How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Anne Your Own Question

Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 1681
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
Type Your Tax Question Here...
Anne is online now
A new question is answered every 9 seconds

Im in the US and Ive contracted with an Australian company

Resolved Question:

I'm in the US and I've contracted with an Australian company to develop software. They have a programmer working in my office. Their monthly invoices are from Australia and I pay by wire transfer to their bank account in Australia. Is there anything different I should be reporting to the IRS because they're a foreign company or should I just treat them the same as a US vendor, except I don't believe I need to issue a 1099 for them. I'd greatly appreciate a sounding board. Thank you.
Submitted: 11 months ago.
Category: Tax
Expert:  Anne replied 11 months ago.

Anne :

Hi

Anne :

good question

Anne :

are you paying the individual that is currently working in your office, or are you paying the company in Australia that he works for?

Customer:

Hi Anne,I'm paying the company that he works for.

Anne :

ok.......give me a minute to look at the treaty

Anne :

ok.......

Anne :

I'm back.........

Anne :

by the way, here's the treaty:

Anne :

http://www.irs.gov/pub/irs-trty/aus.pdf

Anne :

Although there was nothing in it that I found that changed my initial answer, which is ....since you're paying the company, and NOT the person, the money is not subject to the 30% withholding, ..........and I agree with the rest of your statement

Anne :

The only connection you will have with this foreign company is the purchase of their software, is that correct?

Customer:

Correct. I have no financial interest in them.

Customer:

I'm an arm's-length customer.

Anne :

and when their job is over..........they go back to Australia, and you go on with your business.........correct?

Customer:

Not sure about their local person. He's a resident alien. He'll probably go to another customer. The project has been going for a year and will continue for another 1-2 years.

Customer:

There are other programmers involved, but they not on site and not in the USA.

Anne :

What kind of business are you going into?

Customer:

I'm developing a software app that's used by an insurance company. I expect to find more customers.

Anne :

Ok........so you are not selling for that company in Australia, they are simply doing the software part, so yes, you report the expense, they are not subject to the 30% income tax withholding by you, and you will want to save your wire transfers for proof of the expense for the IRS

Customer:

Right. Copies of the transfers are in my "bank file."

Anne :

hold on just one minute more, ok?

Customer:

ok

Anne :


Thanks.......was just reviewing one more web site re: foreign corps and effectively connected income.........and neither applied to you

Anne :

I always test myself by finding all of the info I can...........and nothing I have found makes me change my original answer

Anne :

I think you're good

Customer:

Thank you so much. I guess this session concludes.

Anne :

yes, if you have further questions, you may come back here and post them, even after payment.

Customer:

Thank you.

Anne :

you mentioned having a sounding board............so if you need me again....that's fine

Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 1681
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
Anne and 4 other Tax Specialists are ready to help you
Expert:  Anne replied 11 months ago.
Thank you for the accept and the excellent rating!

Please feel free to ask for me by name if I can help you in the future.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.