User talk:Ansdkfus13
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HELP!!!!!!!! Outsourcing to a foreign country and a correct way to report related expenses..
We just incorporated our company and are planning to outsource website development to Ukraine in Eastern Europe. Since it's a contract job and a deductible expense for our business, we need to report it somehow. However, since they are not located in the US, we do not file 1099 right? I came across two forms that might be relevant to our case: W-8BEN and 1042-S. Which one do I file or both? I understand that W-8BEN is a form that proves the developer is a foreign entity and 1042-S is for tax withholding purposes for agents. Do I withhold tax for the services provided by the website developer in Ukraine? When exactly do you file 1042-S? This is how I understood, correct me if I'm wrong: 1042-S applies when the money is a US source income, which means either the foreign entity has US presence or they made that income with the properties in the US such as capital gains from selling of US stocks?
I'm extremely confused and calling IRS people does NOT help!! They kept transferring me to another department and my call dropped several times. Finally the department I wanted to reach was closed for the day... This is frustrating. Can someone help!!
For recap:
1) Do I withhold tax for the payment I will make to the website developers in a foreign country?
2) Which forms do I file? W-8BEN? 1042-S
Thanks
Arianne
