The Risks U.S. Companies Should Consider before Hiring a Foreign Independent Contractor

The Risks U.S. Companies Should Consider before Hiring a Foreign Independent Contractor

Tax Law
By Anthony Diosdi In today’s global economy, it has become increasingly common for U.S. companies to hire workers located in foreign countries and classify them as independent contractors. U.S. companies can save money hiring foreign independent contractors because they do not have to provide benefits, office space, or equipment to contractors or pay taxes on compensation to contractors. U.S. companies can also save money engaging contractors from other countries due to lower labor costs. However, there are significant risks to hiring foreign independent contractors that should be carefully considered by any U.S. company before considering entering into such an arrangement. What Defines an Independent Contractor  for U.S. Federal Tax PurposesUnder U.S. tax law, an independent contractor is defined as follows: “an individual is an independent contractor if the payer has…
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