Paying Foreign Contractors

Have foreign contractors complete irs form w 8ben.

Paying foreign contractors. Things to consider when paying foreign independent contractors of course like foreign independent contractors not all international payment options are created equal. International money order for foreign independent contractors abroad. Companies paying foreign contractors need to familiarize themselves and their business partners with these new beneficial ownership rules and be prepared as their banks come into compliance with them. These forms are used to establish a status as a foreign person or entity.

Paying independent contractors if you pay independent contractors you may have to file form 1099 nec nonemployee compensation to report payments for services performed for your trade or business. How to approach paying foreign contractors. Companies to file an irs 1099 form to pay a foreign contractor. Payments to foreign contractors for services.

Us companies paying foreign contractors. Karen lynch is a journalist who has covered global business technology and policy in new york paris and washington dc. Us companies hiring foreign contractors can often face significantly more risks and liabilities in foreign courts if the contractors are determined to be employees. One of the many issues with a global economy and the growing popularity of digital nomads and freelancing are the tax implications across borders.

Another established international payment solution is an international money order. If audited form w 8ben supports why no form 1099 was issued and why no tax was withheld. You can purchase one at a range of locations including post offices by paying the amount you want to send along with a fee. If the following four conditions are met you must generally report a payment as nonemployee compensation.

But as noted above the company should require the contractor file irs form w 8ben which formally certifies the worker s foreign status. If you hire an independent contractor who is based in the us the irs requires that you report all annual payments that exceed 600. Even though a principal does not have to report foreign contractor payments to the irs in most cases he should have a foreign contractor complete form w 8ben for individuals or w 8ben e for entities. The author karen lynch.

Generally no form 1099 is required for payments to foreign contractors or services performed outside the us and no withholding is required as long as the foreign contractor is not a us person and the services are wholly performed outside the u s. However a whole different set of rules apply when paying foreign independent contractors.