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rramsook
rramsook, Enrolled Agent
Category: Tax
Satisfied Customers: 304
Experience:  Specialize in Individual,Corporate, and payroll tax matters.
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Hello, I own a small design studio in Southern California

Resolved Question:

Hello,

I own a small design studio in Southern California and am ready to hire a freelance copy writer as an independent contractor who lives in Canada. He is a new graduate who has not formed any type of legal business in Canada. He would be working via internet from his house in Canada at any hour of his choosing as long as deadlines are met.He would be utilized as needed on a per project basis initially, but has the potential to eventually turn into a more steady, full-time job.

I have three questions:

ONE: If I end up giving this person steady project work, at what point would I be possibly = violating current US "independent contractor vs. full-time employee" laws? (if they even apply across borders)

TWO: What is the proper/legal way to go about doing this with regard to the IRS?

THREE: Please weigh in on whether you think it would be most wise/applicable to just hire the person as part-time initially and increase to full-time if necessary.

My business is an LLC taxed as an S corp if that makes any difference.

Thank you in advance.
Submitted: 12 months ago.
Category: Tax
Expert:  rramsook replied 12 months ago.

rramsook :

Hello, Welcome to just answer.

rramsook :

As long as the person is working under his own hours and not a set time per day given by you then he is not deemed an employee.

Customer:

Hello

Customer:

Am I still required to 1099 him as an independent contractor or is there some other international form that I need him to fill out. How am I supposed to classify his expense on my taxes?

rramsook :

being than he is in Canada also allows you to treat the situation as an independent contractor.

rramsook :

You will not be required to issue any 1099's to him because he is considered a foreign subcontractor

rramsook :

But you will need to have him fill out FORM W8-Ben and keep for your records which is your proof that he is a foreign subcontractor.

rramsook :

You will record the expense as independent subcontractor expense on your books.

Customer:

Excellent. Thank you so much.

rramsook, Enrolled Agent
Category: Tax
Satisfied Customers: 304
Experience: Specialize in Individual,Corporate, and payroll tax matters.
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