Sales tax in the United States is a tax levied by the government on the sale of goods and services within the country. Our collection of state and local sales tax varies depending on the state and local jurisdiction where you are located.
If your address is in the U.S., you also may be impacted by marketplace facilitator sales tax laws.
You'll be charged taxes based on the tax residency you entered in your Upwork account under Settings>Tax Information. If you have not listed a tax residency, your taxes will be assessed based on the address registered to your account under Settings>My Info.
You are required to keep your address and tax residency current, even if you move temporarily. Unexpected tax-related actions may occur if your tax residency setting is not up to date. We recommend you regularly review and update the tax information in your account settings.
Products and services with sales tax
Sales tax is traditionally assessed on goods and services and applied at the point of sale. Sales tax may also be charged on services provided by either Upwork or freelancers, and membership, subscription, and other applicable fees.
The amount of tax we are required to collect can vary based on factors such as your state, county or city of residency, the type of fee at issue, and category of the job posting.
It can also vary depending on the type of service purchased, your freelancer’s location, and your tax status (if you are tax-exempt as a charity, for example).
Also, the factors that affect your tax rate could change between the time when your contract starts and when your contract is complete. This means that the tax we initially estimate on your order may change. When you’re setting up a contract, we display an “Estimated Tax” to be collected when confirming an order. This amount may be updated later when your contract is completed.
We assess sales tax, including marketplace facilitator sales tax, at the time of payment. Once it is charged, you will see it labeled as an exclusive line item on your invoice and transaction.
Need to update your address? You can update your tax residency in your Upwork account under Settings > Tax Information. If you have not listed a tax residency, you will be assessed taxes based on the address registered to your account under Settings > My Info. Unexpected tax activity may occur if your tax residency setting is not up-to-date. We recommend you regularly review and update the tax information in your account settings.
Marketplace facilitator sales tax
Some states classify Upwork as a marketplace facilitator and, as a result, we must collect the marketplace facilitator tax from clients in those states.
A marketplace facilitator is defined as a marketplace that either directly or indirectly contracts with third-party sellers to facilitate the sale of certain tangible property products, digital goods, and services.
This specific tax is assessed on the payments you make to your freelancers.
If we are required to collect this tax under law, you'll see it listed as “Marketplace Facilitator Sales Tax,” on invoices and in your transaction history. We remit all taxes paid to the government entity that requires us to collect it, we do not keep it.
Frequently Asked Questions
Generally, sales tax is imposed by the government on a sale of tangible property products, digital goods, and services purchased in the United States.
The marketplace facilitator sales tax is a type of sales tax, paid by clients. As a client, if your state requires us to collect the marketplace facilitator sales tax, it will only be assessed on the payments you make to your freelancers. Keep in mind, both clients and freelancers may be assessed other sales taxes based on their location and other factors.
Only the client is assessed the marketplace facilitator sales tax.
We do not keep this tax, it is forwarded to the government entity that requires us to collect it.
If we are required to collect it, the marketplace facilitator sales tax is assessed on the amount the client pays to their freelancer. The client is charged this tax, and we forward it to the government entity that requires us to collect it.
When sales tax is imposed, it will appear as a separate line on the invoice or receipt that is generated and in your transaction history. If you live in a state where we are required to calculate a marketplace facilitator sales tax, that tax will be labeled as the marketplace facilitator sales tax in an additional line in your transaction history.
If you are a tax-exempt business, you can submit a sales tax exemption certification to firstname.lastname@example.org and then make purchases without paying sales tax. Alternatively, you may be able to get a credit for sales tax paid to Upwork directly from your state. You should consult a tax advisor or contact the Department of Revenue in your state for further details, as policies are different for each state.
We are assessing a sales tax on certain services and fees on Upwork as required by state laws. As a result, you should not be paying this tax elsewhere. We suggest talking to a tax advisor in your area to review the matter
You may be able to deduct these taxes, depending on your situation. Please check with a tax advisor as we cannot advise about your specific situation and don’t want to provide inaccurate info.
You’ll be able to see the amount of tax charged on your Upwork invoices. Unfortunately, we can’t list the tax amounts for all cities, counties, states, etc,. here, as there are thousands across the country and tax laws change frequently. We suggest talking to a tax advisor in your area if you have questions, or checking with your state’s tax department.
We recommend referring to your state’s, county’s, or municipality’s tax website or a tax consultant if you are unsure if we are required to collect sales tax from you.
We suggest making sure your address is correct in two places:
- In Settings, under “Tax Information”
- In Settings, under My info “Company contacts”
Please note that you must use your real, permanent address.
You can find your total earnings and expenses in your transactions report. Go to Reports Transaction History, and then filter for expenses and for the date range you want. The taxes you paid will be displayed as line items.