How do create a 1099 with a non US TAX ID?

Question

Hi,

I had a project done by a company in India and they send me an invoice with their tax id number.
I paid them but then I realized that their TaxID number was in the form of xxxxxx/c/xxxx where c is a character.
I tried to input that in quickbooks and i got the error message "invalid format".

Do you think that this will be a problem when reporting 1099s to the IRS?
How will manage to enter the tax id into the 1099 for them?
Is 1099 what I need to fill out for this or is there another form?
Will I be able to declare the amount as an expense?
The amount is over $5000.

Thanks

Answer 1

I believe you should use form 1042-S when reporting US compensation to foreign persons.

Answer 2

If they are doing business in the US, then they should have a US taxpayer identification number (TIN)-- either a social security number if it is an individual or a employer identification number (EIN) if it is a partnership or corporation. You may want to contact them and request the US TIN number. It's possible they simply gave the wrong number or formatted it incorrectly.

The other tip from the IRS is "If the recipient does not provide a TIN, leave the box for the recipient's TIN blank on the Form 1098, 1099, 5498, or W-2G. Only one recipient TIN can be entered on the form."

Answer 3

You are only supposed to issue 1099's to non-incorporated businesses. More than likely they are an incorporated business. Also, with the fact that they are in India, they quite possibly don't need to file a U.S. income tax return, so I wouldn't worry about a 1099 to them. And yes, you will be able to deduct the amount as an expense.

Answer 4

Since the payee was not subject to US taxes, you do not need to cut a 1099. It would be useless to them. They do not need a US TIN nor can they be compelled to get one.