say i have a partnership with another person and each of us gets 50% of all earnings. He is in pakistan and im in the us. We have several cpa accounts in my name that are whored out to another person for 60% of account earnings so in the end we each get 20% of the check what im wondering is if there is any way for me to have them fill out a form or something at the end of the year so i dont end up paying the taxes on all of the Income from the cpa companies? Im confused and i need a tax person i think...
Looking for a tax expert
- Thread starter dschill
- Start date
Uncle Kracker
Registered Member
- Sep 15, 2008
- 89
- 186
I was wondering about this awhile back and got a non-answer back from the IRS (to my original question to them), last post gives some more specific details about this.
Short version is...
Their income is not required to be reported to the IRS nor is it taxable by the IRS. Under your arrangement you're on the hook for all of it...unless you keep detailed (and verifiable) records. You need at least a W8 from your partner(s) and records of payments (preferably paper checks) or at the least records of electronic payments.
Code:
http://www.blackhatworld.com/blackhat-seo/business-tax-advice/48052-ask-outsourcing-taxes.htmlTheir income is not required to be reported to the IRS nor is it taxable by the IRS. Under your arrangement you're on the hook for all of it...unless you keep detailed (and verifiable) records. You need at least a W8 from your partner(s) and records of payments (preferably paper checks) or at the least records of electronic payments.
Complicated arrangement... In essence, your partner who is taking the 60% from the CPA accounts is being paid a commission. This is easy to deduct on your taxes. You would report the whole income, and deduct the commission paid to the CPA guy. Of course you would need a W-9 from that person and pay him/her in a documentable fashion (i.e. check).
Uncle Kracker
Registered Member
- Sep 15, 2008
- 89
- 186
If his partner in Pakistan is a not a US citizen, the IRS requires the W8 form.
Jackalakus
Junior Member
- May 19, 2009
- 192
- 66
You need teh W8 but - you will obviously only be taxed on your US income. They will not tax you for the pakistani gains.
FreelanceWriter
Newbie
- Jun 10, 2009
- 20
- 2
Another way to do it which works great is to make them a consultant using a 1099 instead, that way they have to do all the work and all you do is report what you spent on them. It's less work!
Torque09
Junior Member
- Apr 25, 2009
- 112
- 17
Hi dschill,
Well, definitely in your case you have to find an accountant. I would recommend to have the local guy (or girl). Prefer to deal with accountant I could trust. But anyway it is up to you.
Here is my advice:
1. For your partner in Pakistan you have to fill out W-8BEN form.
2. For the CPA buddy, you should fill out 1099 form.
Make sure you send them the copy of the form, because they have to report their income as well.
Hi Zach,
The W-8BEN form will exempt you from US taxes, but you have to pay Canada taxes instead. So keep that in mind.
Well, definitely in your case you have to find an accountant. I would recommend to have the local guy (or girl). Prefer to deal with accountant I could trust. But anyway it is up to you.
Here is my advice:
1. For your partner in Pakistan you have to fill out W-8BEN form.
2. For the CPA buddy, you should fill out 1099 form.
Make sure you send them the copy of the form, because they have to report their income as well.
Hi Zach,
The W-8BEN form will exempt you from US taxes, but you have to pay Canada taxes instead. So keep that in mind.
