how to pay offshore contractor

[jamesd]

I have an S-Corp in Virgina, USA.

I need to pay a person (independent contractor) in Egypt
$2,000 for some work they peformed in Egypt for me.

The Egyptian person has a Citibank personal account.

What is the best way to pay the person for their services
that will give me a tax deduction?

(a) paper check made out to the contractor name, which he
will cash/deposit at his Citibank
(b) western union him the money to his name
(c) third-pary programmer payment service like guru.com

Do I need to file a 1099 since the amount was over $600? How
does all this work??

Obviously, I would like to claim this as a business deduction.

[Paul Thomas, CPA]

"jamesd" <jam...@ring4freedom.com> wrote

> What is the best way to pay the person for their services
> that will give me a tax deduction?

It doesn't matter what form the payment takes (check, wire transfer, etc.)
as long as you can prove the expense happened and that it was a legitimate
business expense. You, hopefully, should have some bill, invoice, receipt,
or contract that spells out what it is you are paying for. That amount of
money should be identifiable in your accounting records (as a check, draft,
wire transfer, credit card charge, etc).

--
Paul Thomas, CPA
paultho...@bellsouth.net

[jamesd]

Thanks for the speedy reply, it is greatly appreciated.

[jamesd]

[jamesd]

I forgot to ask, do I need to do a 1099 for him since I paid him more
than $600?

[Paul Thomas, CPA]

"jamesd" <jam...@ring4freedom.com> wrote

>I forgot to ask, do I need to do a 1099 for him since
> I paid him more than $600?

No.

[Smart Bean]

As a US-based S-Corp, you can pay an independent contractor in Egypt by using a wire transfer or an international payment service. Here are some options to consider:

Wire transfer: You can wire the payment directly to the contractor's Citibank account. You'll need the contractor's bank account details, including the account number, routing number, and SWIFT code.

International payment service: You can use an international payment service like TransferWise, Payoneer, or PayPal to transfer funds to the contractor's Citibank account. These services offer competitive exchange rates and low fees.

Third-party payment service: You can use a third-party payment service like Guru.com or Upwork to pay the contractor. These services provide payment protection and escrow services, but they may charge higher fees than other options.

In terms of tax deductions, you should be able to deduct the $2,000 payment to the contractor as a business expense on your US tax return. However, you'll need to ensure that you have proper documentation, such as a contract or invoice, to support the payment and show that it was a legitimate business expense.

You may also need to file a Form 1099-MISC to report the payment to the contractor if the payment exceeds $600 in a tax year. The contractor will need to provide you with their US tax identification number (TIN) or a W-8BEN form to claim a tax treaty exemption if one is available.

Keep in mind that tax laws can be complex and vary based on the specific details of your situation. I recommend consulting with a tax professional or an accountant to ensure that you are meeting all tax reporting and payment requirements.

--
For full context, visit https://www.beansmart.com/accounting/how-to-pay-offshore-contractor-6230-.htm