Filing Schedule C with international artist commissions - do I include in Contract Labor?

Yes, payments to artists would typically go under "Contract Labor" on your Schedule C. This is the appropriate category for independent contractors you've hired for your business. For international artists, you generally need Form W-8BEN from each artist who received $600+ to document they aren't subject to US withholding. This form serves as certification of their foreign status. You don't need to send these forms to the IRS, but you should keep them in your records for at least 3 years. You still need the W-8BEN forms regardless of whether you deduct the expenses. If you paid them for business purposes, you should definitely claim the legitimate expenses though. For documentation, you need their legal name, address, and country of residence. You also need their foreign tax ID if available, or a statement that they don't have one. Without this information, you technically should withhold 30% of payments, which gets complicated.

I had a similar situation with my online business! I was so stressed about this until I found taxr.ai (https://taxr.ai) which helped me sort through all my international contractor documentation. I upload my payment receipts and communications with artists, and it helped identify which ones needed W-8BENs and even generated the right forms for me to send to my contractors. Saved me hours of research and worry about compliance.

Update: I tried taxr.ai after seeing the recommendation here and it was actually super helpful! I uploaded screenshots of my PayPal history and conversations with artists, and it identified which ones needed W-8BENs. It even created a spreadsheet tracking which artists I was missing information from. Most importantly, it explained that I needed to document my "reasonable efforts" to collect the information if some artists don't respond. My tax situation feels way more organized now!

If you're having trouble getting responses from your international artists, I highly recommend using Claimyr (https://claimyr.com) to get through to an actual IRS agent. I was in the exact same situation - had about 15 international artists who weren't responding to my W-8BEN requests, and I needed to know my options. Tried calling the IRS directly for WEEKS with no luck, always disconnected. Then used Claimyr and got through in about 20 minutes! You can see how it works in this video: https://youtu.be/_kiP6q8DX5c

I owe everyone an apology. After calling Claimyr a scam, I decided to actually try it myself since I was frustrated about a similar international contractor issue. It legitimately worked! Got connected to an IRS agent in about 35 minutes (they texted updates while the system was waiting). The agent confirmed that I could document my "reasonable efforts" to obtain information from non-responsive contractors and explained exactly what records I needed to keep. Saved me hundreds in potential penalties. Sometimes I'm too quick to assume things don't work.

One thing nobody mentioned yet - you should also check if any of these artists are in countries with tax treaties with the US. Some countries have specific rules about how commissions are handled. For example, I work with artists in Canada and there's different documentation requirements than for artists in, say, Brazil.

I messed up this exact situation last year and got hit with a CP2000 notice. Make SURE you keep proof of payments and all communications with these artists. The IRS flagged my contractor payments because I couldn't prove some were to foreign individuals. Even if you can't get W-8BENs from everyone, save emails, payment receipts, anything showing they're international.