Taxes with outsourcers in other countries, HELP

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Hey guys,

So this is the first year that I have done really well. I hired an accountant and there was a bit of a problem. I am from the US and outsource almost all work overseas to Philippines, India etc...

Now they have never dealt with someone who has done overseas outsourcing. They are worried I may not be able to claim the work outsourced as tax deductions. Since it is going out of the country. And at the moment it is over 40,000 worth, which would suck big time if I couldn't claim any of that as a deduction.

I know a lot of guys outsource here and may be in the same boat. Were you able to get tax deductions on work done from outsourcers?

I found this http://www.irs.gov/pub/irs-pdf/f1042s.pdf which seemed to indicate that I need the name and addresses of everyone I outsourced work to. Maybe that is all I need?

Anyone with experience on this and has any thoughts would be greatly appreciated. Looks like I may need to start hiring some employees here :rolleyes:
#offline marketing #countries #outsourcers #taxes
  • Any cost of doing business is deductible. Any accountant should know that.
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  • Oh... also, the 1042s is irrelevant. If you have someone in the Philippines that is a citizen of the philippines working at their home, you don't need anything. You have to cover yourself though, write up a small agreement basically stating the opposite wording of the w-8 form and you'll be okay.
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    • Thanks man! Yeah it kind of caught me off guard when they were not sure what to do. Maybe I will look into a different accountant as well.
  • If you've been using Paypal, which I'm pretty sure you have been. Didn't you have your people create Paypal invoices? This should be clear enough documentation that your payments are a cost of doing business and you'd have records via Paypal indicating it.

    If not, start making them send you the invoices in order to get paid.
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    • Some gave invoices but a lot were just details sent through a wufoo form and then payment being made. But I do have records of all of them.

      I appreciate the help and advice guys. Thanks
  • Make your outsource team use a site like Elance or ODesk and everything is handled for you.
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  • Is it wisdom that one should have a divorce attorney handle a civil matter?

    Is it wise to call a plumber to repair your automobile?

    Let me suggest that this is not the person to handle your taxes.

    Joe Mobley
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