Paying contractors abroad from the US: W-8BEN, 1099 and what to file

Which form for which contractor

Two questions decide the forms: is the contractor a US person, and where do they do the work?

With a valid Form W-8 that you can rely on, you do not report the payment on a Form 1099. A foreign company that works in the US can need other forms, so ask a tax adviser.

Sources: IRS, Instructions for the Requester of Forms W-8 (June 2022), IRS, Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities (2026), IRS, Instructions for Forms 1099-MISC and 1099-NEC (December 2026), IRS, Instructions for Form 1042-S (2026)Checked 20 Oct 2026

Where the work is done decides

Pay for services comes from the place where the person does the work. It does not matter where you signed the contract, where you pay or where your company is.

• Work done outside the US is foreign-source income. US withholding and Form 1042-S do not apply to it.
• Work done in the US is US-source income. US withholding and Form 1042-S apply.
• For work done partly in the US, split the pay by days: the days of work in the US, divided by all the days of work.

So a contractor who visits the US to work there, even for a few days, can change your duties for that part of the pay.

Sources: IRS, Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities (2026), IRS, Nonresident aliens, source of income, IRS, Instructions for Form 1042-S (2026)Checked 20 Oct 2026

The forms, one by one

Form W-8BEN

A foreign person gives it to you, not to the IRS, before the payment. It shows that they are not a US person, and it can claim a lower rate under a tax treaty.IRS, Instructions for Form W-8BEN (October 2021)Checked 20 Oct 2026

Form W-8BEN-E

The same form for a foreign company, such as a contractor who works through their own company.IRS, About Form W-8BEN-E, IRS, Instructions for Form W-8BEN (October 2021)Checked 20 Oct 2026

Form W-9

A US person gives it to you with their US tax number. A US citizen uses it even when they live outside the United States.IRS, Instructions for Form W-8BEN (October 2021), IRS, General Instructions for Certain Information Returns (2025)Checked 20 Oct 2026

Form 8233

A foreign person uses it to claim a treaty exemption for pay for work done in the United States. You review it, sign it and send it to the IRS within 5 days.IRS, Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities (2026)Checked 20 Oct 2026

Form 1099-NEC

You file it for each person who is not your employee and to whom you paid US$2,000 or more for services in 2026. The threshold applies to tax years after 2025, and it can change with inflation from 2027.IRS, Instructions for Forms 1099-MISC and 1099-NEC (December 2026)Checked 20 Oct 2026

Forms 1042-S and 1042

Form 1042-S reports a foreign person's US-source income that is subject to withholding. Form 1042 is the payer's yearly return. Both are due by March 15 of the next year.IRS, Instructions for Form 1042-S (2026), IRS, Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities (2026)Checked 20 Oct 2026

How to collect Form W-8BEN

• Ask for the form before the first payment.
• The contractor fills it in and signs it. You keep it. Do not send it to the IRS.
• The form asks for the contractor's tax number in their own country, with some exceptions.
• Check that the form is complete and that nothing on it conflicts with what you know about the contractor.
• The form stays valid until the last day of the third calendar year after the year of signing. A form signed on 30 Sep 2022 stays valid until 31 Dec 2025.
• When a fact on the form changes, the contractor must tell you within 30 days and give you a new form.

A payer without a valid Form W-8 or W-9, who does not withhold as the rules say, can have to pay the tax: 30%, or 24% backup withholding, plus interest and penalties.

Sources: IRS, Instructions for Form W-8BEN (October 2021), IRS, Instructions for the Requester of Forms W-8 (June 2022)Checked 20 Oct 2026

When a foreign contractor works in the United States

Pay to a foreign contractor for work in the US is US-source income. You must withhold 30% of each payment, unless an exemption applies.

• A tax treaty can lower the rate or remove it. The contractor claims this on Form 8233.
• The IRS can agree a lower rate with the contractor in a withholding agreement.
• The last payment of the year can be exempt in some cases, with the IRS's approval.

You report the payment on Form 1042-S and file Form 1042, by March 15 of the next year. You file Form 1042-S even when a treaty removes the withholding. Ask a tax adviser before a foreign contractor works in the US.

Sources: IRS, Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities (2026), IRS, Instructions for Form 1042-S (2026)Checked 20 Oct 2026

US citizens and residents who live abroad

A US citizen is a US person, even when they live outside the United States. So is a US resident. They give you Form W-9, not Form W-8BEN.

File Form 1099-NEC for each of them to whom you paid US$2,000 or more for services in 2026. Send it to the IRS and give it to the contractor by January 31 of the next year.

If a US person gives you no valid tax number, backup withholding of 24% can apply. Then you file Form 1099-NEC whatever the amount.

Sources: IRS, Instructions for Form W-8BEN (October 2021), IRS, Instructions for Forms 1099-MISC and 1099-NEC (December 2026), IRS, General Instructions for Certain Information Returns (2025)Checked 20 Oct 2026

The form does not decide if the person is a contractor

Form W-8BEN shows only the person's tax status in the US. It does not show that they are a contractor. In each of our countries, the law looks at how the work is done. A person who works like an employee can count as one. See the employee test in each of our countries.

A contractor of record (COR) signs with the contractor and pays them for you. Ask each provider which tax forms it collects and files. Compare the contractor of record offers.

For a person who works like an employee, an employer of record (EOR) employs them under the law of their country. Compare the three ways to hire abroad.

What to do, step by step

1. Check where the work is doneAsk if the contractor will do any work in the United States, and for how many days.
2. Collect the right formForm W-8BEN from a foreign person, Form W-8BEN-E from a foreign company, and Form W-9 from a US person. Do this before the first payment.
3. Check the formCheck that it is complete and signed, and that nothing on it conflicts with what you know.
4. Pay the invoicesWithhold only when the rules say so: for work in the US, or for a US person without a valid tax number.
5. File the returnsForm 1099-NEC by January 31 for a US person paid US$2,000 or more. Forms 1042-S and 1042 by March 15 for US-source pay to a foreign person.
6. Renew the formsAsk for a new Form W-8BEN before the old one ends, and when a fact on it changes.

The way that you pay, such as a bank transfer or a contractor platform, does not change these rules. Compare the ways to pay international contractors.

Sources: IRS, Instructions for Form W-8BEN (October 2021), IRS, Instructions for Forms 1099-MISC and 1099-NEC (December 2026), IRS, Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities (2026)Checked 20 Oct 2026