are you paying the individual that is currently working in your office, or are you paying the company in Australia that he works for?
Hi Anne,I'm paying the company that he works for.
ok.......give me a minute to look at the treaty
by the way, here's the treaty:
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
The only connection you will have with this foreign company is the purchase of their software, is that correct?
Correct. I have no financial interest in them.
I'm an arm's-length customer.
and when their job is over..........they go back to Australia, and you go on with your business.........correct?
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.
There are other programmers involved, but they not on site and not in the USA.
What kind of business are you going into?
I'm developing a software app that's used by an insurance company. I expect to find more customers.
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
Right. Copies of the transfers are in my "bank file."
hold on just one minute more, ok?
Thanks.......was just reviewing one more web site re: foreign corps and effectively connected income.........and neither applied to you
I always test myself by finding all of the info I can...........and nothing I have found makes me change my original answer
I think you're good
Thank you so much. I guess this session concludes.
yes, if you have further questions, you may come back here and post them, even after payment.
you mentioned having a sounding board............so if you need me again....that's fine