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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28082
Experience:  Taxes, Immigration, Labor Relations
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We are a llc software development company based in the USA.

Customer Question

We are a llc software development company based in the USA.
We pay software developers in Romania and wire funds to them monthly based on invoices they provide. They are registered in Romania and pay taxes in their country. this was required as well as a employment contract to set up direct deposit.
i believe i need to document W-8BEN, the contact between us and invoices to be in compliance with US tax law. Is there any withholding or other considerations needed to be in compliance?
Submitted: 6 months ago.
Category: Tax
Expert:  Lev replied 6 months ago.
You are correct - you will need to use form W-8BEN to document the payee identification and you do need the contact and invoices to document business purpose of payments (for deduction purposes)No withholding is required if all s4ervices are provided from physical locations outside of the US.In this case - compensation for such services is not considered as from US sources and is not subject to US taxes for nonresident aliens.Correspondingly - that compensation is not subject to withholding.Questions?
Customer: replied 6 months ago.
Hi Lev,could you provide me this summary in writing with professional information included on your letterhead?In other words, i'm looking to document that i took the time to hire a tax professional to consult me on the matter so i am fully covered.thx
Drew
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Customer: replied 6 months ago.
also, for investors to clear them of any associated liability
Expert:  Lev replied 6 months ago.
Hi Drew,Communications on this Site are not confidential and shall not be the subject of any associated privileges. Communications on this Site are limited, as described above, do not involve in-person evaluations or visits, and do not include safeguards and procedures typical of in-person evaluations and visits. No professional-client relationships shall be formed on the Site.Based on the above - I will NOT provide a signed document - and if you intention is to have such document - I might suggest to communicate with local tax professionals in your state..Please be sure NOT to post any personal information - as all posts are available for general public.
Expert:  Lev replied 6 months ago.
For your confidence - I might suggest a reference to official IRS publication.You may take a look - page 13 IRS publication 519https://www.irs.gov/pub/irs-pdf/p519.pdfAs a nonresident alien - the person would be taxed ONLY on income from US sources - and generally will file form 1040NR.But in your situation - that is not income from US sources and therefore is not taxable in the US..There are some complex rules to determine the source of income.- Table 2-1. Summary of Source Rules of Nonresident Aliens.As you see the factors in determination of the income source income:- Personal services - Where services performed.- So when services are provided by nonresident aliens and are provided outside the US - that income is not taxable in the US.Correspondingly - these payments are NOT subject to withholding.Please be sure to ask if you need any clarification this matter.

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