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 may be impacted by marketplace facilitator 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.

Sales tax amounts


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).

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 order is finalized and your contract is completed.

Sales tax, including marketplace facilitator sales tax, is applied at the time of purchase. 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.

What is a marketplace facilitator?

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 through the marketplace. As a result, Upwork may be classified as a marketplace facilitator in some states for third-party (freelancer) sales that are facilitated through the Upwork platform.

These marketplace facilitator laws move the obligation to collect and remit sales tax from the third-party seller (freelancer) to the marketplace facilitator. If Upwork is deemed as a marketplace facilitator, Upwork is responsible for calculating, collecting, and remitting tax on certain freelancer transactions made through the Upwork platform in states where the marketplace facilitator or marketplace collection legislation is enacted.

When would Upwork need to collect and remit taxes and who pays?

Upwork collects the marketplace facilitator sales tax in states, counties, or cities where the marketplace facilitator laws apply to Upwork. The client pays the tax as part of their order when applicable.

Where can I see the sales taxes that Upwork remitted on my behalf as a freelancer or agency?

The sales tax Upwork collects and remits to the applicable tax authority is labeled as “Marketplace Facilitator Sales Tax”, and it is either indicated in the transaction history in your account or on an invoice.

 

Frequently Asked Questions

What is sales tax?

Generally, sales tax is imposed by the government on a sale of tangible property products, digital goods, and services purchased in the United States.

As a result, freelancer’s service fees or Upwork’s fees may be subject to sales tax if the state requires us to collect it.

What is a marketplace facilitator’s sales tax on an invoice?

Pursuant to legislation, some marketplace facilitator laws may move the obligation to collect and remit sales tax from a third-party seller to the marketplace facilitator.

In some cases, Upwork may be deemed as a marketplace facilitator. This would require us to calculate, collect, and remit tax on certain transactions made through the Upwork platform in states where the marketplace facilitator legislation is enacted and applies to Upwork.

Where can I see sales tax listed on an invoice?

When sales tax is imposed, it will appear as a separate line on the invoice or receipt that is generated for the payment being taxes. Additionally, the collected tax will appear as an individual line labeled as sales tax in the transaction history in your account. 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.

What if my business or my company’s business is exempt from sales tax?

We do have a process in place for sales tax exemption for eligible businesses. If you are a tax-exempt business, you can submit a sales tax exemption certification and then make purchases without paying sales tax. This could include exemption for charities or buyers who have a reseller exemption, for instance.

Alternatively, you may be able to get a credit for sales tax paid to Upwork directly from your state. However, 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.

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