Tax Obligations When Hiring a Remote Contractor from the US
Your tax obligations when hiring a remote contractor from the US are simpler than most founders fear: for non-US persons performing work outside the United States, you generally do not withhold taxes or issue a 1099. Collect a W-8BEN, document the B2B relationship, and the IRS exposure is minimal.
The W-8BEN Framework
The US Founder Tax Checklist
- W-8BEN on file — certifies foreign status; required for non-withholding.
- No 1099-NEC — not issued for non-US persons working abroad.
- No US withholding — the contractor reports and pays tax in the Philippines.
- B2B agreement — written contract establishing contractor (not employee) status.
- Documented payments — Wise/bank receipts retained for audit trail.
With these five items, your exposure is minimal and your records are audit-ready.
For non-US citizens performing work outside the US, you generally do not need to withhold taxes or issue a 1099. Instead, you collect a W-8BEN form. This simple step protects you while your technical VA builds your n8n workflow integrations. the direct-hire practice behind these systems.
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Frequently Asked Questions
How much does it cost to hire a remote contractor from the Philippines?
Elite Filipino technical contractors typically charge $1,500-$4,000/month depending on expertise level. A senior RevOps architect or CRM automation specialist commands $2,500-$5,000/month, compared to $8,000-$15,000 for equivalent domestic talent.
What payment methods work best for paying Filipino contractors?
Wise (formerly TransferWise) is the industry standard, charging 0.5-1.5% in conversion fees with same-day settlement. Traditional bank wires cost $35-50 per transfer plus 2-4% hidden FX margins. For a $2,000 monthly retainer, Wise saves $30-65 per payment.
Do I need to file tax forms for a Filipino contractor?
Collect a W-8BEN form to certify their foreign status. You do not file a 1099-NEC for non-US persons performing work outside the United States, and you are not required to withhold US federal income tax. Keep the W-8BEN and payment receipts on file for IRS compliance.