What taxes do I have to pay?

None!

Okay, that might be a little overly simplified. Let’s go into a little more detail…

You can hire a remote worker as an overseas employee. They work as a subcontractor, so in the US for example there’s no need for you to send the usual 1099 form.

There are two forms that you will have to consider though: the 1120S and W-8BEN forms.

The W-8BEN form is submitted by your foreign worker and it indicates that you are paying someone in a foreign country for work. It is extremely important for helping you track and prove your business expenses. Your worker will also be required to claim this income and pay taxes in their home country. If your worker doesn’t automatically submit this form, make sure you request it. Then keep it filed in your records in case you ever need it.

The 1120S form is used by LLCs and S corporations to track gains, losses, income, and other business expenses associated with your business. Payments to a foreign worker are deductible on the 1120S form and you must include these wages under the “Other deductions” category.

PLEASE NOTE: This is not financial advice. Should you have further questions, please check with an accountant.

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