we have implemented a new policy (supported by IRS 2022 General Instructions) wherein freelancers in the US who have missing or incorrect tax details will be subjected to a 24% income tax.
The 24% tax applies to payments received in any form like Milestone Payment, contest prize, or tips; from your gross income. Tax collection will take place as soon as you receive payment.
To prevent deductions, make sure you have a valid TIN with the correct individual/entity name in your account's tax details. Follow the steps below to set up your TIN.
1. Click your profile picture thumbnail from the main menu bar, and choose Settings.
2. Click Payment & Financials.
3. Go to the Tax Information section.
4. Choose your Tax Identification Type from the dropdown.
5. Provide your EIN/SSN/ITIN and the exact individual/entity name linked to it.
6. Click Update Tax Information to save changes.
Note that once added, your TIN cannot be removed. Should you require changes to your tax details, please contact Support. Also, 1099-K certificates generated for you will be available in the Tax Statements tab once available.
Policy regarding return of taxes withheld
Tax withheld from all your transactions in the financial year will be automatically returned to your Freelancer account when any of these conditions are met:
● You have submitted a valid TIN in the same financial year where your income was withheld.
● You did not exceed or meet the gross earning of $600 by the end of the financial year.
Funds are initially withheld in the platform and will only be remitted to the government if the conditions above are not met. Should you qualify for a refund, refund will be made to your Freelancer account and will not come from the IRS in a form of tax return.
