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I am a sole proprietor and have hired a US citizen who is…

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I am a sole proprietor and have hired a US citizen who is living in the Philippines. He wants me to pay him via Western Union. I expect to pay him over $25,000 in the next month. Will I have to pay taxes on the money I send to him? And do I need to get any information from him before I pay him?

Submitted: 6 months ago.Category: Tax
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9/25/2017
Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 6 months ago
Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 2,143
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
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The IRS Form W-9 should be kept in your files for four years for future reference in case of any, If you paid someone who is not your employee.

https://www.irs.gov/businesses/small-businesses-self-employed/forms-and-associated-taxes-for-independent-contractors

Below is a link directly to the IRS site and directions to your question.

"If you’ve made the determination that the person you’re paying is an independent contractor, the first step is to have the contractor complete Form W-9 (PDF), Request for Taxpayer Identification Number and Certification. This form can be used to request the correct name and Taxpayer Identification Number, or TIN, of the worker. A TIN may be either a Social Security Number (SSN), or an Employer Identification Number (EIN). The W-9 (PDF) should be kept in your files for four years for future reference in case of any questions from the worker or the IRS."

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 6 months ago

Even if the contractor claims to be tax exempt they still must disclose and certify that fact using the W-9

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Customer reply replied 6 months ago
I am processing Hurricane IRMA claims and he is working with me on preparing the files. I am not and LLC. I was concerned that by paying him through Western Union and not having any of his info (SSN) that the IRS could force me to pay taxes on the money I send to him?
Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 6 months ago

Paying through Western Union in and of it self is not an issue with the IRS. However, you are sending cash, which I recommend only doing after the work is complete.

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 6 months ago

The IRS would require you to send a 1099 to the person if you pay them more then $600, which is why you need the W9 to be completed.

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 6 months ago

The W9 is an informational request for your records so you know how to report the income to the IRS that you paid to the contractor

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 6 months ago

I Hope this answer has helped! If you have any further questions please let me know!

If you are satisfied with this answer, a positive rating by clicking on three stars or more would be appreciated. Thank you!Hope that helps. If you are satisfied with this answer, a positive rating would be appreciated.

Thank you!

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 6 months ago

Hello.

Do you have any further questions?

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 6 months ago

If you have any further questions please let me know.

If you are satisfied with this answer, a positive rating by clicking on three stars or more would be appreciated. Thank you!

Thank you!

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