Foreign Contractor Withholding In Maricopa
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FAQ
Without this form, you must withhold 30% of your payments to foreign contractors for taxes. IRS Form W-8BEN-E is similar but is for foreign businesses rather than individuals. For example, if you work with a foreign contractor who has formed a business entity, they may need to file W-8BEN-E instead of W-8BEN.
If the employee working in Arizona is not an Arizona resident, withholding of Arizona state income tax is required once the employee has been working in Arizona for 60 days. If both the employer and nonresident employee agree, withholding can start at the beginning of employment instead of waiting 60 days.
Form 1099-NEC and 1099-MISC: If your business pays a foreign contractor with a temporary TIN (ITIN) $600 or more for services provided within the United States, then you can file Form 1099-NEC or Form 1099-MISC to report these payments to the IRS.
New contractors and out-of-state contractors are required to be licensed with the Registrar of Contractors and, in most cases, must post a bond with the Arizona Department of Revenue (ADOR).
Under US domestic tax laws, a foreign person generally is subject to 30% US tax on the gross amount of certain US-source income.
Although a nonresident employee may be exempt from Arizona income tax withholding, the individual has to file a nonresident Arizona income tax return if he or she meets the filing requirement.
U.S. State Non-resident Withholding Tax Georgia. Maryland. Oklahoma. New Mexico. Utah. California. Oregon. Montana.
Withholding Percentage Options Keep in mind for tax year 2023 and beyond, the tax rate for Arizona taxable income is 2.5%.
