You just hired someone in the Philippines.
Great decision. They’re doing amazing work. Then January rolls around and you think: “Wait, do I need to send them a 1099?”
Short answer: No.
Long answer: Still no, but let me explain why and what you should do instead.
The 1099 Rule That Saves You Time
Form 1099-NEC is only for U.S. persons or residents who receive over $600 annually. Your Filipino contractor doesn’t fit that description.
They’re working from the Philippines. They’re not a U.S. citizen. They don’t have a U.S. tax home.
The IRS doesn’t want a 1099 for them. In fact, sending one creates more problems than it solves.
I’ve seen business owners stress about this for weeks. They shouldn’t.
Why Filipino Contractors Are Different
The IRS Foreign Contractor Exemption
The IRS exempts foreign contractors from 1099 reporting. It’s in their guidelines.
Your remote worker in Manila is providing services from the Philippines. That makes them a foreign contractor, plain and simple.
Payment Amount Doesn’t Matter
You could pay them $1,000 or $100,000 a year. Still no 1099 required.
This applies whether you hired them directly or through a platform. The location where they perform the work is what counts.
Why W-8BEN Matters More Than 1099
Instead of a 1099, you need one simple document: the W-8BEN form.
Get this before you send the first payment. Seriously, make it part of your onboarding.
What the W-8BEN Does for You
This form does three things:
- It confirms your contractor is a foreign person.
- It documents their foreign status for your records.
- It prevents the IRS from automatically withholding 30% of your payments.
That last part is important. Without a W-8BEN, you could be required to withhold 30% under FATCA rules. Nobody wants that.
How Long It Stays Valid
The form is valid for three years. Set a reminder to renew it.
Your contractor will need their Philippine Tax Identification Number (TIN) for the form. Most Filipino workers already have this.
How U.S. Business Owners Should Handle This
Step 1: Request the Form During Onboarding
Make requesting the W-8BEN as routine as getting their PayPal address.
Step 2: File It Away (Not with the IRS)
Keep the completed form in your records. You don’t send it to the IRS. Just file it away in case of an audit.
Step 3: Track Payments as Business Expenses
Track all payments in your accounting software — QuickBooks, Gusto, or whatever you use. These are business expenses you can deduct.
Step 4: Skip the Backup Withholding
Forget about backup withholding. That’s only for U.S. contractors who don’t provide a valid TIN.
State-Level Considerations
Most states follow federal rules on this. California sometimes asks for additional documentation, but it’s rare. Check your state requirements if you want to be thorough.
If You’re in the UK
No 1099 Equivalent Exists
Good news. This is even simpler for you.
The UK doesn’t have a 1099 equivalent for foreign contractors. HMRC doesn’t require reporting for services provided by non-residents.
What UK Employers Should Collect
You still want to collect a W-8BEN (or W-8BEN-E if you’re dealing with an entity). This helps with FATCA compliance and keeps your banking relationships smooth.
Keep invoices from your contractors. That’s your proof of business expense.
Payment and Documentation
Pay through Wise or a similar service. Document everything. Claim the deduction on your tax return.
No special forms to file. No reporting thresholds. Just standard business expense documentation.
Australian Employers Have It Easy Too
TFN Requirements Don’t Apply
Australia’s TFN system only applies to Australian residents.
Your Filipino contractor doesn’t need to provide a Tax File Number. The ATO doesn’t expect one.
Withholding Rules for Foreign Contractors
No withholding requirements unless the services are physically performed in Australia. Since your contractor is working from the Philippines, you’re clear.
When Reporting Might Be Required
For payments over AUD 13,000 (approximately $8,500 USD), check if you need to report through the ATO’s systems. Most standard contractor relationships don’t trigger this.
Collect a foreign tax residency certificate if your accountant recommends it. Otherwise, keep invoices and process payments normally.
What Documents You Actually Need
United States Requirements
Get a W-8BEN for individual contractors or W-8BEN-E for entities. Collect this before the first payment. Renew every three years. This certifies foreign status and prevents withholding.
United Kingdom Requirements
Request a W-8BEN or W-8BEN-E plus regular invoices. Collect at contract start. Use for HMRC compliance and expense documentation.
Australia Requirements
Collect a foreign tax residency certificate if needed, plus invoices. Mainly required for payments over $8,500 USD or if your accountant requests it.
Universal Deduction Rules
All three countries let you deduct these payments as business expenses. Keep good records internally even if you’re not filing anything with tax authorities about your contractor.
How to Pay Your Filipino Contractors
Best Payment Platforms
Use Wise, Payoneer, or PayPal Business.
These services have low fees for Philippine peso transfers and automatically generate receipts. Your contractor gets paid quickly.
Contract Language That Protects You
Your contract should specify “independent contractor, services performed in Philippines.” This reinforces their foreign status.
Internal Record-Keeping
Keep a simple spreadsheet: contractor name, payment date, amount, purpose. This is for your records, not for filing anywhere.
If you’re hiring through HireTalent.ph, the platform streamlines payment tracking and ensures your contracts include the right language for foreign contractor relationships.
What Happens If You Send a 1099 Anyway
Don’t do this, but here’s what happens if you do.
Your Filipino contractor can’t file U.S. taxes with it. They don’t have a Social Security Number or ITIN. The form is useless to them.
The IRS might reject your filing. Penalties range from $60 to $310 per form for incorrect filing.
Your contractor gets confused. You look unprofessional. Your accountant has to fix it.
When You’re Scaling Up
Rules Stay the Same Regardless of Team Size
Maybe you’re hiring one person. Maybe you’re hiring fifty.
The rules don’t change. Each contractor needs a W-8BEN. No 1099s required, regardless of team size.
When to Bring in Professional Help
For larger teams, consider working with a cross-border accountant. Services like Bench.co specialize in this. They can review your processes and make sure everything is documented correctly.
Systems That Scale
If you’re building a team of 10, 50, or 300 people for customer support or other operations, the administrative side matters.
You need systems that track documentation, payment records, and contract details without drowning in paperwork.
The Bottom Line
U.S. employers don’t send 1099s to Filipino contractors. UK and Australian employers don’t have equivalent requirements either.
Get a W-8BEN form instead. Collect it early. Renew it every three years.
Track your payments for your own business expense deductions. Keep invoices and contracts.
Pay through reliable services. Document everything reasonably well.
That’s it. You’re compliant. Your contractor is happy. Your accountant won’t yell at you.
