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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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I have a US business that res home contractors in the

Customer Question

Hi Pearl.
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: I have a US business that hires home contractors in the Philippines
Resolved Question:
I have a business that hires home contractors in the Philippines - we send funds via Paypal to them.I'd like to know if we are going to have any issues in "writing off" payroll as a business expense this way and if there's a better recommended way of paying contractors working from home in a foreign country?Or if we should ask for clients to wire funds to a foreign bank account / corporation instead of one in the US? We are a totally virtual business so it doesn't matter where we say our headquarters is, what's the best way to set up our corporate structure for tax advantages?
JA: Is there anything else the Accountant should be aware of?
Customer: Hi. I copied this 3 year old post from your site. My situation the same. My business is based in NJ and my virtual assistants/independent contractors work from home in the Philippines. What do I have to provide the IRS to write the compensation off. Do the contractors have to provide a signed US form that I submit to the IRS etc. Please advise. The post I copied was 3 years old. Is there an update? Thank you.
JA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the $5 fully-refundable deposit now. While you're filling out that form, I'll tell the Accountant about your situation and then connect you two.
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
Hi. I have a US business based in NJ. I am about to hire independent contractor virtual assistants who work from home in the Philippines. What do I have to do to report the compensation expenses to the IRS? Are there forms for me to fill out? Are there forms the Virtual Assistants to fill out? How do I handle all this and what do I have to do? Please advise.
Expert:  Barbara replied 1 year ago.

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

There will be no "issues" writing off payments to contractors performing services in a foreign country for your U.S. company. You should document the payments, i.e., name, date, amount, what services were performed, etc.

You will need to obtain a W-8BEN from each of the foreign contractors for your records. The W-8BEN forms do NOT get forwarded to the IRS.

You will not issue 1099-MISC to the foreign contractors.

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

Thank you and best regards,


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 further.

Best regards,