Can I ignore 1099s for non-U.S. residents/entities? We have brought on some service providers in India and the UK this past year.
You can read the particular dos and don'ts right here on the 1099 form instructions courtesy of the IRS: http://www.irs.gov/pub/irs-pdf/i1099msc.pdf. However, they are not specific about foreign entities on that form. However, in the U.S. you only issue 1099s to non-corporate entities (contractors, consultants, some LLPs and similar entities - read the specifics on the form) that are U.S. entities. So you don't have to complete 1099s for non-U.S. residents.
If you are a U.S. company or an individual paying a non-U.S. person (non-citizen and non-tax resident) for services performed outside the U.S., then you will likely need one of the Form W-8s, likely a W-8BEN, to keep on file to support the amount of withholding, which could be zero. I don't think a 1099 would be appropriate. I'd be happy to discuss further if you would like.
I would modify that a bit to distinguish between US taxpayer non-residents and those who are not US taxpayers. If you have a consultant who is a US citizen or green card holder who happens to live abroad, I think that person should also receive a 1099-misc. The question to ask might be whether the person/entity you are paying has a US taxpayer ID (SSN or FEIN), which gets to the heart of it as a business question rather than a personal question.
I have been wondering about this. My web designer is pure Canadian living in Montreal. I use PayPal to pay him. He gets paid by project, sets his own work parameters. Since the 1099 system is to alert taxpayers about taxes owed from revenue generated - I assumed he did not qualify.
No need to Issue tax reporting to Non-us people overseas.... however if they are paid and working in US then you need to issue so the IRS can asses tax on US soil.
That sets up the issue that it better to hire non-us people because ultimately you get more bang for your buck...as Donald trump says ..they are not your friends....
hey I get it....the rules favor non-us people by default.....
glad to be of service
You may need to withhold taxes and file Forms 1042-S and 1042, however. See the form instructions at
Only if they actually work on US soil. As far as backup withholding, only those individuals whose countries don't have a tax treaty with the US (but a 1042 is still necessary).
I was the CFO of a business that billed for services that were all done overseas, by non-US tax payers. The company had no nexus overseas. Besides filing our corporate US taxes we were not required to give the workers any document that said they worked.
What they did in their own (foreign) countries was their business.
Thanks Sonya, this seems to pertain to things like investments and annuities rather than paying for regular work.... although it is honestly very hard to tell what all this gobbledegook means ------> https://www.irs.gov/pub/irs-pdf/i1042.pdf It could days just to get through all the references they cite.
Browse our extensive library of free white papers focused on the latest financial, technology and business issues.