What is freelance work in the US?
In the United States, someone who is self-employed is called a self employed ou independent contractorUnlike a formally employed worker (W-2 employee), a self-employed individual does not have taxes automatically withheld at source and needs to manage their own tax situation.
There are three main ways to work as a freelancer in the US:
Sole Proprietor (Individual Entrepreneur): The simplest way, without needing to form a company. You operate under your own name and tax identification number (SSN or ITIN).
LLC (Limited Liability Company): A legal structure that protects personal assets and can offer tax advantages, especially for those who earn over US$40 per year.
S-Corp: Recommended for self-employed individuals with high revenue, as it can significantly reduce the self-employment tax burden.
Tax invoices in the USA: How do they work?
One of the main questions for those starting to work as freelancers in the US is: How do I issue invoices to my clients?
The good news is that the American system is simpler than the Brazilian one in this respect. In the US, there is no concept of an "electronic invoice" issued by the government—instead, the self-employed individual issues one. invoice (invoice) directly to the customer.
What is an invoice?
An invoice is a billing document issued by a service provider to a client. It serves as proof of service rendered, a basis for payment, and an accounting record. Unlike in Brazil, there is no government-issued system—you create and send it yourself.
What should be included on an American invoice?
- Full name or company name: service provider identification
- Address and contact information: professional email and phone number
- Customer data: Name, company, and address of the service recipient.
- Invoice number: numerical sequence for control (e.g., INV-001)
- Issue date and due date: usually 15 to 30 days after issuance
- Description of services provided: clear breakdown of what was delivered
- Amount charged: in US dollars (USD), with subtotal and total
- Accepted payment method: bank transfer, ACH, PayPal, Wise, check, etc.
- Bank details or payment link: to facilitate receipt
💡 Tip: Popular tools for creating professional invoices include FreshBooks, QuickBooks, Wave (free), Bonsai, and HoneyBook. Keep all your invoices—they are essential for tax filing.
Taxes for Self-Employed Individuals in the USA
This is the topic that generates the most questions—and also the most important. Self-employed workers in the US are responsible for calculating, withholding, and paying their own taxes. There are three main types of taxes:
1. Federal Income Tax
It works progressively, with rates ranging from 10% to 37% depending on the taxable income bracket. For 2024, the brackets for single taxpayers are:
| Taxable Income | Aliquot |
| Up to $11.600 | 10% |
| $ 11.601 - $ 47.150 | 12% |
| $ 47.151 - $ 100.525 | 22% |
| $ 100.526 - $ 191.950 | 24% |
| $ 191.951 - $ 243.725 | 32% |
| $ 243.726 - $ 609.350 | 35% |
| Above US$609.350 | 37% |
2. Self-Employment Tax
This tax is exclusive to self employed and covers contributions to Social Security (12,4%) and Medicare (2,9%), totaling 15,3% on net profit.
When you're employed, your employer pays half of that amount. As a self-employed individual, you pay the full amount—but you can deduct half of that amount on your income tax return. Self-employment tax applies to profits above $400 per year.
3. State Income Tax
Most U.S. states levy state income tax, with rates ranging from 1% to 13,3% (California). Some states do not levy income tax: Texas, Florida, Nevada, Washington, Wyoming, South Dakota, and Alaska.
📊 Practical example: For a self-employed individual with a net income of $60.000/year in California, the estimated tax burden is around 30 to 35%, considering federal income tax, self-employment tax, and state tax.
Essential Forms for Freelancers
W-9 Form
When you start working for an American client as a contractor, they will likely ask you to fill out a W-9 form. This form provides your name, address, and Taxpayer Identification Number (TIN) — which may be your SSN or EIN. The W-9 is not sent to the IRS; it remains with the client for record-keeping purposes.
Form 1099-NEC
If you received $600 or more from a single client in a year, they are required to send you a 1099-NEC by January 31 of the following year. This document informs the IRS how much you received from that client. Add up all the 1099-NECs you received to calculate your gross income as a self-employed individual.
Schedule C
Here you declare your income and expenses as a self-employed individual, calculating your net profit. It is attached to Form 1040 (main tax return). In Schedule C you can deduct business expenses such as home office, equipment, software, internet, courses, business travel and marketing.
Schedule SE
This form allows you to calculate the amount of self-employment tax payable, based on Schedule C net income.
Form 1040-ES (Estimated Tax Payments)
As a self-employed individual, you need to pay taxes. quarterly basisThe salaries are approximately:
- April 15 — income from January to March
- June 15 — income from April to May
- September 15 — income from June to August
- January 15, of the following year — income from September to December
If you fail to make your quarterly payments and owe more than $1.000 at the end of the year, you will be subject to an underpayment penalty.
How to Pay Taxes: Step by Step
- Get your SSN or ITIN: If you don't have a Social Security Number (SSN), request an International Trademark Number (ITIN) using Form W-7.
