Marriage with a non-US citizen

[cmallow17]

Hello! 

I got married this year to a non-US citizen. I am a US citizen and we both live together overseas. I have a sole proprietorship (2024 is my first full year of being self-employed). My partner has a special skill (translation), for which I would like to hire him to assist me in my business. I have a few questions around this:

1) Am I able to hire him as an employee? I'm not sure since he is not yet a U.S. citizen. He would be performing the translation work outside of the US.

 - If so, would I be able to compensate him through a Section 105-HRA? Would our medical expenses from overseas be eligible, or do we have to seek care only in the US for the expenses to be eligible?

-If I may hire him as an employee, would I be allowed to set him up under my solo 401K plan? Or must I wait until he has authorization to work in the US?

2) Alternatively, am I able to hire him as a contractor and issue him a 1099? 

3) If I hire him as a contractor and I issue him a 1099, will he be liable to pay self employment taxes (i.e., Medicare and Social Security)? Even though he is not in the US? He does not have a SSN or ITIN (but we are planning to apply for the ITIN with the 2024 tax return).

4) Since we are both outside of the US, we will plan to use the Foreign Earned Income Exclusion. Does the $126,500 exclusion amount only apply to excluded income for the purposes of federal income tax, or does it also include Medicare and Social security taxes?

Thank you very much for your help and consideration!

[FranklinF]

1. US companies can hire international workers legally.
2. In general, you are required to have established a Legal Entity in the workers' country of residence in order to DIRECTLY HIRE EMPLOYEES.
3. You still have the option to hire INDEPENDENT CONTRACTORS
   
4. A U.S. business payor making a compensation payment to a non-U.S. independent contractor must withhold an amount sufficient to ensure that at least 30% of the amount subsequently determined to be U.S.-source income is withheld.
   
5. Self-employed U.S. citizens or residents are still subject to SE Tax Rules regardless of where they work !!!
6. You may apply for the Foreign Earned Income Exclusion as long as all the criteria for such are met.
7. From ALL the above, we can see that it is VERY IPORTANT to first determine if a foreign person is considered or regarded as a US Citizen for tax purposes. 

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