I have a number of independent contractors that work for my firm but do not live in the US, nor are they US citizens. My CPA instructed me to have a W-8CEI IRS form on file (equivalent to a W-9 for US workers) before I pay them. How can I tell QuickBooks which workers are W-8s and how can QuickBooks at year end issue the equivalent of 1099s for them?
Hello there, SSGLLC,
That's a great question! Allow me to help you get the form you need.
At this time, the IRS form W-8ECI is currently unavailable in Quickbooks Online. Although, we can access the report directly from the IRS website's downloadable forms.
Here's how you can generate the form in the website:
Once downloaded, you can manually fill out the report's information then file it to the IRS.
I can see how this feature can be beneficial to help you file your taxes efficiently, so I'd recommend sending our engineers your product suggestions. They are the ones who consider our customer feedback for future QuickBooks enhancements.
Here's how you can send your request:
That's it, SSGLLC. If there is anything else you need, please let me know by mentioning me in the thread. All the best for your business!
As long as the foreign contractor is not a U.S. person and the services are wholly performed outside the U.S., then no Form 1099 is required and no withholding is required.
However (Treas. Reg. §1.1441-1(b)(3)), it is generally easier to ask them to complete a Form W-8BEN. By signing Form W-8BEN, the foreign contractor is certifying that he or she is not a U.S. person.
The Form W-8BEN is not filed with the I.R.S. It is kept on file with the U.S. payor in case the U.S. payor is audited. If audited, the Form W-8BEN supports why no Form 1099 was issued and why no tax was withheld.
So basically as I read it, you file the w-8 and you are done. The 1099 is a US only form and not sent to foreign workers. But you should check with a tax accountant. I also found this legal article on the topic that makes for interesting reading.