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simplysrujan · Feb 9, 2006, 06:14 PM

Hi,
I have hired a company in India to do some of our work. I am wondering if I can send them a check for the agreed amount or do I have to pay the taxes and pay them the remaining amount. Would I be able to write off my taxes?
Thanks

AtlantaTaxExpert · Feb 9, 2006, 08:41 PM

To which taxes do you refer?

simplysrujan · Feb 9, 2006, 09:46 PM

I am talking about employment tax. Do I have to send the whole amount so that they pay the tax in India or do I have to with hold the taxes(to pay IRS) and send them the remaining amount?
Thanks

AtlantaTaxExpert · Feb 9, 2006, 09:59 PM

Rujan:

In most cases, U.S. employment taxes applies only to work performed within the United States. The exceptions are U.S. military deployed overseas, U.S. government employees located outside of the U.S. and U.S. citizens working for U.S.-based companies in foreign locations.

If you hired an Indian company to work in India, then U.S. employment taxes do NOT apply.

simplysrujan · Feb 9, 2006, 10:24 PM

Thanks for the response.
Could you please tell me how I can write off the taxes for the amount I pay these people in INdia.
Thanks

AtlantaTaxExpert · Feb 10, 2006, 05:38 AM

Foreign taxes you pay are deductible as a miscellaneous deduction on Schedule C (for a sole proprietorship) or on the partnership or corporate return you file.

simplysrujan · Feb 12, 2006, 02:53 PM

Thanks for your assistance. I will be talking to my accountant for further help.
Sr

Fr_Chuck · Feb 12, 2006, 03:23 PM

Are you hiring individual employees, or merely hiring a company to do work for you.

Even in the US if you hire a firm to do work for you, you merely pay them the agreed to price for their service. The company that is contracted by you would be liable for their own taxes and expenses.

For example, my son owns a plumbing business, he hires on a regular basis two other plumbing companies to do work for him ( subcontract)

He is not responsible for any of their taxes, insurance or workers comp.
He merely has a contract with them to do a certain amout of work or do a certain job for a certain amount of money, he pays them merely the contracted price. He will if the amount is over a certain lmit a 1099 form to show that he paid them a certain amount of labor.

You sounded like you merely hired a firm to do work for you, I would advice you seriousllsy if you are doing business and esp overseas business that you take some business and accounting classes that can help you properly know your liabiliy in many areas.

simplysrujan · Feb 12, 2006, 04:24 PM

Thank You Fr Chuck

AtlantaTaxExpert · Feb 12, 2006, 10:19 PM

Exceptionally sound advice, Fr Chuck!