Legal Question in Business Law in New York
Foreign Indepedent Contractors and tax affects
OK. I am about to start doing a lot of work using foreign companies/contractors. I know here in the US that they would be tax deductible but that they must fill out 1099's, does this apply to foreign contractors? Will they be tax deductible without filling out a 1099?
Due to the fact that I will use foreign contractors my profits will be extremely high and from my understanding of taxes over 90k counting ny state tax I can expect around 10% tax on most of money correct? So if I make let's say 100Mil and tax takes 10Mil, what happens if the cost of the independent contractors is higher or even to the amount the gov't takes in taxes? Would I get a full refund of all 10Mil would I get above and beyond that 10Mil back?
1 Answer from Attorneys
Re: Foreign Indepedent Contractors and tax affects
It is irrelevant where your contractors work from, you need to file Forms 1099 for all contractors receiving over $600 a year, to be eligible to deduct these costs. The forms need names, addresses and tax numbers (social security or federal tax identification numbers. Foreign workers, even if consultants, may be subject to taxes in the US, if they receive compensation from the US. Thus, you may be subject to withholding for the foreign workers/consultants. The reporting and possible tax withholding is your responsibility. The income tax rates to which you would be subject (federal and state) are linked to profitability, with higher rates as your net income rises. The 10% rate you cite, is based upon minimal taxable income. More information is necessary to provide you with a better answer than the general information stated above.
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