Outsourcing and Taxes

7 replies
Hello fellow Warriors!

After spinning my wheels and trying to figure out what to do, including falling for some really stupid "make a zillion dollars today" BS, it dawns on me that my 10 years of professional skills as a web/writing/design project manager is not only my real talent, but my best viable option for starting my own business. (yeah- the bright shiny candy was hard to resist!)

I have started drawing up my plans for outsourcing the work through sites like ODesk & Elance, but am wondering how to handle taxes.

I know that if I hired US based contractors, I could claim their expense and they would have to claim anything over $600 on their taxes. Does that change if they are outside of the US? Can I still claim the expense? Is it my responsibility to track their earnings to that $600 mark? Do they have to file a 1099?

If you know or can point me to the answers, I would greatly appreciate it!

Thanks!
Mere
#1099 #outsourcing #taxes
  • Profile picture of the author webapex
    The courses I have seen on hiring full time VAs in Philippines seem to not mention taxes. Any taxes for contractors hired through odesk, etc are generally? handled by the agency.
    You would have to file a 10-99 if you have direct paid that $600 to a single contractor, independant of their total income.

    Of course the big contractor issue is having someone working on site for rnough hours to be an employee with all the accompanying headaches.
    Signature

    “An expert is a person who has made all the mistakes that can be made in a very narrow field” Niels Bohr

    {{ DiscussionBoard.errors[3877471].message }}
  • Profile picture of the author magiclouie
    Originally Posted by mnoonan View Post

    Hello fellow Warriors!

    After spinning my wheels and trying to figure out what to do, including falling for some really stupid "make a zillion dollars today" BS, it dawns on me that my 10 years of professional skills as a web/writing/design project manager is not only my real talent, but my best viable option for starting my own business. (yeah- the bright shiny candy was hard to resist!)

    I have started drawing up my plans for outsourcing the work through sites like ODesk & Elance, but am wondering how to handle taxes.

    I know that if I hired US based contractors, I could claim their expense and they would have to claim anything over $600 on their taxes. Does that change if they are outside of the US? Can I still claim the expense? Is it my responsibility to track their earnings to that $600 mark? Do they have to file a 1099?

    If you know or can point me to the answers, I would greatly appreciate it!

    Thanks!
    Mere
    Hi Mere,

    Online Filipino workers are not paying taxes here in the Philippines at the moment, perhaps in the future.

    So, filing a 1099 is not necessary.

    Just out of curiosity, have you hired somebody already who lived outside the US?

    Feel free to contact me if you need further info, I might be of help.

    Cheers,
    MagicLouie
    {{ DiscussionBoard.errors[3877549].message }}
    • Profile picture of the author Kay King
      You really need to talk to a tax accountant or at the very least start reading the info on the IRS sites. US tax forms are for US citizens - not for everyone you hire perhaps.

      Get this set up right in the beginning by running your plans by a tax professional and you'll save a headache later on.

      kay
      Signature
      Saving one dog will not change the world - but the world will change forever for that one dog.

      Zoo Sign: WARNING! Those who throw objects at the crocodiles will be asked to retrieve them.

      {{ DiscussionBoard.errors[3878199].message }}
  • Profile picture of the author BloggingPro
    I would make a quick call to H&R block there locally. The one in my town was more than helpful and gave up tons of valuable information for free. I think I know why they did it too--because when tax time came I simply took everything they told me to save, paid a small fee and let them file for me. Was totally worth it too.
    Signature
    You're going to fail. If you're afraid of failure then you do not belong in the Internet Marketing Business. Period.
    {{ DiscussionBoard.errors[3879093].message }}
  • Profile picture of the author noble
    Talk to a professional to get the correct advise. The best way to handle it usually is to make them a "contractor" though so YOU don't have to take out money and pay taxes the burden is on them when they file. You are still required to report it though.
    {{ DiscussionBoard.errors[3879121].message }}
  • Profile picture of the author mnoonan
    Wow! Thanks for all the responses! I am thinking about asking a tax pro for some advice, just hadn't gotten that far yet. I guess what I was thinking was that if I make the money and pay out for the work outsourced outside of the US, I would think that Uncle Sam would want his cut no matter what. Yeah- I think a tax pro is probably best! Thanks again!
    Signature
    4aClick.info
    An Article Directory that gives you 100% conversion to your email list.
    YES 100%!!
    Officially Launches July 6th- Get in early!
    Get 3 Months of Reporting through the WSO!
    {{ DiscussionBoard.errors[3879586].message }}
    • Profile picture of the author myeanne
      Originally Posted by mnoonan View Post

      Wow! Thanks for all the responses! I am thinking about asking a tax pro for some advice, just hadn't gotten that far yet. I guess what I was thinking was that if I make the money and pay out for the work outsourced outside of the US, I would think that Uncle Sam would want his cut no matter what. Yeah- I think a tax pro is probably best! Thanks again!
      Hi there,

      Hiring outside USA specifically in the Philippines doesn't require any taxes. You will only pay the rate of your staff and there's no hidden charges.

      If you're planning to outsource, feel free to check us out. See my sig for more information.
      Signature
      Staff Leasing
      We Lease Offshore Employees

      Hire inexpensive labor from the Philippines!
      {{ DiscussionBoard.errors[3895287].message }}

Trending Topics