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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3364
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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How should I pay performed by individuals outside of US.The

Customer Question

Hello. How should I pay for services performed by individuals outside of US.The person is Ukrainian citizen and live in Ukraine. I do online retail and some manufacturing. How should I work with this so will not have to pay taxes on amounts sent to different country so these expanses will be tax deductible for me. I need to know what documentation do I need to have for proof in a case of IRS audit. I pay via Western Union now. Is it OK? I'm solo proprietorship now but will start S corp soon. The yearly amount of transaction to overseas is about 50 transactions with $50000-$150000 total. Thank you.
Oleksii
Submitted: 1 year ago.
Category: Tax
Expert:  Barbara replied 1 year ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

Payments to individuals who reside and perform services outside of the U.S. do not have taxes withheld for U.S. taxes. Those payments are tax deductible to you as expenses. You will keep proof of the payment transactions.

You will ask the individuals to provide you with a completed W8-BEN, which you will keep for your records. The W8-BEN does NOT get forwarded to the IRS.

https://www.irs.gov/uac/Form-W-8BEN,-Certificate-of-Foreign-Status-of-Beneficial-Owner-for-United-States-Tax-Withholding

Please let me know if you require further information or clarification.

Thank you and best regards,

Barb

Expert:  Barbara replied 1 year ago.

Just following up with you to see if you have any other questions or concerns. If so, please come back to me here, and I will be happy to assist you.

Best regards,

Barb