This question is for a licensed CPA or Tax
Attorney who is familiar with small S Corporations and/or LLCs
who hire people from India for work and pay them.
I have a client who has an LLC (state
is Indiana , if that matters) and has her computer team ("web developers") working from Pakistan.
She sends them money via Western Union. The IRS
(in her audit
) stated they were not "employees" and she could not write off payments to them.
I want to know
1.) what can she do to make sure (what RULE or CODE of IRS LAW
) that states she can in fact write these employees off, or how she should pay them (other than Company checks) via Western Union to argue for this writeoff. I know their has to be a way, considering Google and all those companies outsource.
2.) Does she need to file anything with the state or pay "the employees taxes" to do this? Since they are not and never will be US
citizens, what is the procedure?
PLEASE READ QUESTION CAREFULLY AND ANSWER BOTH PARTS WITH CITATIONS ONLY IF YOU HAVE DONE IT AND ARE FAMILIAR WITH THE SITUATION. THANK YOU.