Foreign Contractor/Contracting

Factual Questions
1

I’m a web developer in California and I met a graphic designer working in Canada. It would be nice to contract eachother via the net, but what are the implications for this? I’m mainly wondering about taxes-obviously I would report my income to the IRS, but would I need to report it to the Canada Revenue Agency, too? And when I pay him-would I just file a 1099 or something, or would I need to report to the CRA, or even withhold IRS taxes?

I’d like to think I could just cut him a check and let the IRS and CRA know-and that he could do the same for me-but I have a feeling it’s more complicated than that.

(Obviously, I’m not asking for professional advice, I know you’re not my lawyer, etc; I’m just looking briefly right now, but keep getting thrown in circles.)

2

IANAA, I am not your accountant and I never played one on TV,

However, as a US citizen working abroad, I’ve had to study taxes.

Basically, you declare the taxes in the country were you are working, not where you are getting paid from. You have to pay US taxes, and it doesn’t matter where the money is coming from or where the service goes.

Same for him. He has to worry about his own taxes and is not liable for US taxes.

The IRS has a publication for US citizens living abroad.

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