Am I responsible for filing tax forms for my freelancer?

One of the many advantages of paying your freelancers through Upwork is that you should not be required to file US tax forms (W-2, 1099-MISC, etc.) for those freelancers.

Independent Contractors

If you classify your freelancer as an independent contractor, you don’t need to send or file a Form 1099-MISC for your payments to them through Upwork. All freelancers must submit information for Form W-9 (US-based) or Form W-8BEN (international) to Upwork and we will file a Form 1099-K, if applicable.

Why don’t I have to send a 1099-MISC?

Under the new Internal Revenue Code Section 6050W, clients that use Upwork are no longer required to file Form 1099-MISC for freelancers paid through Upwork. Because you are not paying your freelancer directly, the general principle that you should send a 1099-MISC when paying for services does not apply.

When you pay your freelancer on Upwork, you actually pay Upwork Escrow Inc., which is our licensed escrow subsidiary. Upwork Escrow Inc. acts as a third party settlement organization under Internal Revenue Code Section 6050W. As a third party settlement organization, we are required to report the payments we remit to your freelancer to the Internal Revenue Service (IRS) on Form 1099-K, in accordance with IRS regulations.

Those regulations provide that, because you pay your freelancers through us—instead of paying them directly, we are required to file Forms 1099-K and you do not have to report those payments on Form 1099-MISC. This is true even if your freelancer does not receive enough payments for us to report on them specifically. The fact that we are a third party settlement organization required to make these reports is the determining factor.  

Employees

If you believe that your Upwork freelancer is best classified as an employee, you should use Upwork Payroll. When you use the Upwork Payroll service, our staffing provider will:

  • act as employer of record,
  • handle all of the withholding and payment of taxes, and
  • provide the worker with a Form W-2

Note: You should determine proper classification of all of your U.S.-based freelancers based on IRS guidelines and other federal, state, and local regulations.

More Information

For your records, you may access your annual billing history from your Reports > Transaction History.


This article does not address all the tax issues for freelancers and it cannot and should not be relied upon as legal advice.  Readers are strongly encouraged to seek tax advice based on their particular circumstances from an independent tax advisor.


Have more questions? Submit a request

Comments

Select your issue category and subcategory
Please share as much information as you can, including things like:
Attachment (for example, screenshots):
Add Files
    Popular Topics
    Provide more details:
    Attachment (for example, screenshots):
    Add Files
      • Discuss with Upwork Community

      Your request has been submitted

      Your ticket number is XXXXXXXXX
      We will email you as soon as we can.

      Our records show your Upwork account is not active.

      This might be due to no account activity (earnings, payments, contracts, etc.) or because we had to suspend it. When we suspend an account we send an email explaining the reason and whether or not you can take steps to reverse the suspension. Please review that email for more details.

      For general questions, you can visit our Community or review our Terms of Service.

      We’ll start a video chat with you. Please make sure you use a desktop device with a camera to continue the process. Also, allow Upwork temporary use of your camera and microphone. You may disable this access after the chat session.

      If all of our agents are busy when you attempt to chat, please hold, and one of our agents will be with you shortly.

      We noticed that you're currently using a browser that is not supported by our video verify process.

      We recommend that you switch to Google Chrome or Firefox in order to successfully complete verification. Thank you

      Upwork’s Category Specialists are standing by to help you discover and plan new projects.

      Ask them about roles or projects that you want to learn more about. They can also draft job posts for you.

      Your chat will begin in the bottom right corner of this page.

      Upwork’s Category Specialists are currently offline.

      Send us a message below and we’ll respond via email as soon as we can. You can also come back here during business hours (Mon-Fri, 6am-5pm PT) to chat with us.

      How can we help?
      Thanks for your message! A Category Specialist will respond to your message via email as soon as they can.
      Powered by Zendesk