Withholding for payment to a non-US person

April 2, 2021

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Q. We had an individual in Pakistan find a bug on our website and reported it. In show of good faith, management would like to send him payment. He submitted an invoice and a W-8, but we are having trouble trying to figure out if we need to withhold tax and/or report. Would this be considered non-US-sourced income since he performed the work outside of the US?  A. (Answered by a 3rd party, independent advisory services firm offering experienced and practical help for tax regulatory compliance…

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Naturally, this forum doesn’t allow the kind of full information exchange necessary for the Institute of Finance & Management (IOFM) to provide legal advice and the Expert is not a tax attorney in any event. Please understand that the nature of our responses are limited by these constraints as well as the site’s Terms of Use. If you have further questions or suggestions about how we can improve IOFM, please let us know. 
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