Am I required to issue a 1099-MISC form if I am based abroad?

[tessmartin]

I am a US citizen who lives abroad, and runs a small company (the equivalent of a sole proprietorship). I will be filing US taxes, but also local taxes, and I usually qualify for the foreign-earned income exclusion. I hired the services of a US based independent contractor for over $600. Am I required to issue a 1099-MISC form?

[ToddL · Accepted solution]

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.)