- Open an American bank account: It facilitates receiving payments from clients and paying taxes.
- Separate business expenses: Use a separate account for the business whenever possible.
- Keep all receipts and invoices: essential for deductions and eventual audits.
- Pay the estimated taxes quarterly: use IRS Direct Pay or EFTPS (Electronic Federal Tax Payment System).
- File your annual tax return by April 15th. Use Form 1040 with Schedule C and Schedule SE. Software such as TurboTax Self-Employed, TaxAct, or H&R Block facilitates the process.
Tax Deductions for Self-Employed Individuals: How to Save Money
One of the great advantages of self-employment is the possibility of deducting business expenses, thus reducing taxable profit.
Home office: If you use part of your residence exclusively for work, you can deduct a proportion of your expenses for rent, electricity, and internet. There are two methods: the simplified one (US$5 per m²) or the regular one (percentage of the property used).
Equipment and technology: Computers, cameras, microphones, software, and tablets are deductible. Section 179 allows you to deduct the total value in the year of purchase.
Internet and telephone: The portion used for professional purposes is deductible. If you use it for work 70% of the time, you can deduct 70% of the cost.
Courses and training: Online courses, workshops, and technical books related to your field are tax-deductible.
Health plan: Self-employed individuals can deduct 100% of health plan premiums paid for themselves, their spouse, and dependents, directly on Form 1040.
SEP-IRA (retirement): Contributions can be deducted up to 25% of net income, or $69.000 in 2024. It's an excellent strategy to reduce taxes and build wealth at the same time.
Brazilians Providing Services to American Clients from Brazil
Many Brazilians work remotely for US companies without living there. In this case, the tax situation is different.
Do you have to pay taxes in the US?
In general, if you are a tax resident in Brazil, provide services from outside the country, and receive payments from American clients, You are not required to pay income tax in the US.The American customer does not need to issue a 1099 form, and you do not need to declare it to the IRS. However, if you spend more than 183 days in the U.S. in a year (Substantial Presence Test), you may be considered a U.S. tax resident.
How do I receive payments from American clients?
- Wise: account in dollars with an American routing number
- Payoneer: popular among international freelancers
- Deel / Remote.com: platforms that handle the bureaucratic side
- SWIFT Transfer: direct between banks
And in Brazil, do you need to declare it?
Yes. All income received from abroad must be declared to the Federal Revenue Service. You declare the amounts under Taxable Income Received from Abroad and pay the monthly income tax (carnê-leão) via DARF, with progressive tax rates of up to 27,5%.
⚠️ Important: Brazil and the U.S. do not have a double taxation agreement. If you live in the U.S. and also file taxes in Brazil, you may pay taxes in both countries. Consult an accountant specializing in international taxation.
Common Mistakes Freelancers Make
Not separating personal and professional accounts: Mixing finances makes accounting difficult and can cause problems during audits.
Not filing quarterly estimated taxes: This results in fines and interest at the end of the year.
Not keeping expense receipts: Without documentation, you lose the right to deductions.
Ignore the self-employment tax: Many people forget to provision for that additional 15,3% on profit.
Not hiring an accountant when necessary: For those earning over US$50, a CPA (Certified Public Accountant) typically pays for itself through the savings generated.
Frequently Asked Questions (FAQ's)
Do I need an LLC to work as a freelancer in the US? No. You can operate as a sole proprietor with your SSN or ITIN. An LLC is recommended for those who want personal asset protection or specific tax advantages.
What is an EIN and when do I need one? The EIN (Employer Identification Number) is the equivalent of the American CNPJ (Brazilian company tax ID). You need one if you open an LLC, hire employees, or want to separate your personal (SSN) and professional tax identification numbers.
Which software should I use to file my taxes as a self-employed individual? TurboTax Self-Employed, TaxAct, and H&R Block are the most popular. For more complex tax situations, a CPA is recommended.
Can I deduct business trips? Yes. Trips exclusively for work — including airfare, accommodation, transportation, and 50% of meals — are deductible.
When should I hire an accountant (CPA)? Consider hiring a CPA if your annual income exceeds $50, you have multiple income sources, investments, real estate, or file taxes in two countries.
Conclusion
Working as a freelancer in the US offers unique freedom and opportunities — but it demands responsibility regarding tax obligations. Unlike formal employment, you need to manage your own invoices, calculate taxes, make quarterly payments, and file annual returns with the IRS.
The secret lies in organization: set aside a bank account for the business, keep all receipts, issue professional invoices, and don't leave estimated taxes until the last minute.
If your situation is more complex—such as filing taxes in both the US and Brazil simultaneously—don't hesitate to consult an accountant specializing in international taxation. The investment will quickly pay for itself in tax savings and peace of mind.
