If you are claiming an expense (deduction) on your U.S. return for the services of the
US based independent contractor,
foreign-income exclusion notwithstanding, you are required to report the payment on Form 1099-MISC.
From Instructions for Form 1099-MISC
File Form 1099-MISC, Miscellaneous Income, for each
person to whom you have paid during the year at least $600 in services performed by someone who is not your
employee (including parts and materials), box 7;
Trade or business reporting only. Report on Form
1099-MISC only when payments are made in the course of
your trade or business. Personal payments are not
reportable. You are engaged in a trade or business if you
operate for gain or profit.
There is no distinction made for payments coming from a foreign country. In fact the Form 1099-MISC specifically mentions the option of a foreign address for the payer.
(PAYER’S name, street address, city or town, state or province, country, ZIP
or foreign postal code, and telephone no.)
