We pay a foreign contractor who works partly in the United States. Can we treat the whole invoice as foreign-source?

Service income generally follows where the services are physically performed, not simply where the contractor lives or sends invoices. Work performed partly inside and outside the United States can require allocation and a withholding review. A W-8 establishes relevant foreign status but does not make U.S.-performed services foreign-source.

A specific business-owner situation

A foreign engineer works remotely overseas, then spends three weeks at a U.S. client site. The business cannot classify the whole project from the foreign mailing address.

Illustrative example, not a client result.

What to establish before filing

1. Establish the service locations and dates.
2. Obtain valid payee documentation.
3. Analyze allocation withholding and any treaty claim.

Which fact changes the answer?

A treaty exemption may require specific eligibility and documentation. It is not established merely because the contractor comes from a treaty country.

A mistake to avoid

Do not confuse foreign nationality with foreign-source income.

Records that support the decision

• Travel and work logs.
• Service agreement.
• Applicable withholding certificates.

The decision to document

Give the payment team a documented allocation and withholding instruction before the next transfer.

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Related questions

• Our contractor lives abroad but is a U.S. citizen. Should we collect a W-8 instead of a W-9?
• Our foreign vendor's W-8 expired before payment. Can we keep using last year's withholding treatment?

Sources and editorial context

• IRS Publication 515: foreign-person withholding

General educational information prepared with AI assistance. No individual professional review is claimed. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.