AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
If you are a US tax resident, fees from Nigerian clients are self-employment income reported on Schedule C, with self-employment tax on Schedule SE once net earnings reach $400. Convert naira receipts to dollars at the rate when you were paid, and make quarterly estimated payments if you expect to owe $1,000 or more. Nigeria may also deduct withholding tax, and there is no US-Nigeria tax treaty to adjust any of this.
Who counts as self-employed
The IRS treats you as self-employed if you carry on a trade or business as a sole proprietor or independent contractor, including part-time work alongside a job. A designer in Houston building a brand for a Lagos fintech, a data analyst reviewing reports for an Abuja agency, a writer paid by a Nigerian publication: each is running a small business in IRS terms, even with only one client and even if the client never sends a US form.
US citizens and resident aliens (green card holders, and others who meet the substantial presence test) are taxed on worldwide income, so the client's country does not change whether the income is reportable. Nonresidents, such as many F-1 students in their early years, follow different rules; see freelancing on OPT.
The forms you will use
| Form | What it does |
|---|---|
| Schedule C (Form 1040) | Profit or loss from your freelance business: income minus allowable expenses |
| Schedule SE (Form 1040) | Self-employment tax (Social Security and Medicare) on net earnings, required at $400 or more |
| Form 1040-ES | Works out and pays quarterly estimated tax, because no employer withholds for you |
| Form 1116 (if relevant) | Claims a credit for qualifying foreign income tax, such as Nigerian withholding tax, subject to limits |
| FinCEN Form 114 (FBAR) | Filed separately if your foreign accounts together exceed $10,000 at any time in the year |
The IRS self-employed tax centre (reviewed September 2026) confirms the $400 filing trigger for net self-employment earnings and the use of Schedules C and SE and Form 1040-ES.
Turning naira into dollars on your return
Everything on a US return is in dollars. The IRS says to use the exchange rate prevailing when you receive, pay or accrue an item; it has no official rate and lists sources such as banks, the Treasury and the Federal Reserve, and publishes yearly average rates. Choose one reliable source and use it consistently, keeping a note of the rate for each payment. Our guide to converting naira invoices for Schedule C goes deeper.
Worked example (illustrative figures)
You invoice a Lagos client ₦4,500,000 for a project and receive it in two parts. ₦2,250,000 arrives in March when your chosen rate is ₦1,500 per dollar: $1,500. ₦2,250,000 arrives in June at ₦1,600: about $1,406. Gross receipts for Schedule C: about $2,906. If the client deducted withholding tax, report the gross amount and treat the deduction separately (see below). Rates here are examples only.
Paying during the year
Without an employer withholding tax, the IRS expects quarterly estimated payments if you expect to owe $1,000 or more when you file. You generally avoid the underpayment penalty by paying at least 90% of this year's tax or 100% of last year's, whichever is smaller (IRS Estimated taxes, reviewed September 2026). If you also have a W-2 job, raising your W-4 withholding is another way to cover freelance tax. See quarterly estimates for freelancers.
Expenses you can set against the income
Schedule C taxes profit, not turnover. Ordinary and necessary costs of the freelance business reduce the figure that both income tax and self-employment tax are worked out on. For freelancers serving Nigerian clients the usual items are software subscriptions, equipment, a share of home internet, professional memberships, payment platform fees and bank charges on incoming wires. Travel to Nigeria can qualify when the main purpose is business and you keep records of the work done; a family visit with one client lunch is unlikely to. Guides on the home office deduction and deducting a Nigeria trip cover the detail.
Keep receipts in the currency they were paid in and convert them the same way as income, at the rate when paid. A cost paid in naira from a Nigerian account is still a dollar expense on the return.
The Nigerian side
Nigerian companies that pay for services often deduct withholding tax before paying. Under the 2024 withholding regulations summarised by PwC, the rate for professional and consultancy fees paid to non-residents is 10%, and for other services 5%. That deduction does not replace your US tax. It may be claimable as a foreign tax credit, but only within limits; read Nigerian withholding tax on fees and claiming it as a credit. The IRS treaty list has no US-Nigeria income tax treaty, so there is no treaty rate to reduce the deduction.
What to check first
- Your US tax residence status for the year.
- A log of each invoice and payment with date, naira amount, rate used and dollar value.
- Withholding tax receipts from each Nigerian client.
- Whether your Nigerian accounts push you over the $10,000 FBAR threshold.
- Your first estimated payment date. This is information, not tax advice; a preparer who handles foreign income can confirm your position.
Where Pryme fits
A Pryme Business Account opened from the US can receive naira and dollars and keep each in its own currency until you choose to convert, which makes the per-payment rate easier to record. Invoicing keeps invoices and payments together.
Questions people ask
Do I pay US tax on money from Nigerian clients?
Yes, if you are a US tax resident. Worldwide income is taxable, and freelance fees go on Schedule C with self-employment tax on Schedule SE.
What exchange rate do I use for naira income on my US return?
The rate prevailing when you received the payment, from a reliable source used consistently. The IRS has no official rate but publishes yearly averages.
Do I need to pay quarterly taxes as a freelancer?
Generally yes if you expect to owe $1,000 or more when you file. Form 1040-ES works out the payments.
Is there a tax treaty between the US and Nigeria?
No. The IRS treaty list does not include Nigeria, so domestic rules on both sides apply.
Sources
- IRS: Self-employed individuals tax center (reviewed 27 Sep 2026) · accessed Oct 2026
- IRS: Estimated taxes (reviewed 25 Sep 2026) · accessed Oct 2026
- IRS: Foreign currency and currency exchange rates (reviewed 22 May 2026) · accessed Oct 2026
- PwC Nigeria: Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 (Jul 2024) · accessed Oct 2026
- IRS: United States income tax treaties, A to Z (reviewed 3 Jan 2026) · accessed Oct 2026
- IRS: Comparison of Form 8938 and FBAR requirements (reviewed 19 Sep 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.