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Q. My company is going to begin outsourcing work to independent contractors in another country. Are there any restrictions on claiming tax deductions for work performed by foreigners? D.D.N., New York

A. No. Generally, the rules are the same as they are for fees paid to a U.S. firm or individuals. You can deduct the “ordinary and necessary” expenses of your business, even if they’re paid to foreign sources. Be sure to keep adequate records of the expenses—such as canceled checks and invoices—to prove that the amounts you’ve paid represent fees for legitimate business services. Tip: Use Form 1042 to report the fees. The form is available at www.irs.gov/pub/irs-pdf/f1042.pdf.

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