We manufacture food warming equipment, and buy parts to repair the product we sold. We are in WI, but sell worldwide, so I don't know where the actual repair takes place. We hire someone local to the customer to do the warranty work. Is this a 1099 event?


We understand the question to be about the taxability of the service payments to contractors worldwide. If that is incorrect, or incomplete (do you also have a question about the parts?), please let us know.

You are paying various contractors in a variety of countries to carry out warranty repairs on product your customers bought, in the countries of the customers’ operations. Yes, these contractor payments may in some cases be subject to 1099 reporting. If we understand the situation, they probably are not subject to 1042-S reporting or withholding.

Payments for services of $600 or more in the U.S. are subject to 1099-MISC reporting. So if you are paying contractors in the U.S. at least $600 annually, then you must report those on a 1099 (and if you do not have a TIN for the contractor, you must withhold on the payments). 

For payments to non-U.S. persons for services performed outside the U.S., that represents non-U.S. source income and is not subject to withholding and reporting.

If you pay a U.S. person for services and those services are performed outside the U.S., and the amount paid is $600 or more, report on a 1099-MISC.  

And if you pay a non-U.S. person for services performed within the U.S., then those payments are subject to withholding and reporting on a 1042-S.

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