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I am a U.S. citizen living in the United States. I am helping a YouTuber make his videos by paying people to help make content for his video gaming videos. Two of the three people I pay to do this are from other countries. Soon I will have paid them each in total more than 600$ which, from my understanding, is the point where you need to declare the payments on your taxes(?)

I pay them by using PayPal. Can I just use the PayPal statements to substantiate these payments as a business expense on my taxes? And I wouldn't need them to sign a 1099 because they're not U.S. citizens, correct? And I will have my one U.S. worker sign a 1099. Then would I be okay come tax season? Also I do have my own LLC, if that matters.

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  • The US recipient must provide their SSN or EIN on W-9; for this type of payment they aren't actually required to sign it, although if they just read the form and not all the instructions they probably will. You retain this. You prepare the 1099-NEC (formerly -MISC) which you file with IRS and provide a copy to the recipient. Aug 23, 2020 at 1:00

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When you pay somebody for goods or services that are business-related the amount you paid is deductible from your gross income. Regardless of how much it is; there is no threshold. It shows up as a deduction on your Schedule C if you're a sole proprietor or your corporation's 1120s.

I don't know the detailed rules for filing 1099s, but $600 sounds right; that's the threshold for filing a form that tells the IRS that the person you paid got paid. That's so the IRS can track their income; it has nothing to do with deductibility for your taxes. I suspect that you're right that you don't have to file a 1099 for payments to someone in another country, but don't rely on me for that.

As to documentation, there are no specific requirements. Keep reasonable records. Make sure you understand what's going on in your business and on your tax returns.

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    Nit: it's not just 'in' country that matters. US citizen and LPR 'expats' remain subject to full US tax, and reporting, even when they live elsewhere. Only an alien who is not resident as defined for tax purposes is categorized as a 'non-resident alien' and subject to US tax only on US-sourced income, which doesn't include this case of pay for services (labor) (and not for US government). OP said 'from' another country which I assume to be NRA. Aug 23, 2020 at 1:03
  • @dave_thompson_085 — re-reading my answer, I said “payments to someone in another country”,and that’s clearly wrong. Thanks for picking up that sloppiness. Aug 23, 2020 at 2:41

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