working with independant contractor internationally


Z

ZenMasta

I'm based in California but I have a contact in Canada that is doing some
custom web programming for me. How do I handle this so I can deduct my
payments to him? I've never filled out a 1099, I'm just an individual not a
corporation or anything.
 
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J

Jim Kingdon

I've never filled out a 1099, I'm just an individual not a corporation
or anything.
You don't need to be a corporation to fill out a 1099. As a sole
proprietor you can apply for an employer identification number (that's
what I did), or I think you can use your social security number (I'm
not 100% sure on that part).

Go to irs.gov and download the instructions for the 1099. Unless
they've changed it, there's also another (short) form which says
things like how many 1099's you are sending (1096).
I'm based in California but I have a contact in Canada that is doing
some custom web programming for me.
It's the Canada part I'm not sure about here. Someone from Canada
wouldn't have a US taxpayer ID number. I don't know if this means you
are off the hook, or something more complicated. The 1099
instructions maybe mention it.
 
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S

Shyster1040

Assuming that the person in Canada performs the services for which you pay
him in Canada (or, at the least, not in the United States), and assuming
that the person is not a U.S. resident on account of spending too many
days in the U.S., the income you're paying him should constitute non-US
source income paid to a nonresident alien, in which case you are not
required to withhold U.S. tax on that payment and are not required to file
an information return with respect to that payment.

Under the U.S. withholding tax regulations, you are generally permitted to
presume that an individual is a non-US person, particularly if payment is
made to that person at a foreign address. As a result, you can probably
make payments without withholding any US tax on the basis of the
presumptions. However, if you really want to CYA, ask this person for a
completed Form W-8BEN, a form non-US persons use to certify to US payors
that they are non-US persons. If, for some reason, the person you're
paying ever becomes a US resident, or starts carrying on a trade or
business in the US, at that point you may be required to withhold, and you
will want the CYA of a withholding certificate unless you know this person
really, really well.
 

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