What to do about paying foreign freelancers and legal forms

Posted on 2009-07-03
Medium Priority
Last Modified: 2012-05-07
What is required when paying freelancers overseas? How do I prove to the US government that I no longer have those funds and thus should not be taxed on them.

Any other related advise would be appreciated. I will pay US freelancers too...
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WaterStreet, July 4, 10:32PM EDT

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Question by:dothedewyoutwo
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Accepted Solution

Berkson Wein earned 1000 total points
ID: 24774372
First, I'm not an expert on this.  I just happened to stumble on your question.  These are just opinoins.  I strongly suggest consulting with a CPA.  
By overseas, I assume you mean a non-US citizen working overseas?  
You report the expenses on your filing.  If you're doing it on a 1040, it would be on schedule C.  You do not have to know tax id for the recipients, you just pool total labor expenses together on the form.
I don't believe that you'd file a 1099 for these payments since it's not being paid to a non-US entity for work being done 100% outside of the us.
IRS publication 515 (linked here) indicates that there may be the need for withholding for payments to Bulgaria, Canada, and Iceland.
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nickg5 earned 1000 total points
ID: 24774933

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