How to Pay Foreign Freelancers?

June 19, 2008 6:45 AM

As an American employer paying foreign freelancers doing work in their home countries abroad, do I have to withhold US taxes or require my freelancers to file US tax paperwork, etc.?

At my American, America-based employer, I'm in the process of hiring several foreign freelancers in various countries to do editorial work about their home cities. At other companies when I did the same thing, it was never necessary to require such freelancers to file US tax paperwork -- they were not US citizens, were independent contractors, and were not technically deriving income from US-based activities. For the same kind of work from the same kind of people, my new accountant is insisting that they have to file for a US tax ID number, or form a US corporation, etc.

I think she's confusing fulltime employee tax issues with independent contractor issues. Am I right? I'm sure forcing potential freelancers to go through this hassle will hurt recruiting, to say the least. If anyone can point me to official documentation of the issue, or a good resource person, that would be extremely helpful. Many many thanks in advance.


chris m

posted by chrismohney to work & money (4 comments total)

Freelancers within the US file a W-9 form. People outside the US freelancing for a US company fill out a W-8. There are different kinds.

Where I work, no one gets paid without filing IRS forms, it doesn't matter where you live or if you're a freelancer, employee, or vendor.
posted by lampoil at 7:04 AM on June 19

I believe that to be true. I was going to do work for US companies, as a Brit, living outside the US, and was told the same thing: that I have to get a US tax id. The idea is that my employer would then US tax, and the IRS gives me a certificate with the amount of tax I paid them, which I then gave to my local tax authority - who count that as tax already paid, and don't double-charge me.

In reality, it's basically impossible to get the tax payers ID - the "ITIN number" - the form requires notarising at a US Embassy, and needs the name of the tax treaty between the US and the other country, and various other bits of info. Get one bit wrong, and it all starts again. Months of waiting, and lots of shouting, I seem to remember. In the end, I gave up. The fall in the value of the dollar made it not really worth my time.

I think this is pertinent.
posted by DangerIsMyMiddleName at 7:08 AM on June 19

W-8 form - that's it. Here it is.
posted by DangerIsMyMiddleName at 7:13 AM on June 19

Services performed outside the U.S

Compensation paid to a nonresident alien for services performed outside the United States is not considered wages and is not subject to graduated withholding or 30% withholding.
posted by saradarlin at 9:30 AM on June 19