Can I pass tax costs onto my clients?

powerss

So, I was wondering about a way to stop taxes from biting me in the ass at the end of the year.

Is it LEGAL (not MORAL) to pass my tax costs onto my clients? I'm a web designer/developer (small projects) typically between $1,500-$8,000 a project. I'm also a 20 year old college student who likes to spend money. I also hate taxes.

I noticed and have seen that many large companies, particularly phone companies, pass additional taxes or legislation onto their customers in the form of "Federal Government Recovery Fees" at the end of their bill.

Could I invoice a customer and include a line for say, 15% and call it a "Federal Government Recovery Fee" - and have it as non-taxable income and put it toward my taxes at the end of the year?

If I can't, why?

Doc

If I asked a web designer to build me a webpage for $100, and he gave me a bill for $115 without negotiating that price with me beforehand, I'd laugh and write him a check for $100.

Why not just charge 15% more up front? That would accomplish the same thing.

JHunz

powerss wrote: »

So, I was wondering about a way to stop taxes from biting me in the ass at the end of the year.

Is it LEGAL (not MORAL) to pass my tax costs onto my clients? I'm a web designer/developer (small projects) typically between $1,500-$8,000 a project. I'm also a 20 year old college student who likes to spend money. I also hate taxes.

I noticed and have seen that many large companies, particularly phone companies, pass additional taxes or legislation onto their customers in the form of "Federal Government Recovery Fees" at the end of their bill.

Could I invoice a customer and include a line for say, 15% and call it a "Federal Government Recovery Fee" - and have it as non-taxable income and put it toward my taxes at the end of the year?

If I can't, why?

1) Phone companies aren't passing on taxes to you, they're passing on the cost of implementing new changes mandated by legislation.
2) They are still paying taxes on that money.
3) You can't just decide that some of your income is non-taxable.
4) Nor is a client obliged to pay any fee that is not in the original contract.

So, there are lots of reasons this is a bad idea.

Cycophant

Doc wrote: »

If I asked a web designer to build me a webpage for $100, and he gave me a bill for $115 without negotiating that price with me beforehand, I'd laugh and write him a check for $100.

Why not just charge 15% more up front? That would accomplish the same thing.

Because he wants that money to be tax-free, so that it doesn't increase his income. Which basically, is just plain illegal.

I'm not in the US, but unless there's some sort of weird-ass loophole that frankly everyone should know about, I'm sure there's no legal way of doing what you're trying to do.

ASimPerson

Doc wrote: »

If I asked a web designer to build me a webpage for $100, and he gave me a bill for $115 without negotiating that price with me beforehand, I'd laugh and write him a check for $100.

Why not just charge 15% more up front? That would accomplish the same thing.

Not necessarily. He wants the extra 15% to not be taxable as well, otherwise, he still has to pay tax on the extra $15.

I don't really know the answer to whether or not you can get around this. If I had to guess, it's probably not possible.

EggyToast

Yes, that is why freelancers typically cost more than an "employee" would "charge." You'd pay someone $15 an hour as an employee what a freelancer would charge $40 for, because of taxes and risk.

It's no different than people padding their eBay shipping charges by a couple bucks to handle fees. Just be up front as part of the assumed charges for your work. If you want an extra 15% for your work, charge 15% more. Just don't itemize it as taxes, or people will laugh at you and not pay it.

powerss

I didn't think there was a way to do this. I won't do it, I guess I'll just pad my rates more.

It was more about the shenanigans of corporations passing on federal costs to consumers, and if I could do the same.

Lock this bitch!