Which Tax Form

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- harryparker77
  
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posted
15 years ago

Thu, Nov 13, 2008 8:48 PM

A friend of mine is hiring a company back in India to do software work. Now this would classify the Indian company as a non resident foreign alien with no SSN or TIN. Plus the services are performed outside USA. So the company in India pays taxes on this earned income back there but how does my friend write it off to IRS as an expense related to paying to non resident alien for services performed outside USA. I guess what I am looking to know is what form does he use and what details does he need to fill it for the foreign organization to report his expenses?

Any help would be greatly appreciated Harry

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- Paul Thomas, CPA
  
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posted
15 years ago

Thu, Nov 13, 2008 10:38 PM

wrote

Yes. As long as it's an expense of his business that is both ordinary and necessary, and reasonable in light of all facts and circumstances.

There's not a form. There's no requirement for the US firm to file an Indian equivalent of a 1099.

He reports the expense as he would all other like-type expenses (as cost of sales, consulting, etc or so on) - on his business return. He just needs to keep the records (receipts, invoices, etc) that supports the payment.

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- Bill
  
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posted
15 years ago

Thu, Nov 13, 2008 10:54 PM

snipped-for-privacy@gmail.com posted:

I assume your friend has a small business, which results in preparation of a Schedule C. He can simply report "Software" as an expense item and enter the total cost, as one of the expenses of conducting his business.

The invoice he receives from the software designer would simply be retained with other receipts and invoices in his business records. There is no requirement to report the name or location of suppliers who provide services or products on Schedule C.

Bill