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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3801
Experience:  20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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This is a question on filing US taxes expatriate. I

Customer Question

This is a question on filing US taxes for an expatriate. I am a US citizen living and working abroad. I use Schedule C to declare financials of the financials of my foreign sole propriety business. I employ foreign persons outside the US and i report their
wages in line item #26 (wages). They are foreign nationality and work in the foreign country. When i declare Wages for them, do i have to submit w-2 or w-3 for them?
Submitted: 2 years ago.
Category: Tax
Expert:  Barbara replied 2 years ago.
Welcome to Just Answer. My name is ***** ***** I will be happy to assist you today.
In your situation, you are NOT required to submit a W-2 or 1099-MISC for the persons who perform services for your business because they are not U.S. citizens/residents and the work is performed outside of the U.S. To err on the side of caution, you might want to have all foreign workers fill out Part 1, sign and return to you Form W-8BEN, which you will keep for your records.
http://www.irs.gov/uac/Form-W-8BEN,-Certificate-of-Foreign-Status-of-Beneficial-Owner-for-United-States-Tax-Withholding
My best advice would be to enter the payments to them either on Line 11 (Contract Labor) or on Line 27a (Other Expenses) as "Payments for services made to foreign workers." Using Line 26 would not be appropriate because you are not withholding any U.S. taxes from these workers.
Please let me know if you require further information or clarification.
Thank you and best regards,
Barb
Expert:  Barbara replied 2 years ago.
Just following up with you to see if you have any other questions or concerns. If so, please come back to me here at your convenience, and I will be happy to assist you. If not, please take a moment to rate my answer since that is the only way I receive credit for answering you and alerts Just Answer to compensate me.
Thank you and best regards,
Barb