I hired an contractor from foreign country, can I deduct those expenses?

[RossAngelos]

I’m a self employed resident in US. I hired a person that lives outside of US and citizen of another country. So he is not obligated to pay taxes to US. My question is simple. Can I deduct that expenses? So far I paid 500$ to him. Not sure if there will be additional job for him, but  can I deduct those 500$?

[pk]

@RossAngelos , assuming that you are a citizen/resident (Green Card )/ resident for tax purposes you are taxed on your world income  and therefore  allowed to deduct your world wide  expenses  that are attributable  to generating that income.  Thus if you have foreign rental income, then expenses associated  with that income are generally deductible.

The question here  is   (a) is there a foreign  income associated with hiring a foreign contractor ;  (b) was this expense ( paying a foreign contractor ) associated with  personal asset or an income generating asset--- e.g. if you have a second home in a foreign country and you employ a local contractor , then that expense  is not deductible  ( just as it would not be deductible for a second home in the USA ).

So you have to tell -- which country,  what was the  contractor paid for, what type of asset  etc. etc.  

[RossAngelos]

@pk  Thanks for answer. I’m a Green Card holder and live and work in US. I’m doing a web development job ( self employed ). All my income from US companies. Recently I hired a guy to help me to build the website. He lives in a foreign country and not a US resident and has never been in US. I paid him 500$ so far for help. Planning to continue this relationship. 

So per your answer seems like I can deduct paid amount to contractor?

[pk]

In that case, all you have to do is show this amount as an expense under wages -- keep good records ( in case challenged ).  The Non-Resident Alien  probably should file a US return but more likely will not  -- she/he will definitely file his/her own country return and claim the income.