Do You Send a 1099 to a Filipino VA? 2026 Tax Form Rules

Every January I hear a version of the same worry from US business owners who hired a Filipino virtual assistant during the year. They paid someone well past the reporting threshold, they know a US contractor at that level gets a 1099-NEC, and now they are convinced they have missed a filing and are about to be penalized for it.

In almost every case there is nothing to file. A Filipino VA who is not a US person and who performs all of the work from the Philippines does not receive a 1099-NEC at any payment level. What you actually need is a signed Form W-8BEN, and the moment to collect it is before the first payment, not in January. This guide covers why the 1099 does not apply, which W-8 form to request, what it protects you from, how long it stays valid, and what belongs in the contract next to it.

One note before we start. I run Galasya on my own and I am not a CPA or a tax attorney. Everything below is sourced to the IRS and to the text of the US-Philippines tax treaty so you can verify it yourself, and anything unusual about your situation is worth a short call with your accountant.

The short answer

If your VA is a Philippine citizen and resident, is not a US citizen or green card holder, and does every hour of the work from the Philippines, then you file no 1099-NEC, you file no 1042-S, and you withhold nothing. You collect a signed Form W-8BEN before the first payment, keep it on file, refresh it every three years, and deduct the payments as an ordinary contract labor expense. That is the whole obligation.

Why Form 1099-NEC does not apply to a Filipino VA

Two rules stack together to produce that result, and it is worth understanding both because they are what you would point at in an audit.

The first is who the 1099-NEC is for. Form 1099-NEC reports nonemployee compensation paid to US persons. A nonresident alien is not a US person, so the form is the wrong instrument regardless of how much you paid. The IRS counterpart form for foreign persons is Form 1042-S, which reports US-source income paid to nonresidents.

The second rule is what makes 1042-S drop away too, and it is the one most people miss. Under the sourcing rules, personal service income is sourced to the place where the services are performed. The IRS states this plainly in its guidance on the source of personal service income: section 861(a)(3) treats compensation for services performed in the United States as US-source, and section 862(a)(3) treats compensation for services performed outside the United States as foreign-source. Your VA sitting in Cebu answering your inbox is performing services outside the United States. The income is foreign-source. It is not US-taxable income in the VA's hands, there is nothing for you to withhold, and there is nothing for you to report on 1042-S.

Note what does not appear anywhere in that reasoning: the amount you paid. The dollar figure is irrelevant here. It is the payee's status and the place of performance that decide the outcome.

The 2026 threshold change, and why it is a distraction here

There is a genuine 2026 change worth knowing about, and it is the reason a lot of employers are re-reading their contractor paperwork this year. The One Big Beautiful Bill Act, signed into law on July 4, 2025, raised the federal reporting threshold for Form 1099-NEC and Form 1099-MISC from $600 to $2,000 for payments made on or after January 1, 2026, with the first returns under the new rule filed in early 2027. The $600 figure had been in place since the 1954 tax code without ever being indexed for inflation.

That change matters for your US-based contractors. It changes nothing about your Filipino VA. The threshold governs when a 1099 is required for a payee who would receive one in the first place, and a foreign person performing services abroad is not in that population at either $600 or $2,000. If you take one thing from this section, take this: stop measuring your VA against the threshold. It is the wrong test.

What you actually need: a signed Form W-8BEN

The form that replaces the 1099 in your file is Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals). The IRS instruction is simple: give Form W-8BEN to the withholding agent or payer if you are a foreign person and you are the beneficial owner of an amount subject to withholding. You are the payer, so you are the one who has to ask for it.

The VA fills it out and signs it. You do not send it to the IRS. You keep it in your records, and it is your evidence that the person you paid is a foreign person, which is what supports your decision not to file a 1099 and not to withhold. Without it, you are asserting a conclusion you cannot document.

The form itself is one page and takes about five minutes: legal name, country of citizenship (Philippines), permanent residence address in the Philippines, a foreign tax identifying number (the VA's Philippine TIN), date of birth, and a signature. There is no fee and no filing deadline. Ask for it during onboarding, at the same time you set up payment details, and it is done before it can become urgent.

W-8BEN or W-8BEN-E: which one to request

Both forms exist and asking for the wrong one wastes a week. The rule is about what the payee legally is, not what they do.

• Form W-8BEN is for foreign individuals. This covers the overwhelming majority of VA hires: one person, working as a sole proprietor, invoicing you under their own name.
• Form W-8BEN-E is for foreign entities. Use this when you are paying a registered Philippine corporation, partnership, or agency rather than a person. It is substantially longer because it also asks the entity to classify itself for FATCA purposes.

If your VA registered a business in the Philippines and invoices you through it, you want the W-8BEN-E from the entity. If they invoice you personally, you want the W-8BEN. When in doubt, look at whose name is on the invoice and whose bank account receives the money.

What skipping the form actually costs you

This is the part worth taking seriously, because the exposure sits with you as the payer, not with the VA. When you cannot associate a payment with valid documentation, the presumption rules take over, and they do not presume in your favor.

The IRS puts it directly in its Instructions for the Requester of Forms W-8: a withholding agent or payer that fails to obtain a valid Form W-8 or Form W-9 and fails to withhold as required under the presumption rules may be assessed tax at the 30 percent rate under chapter 3 or chapter 4, or the 24 percent backup withholding rate under section 3406.

Read that again with your own numbers in it. On $18,000 of annual VA payments, a 30 percent assessment is $5,400 that you owe and cannot recover from the VA after the fact. A one-page form collected during onboarding is what stands between you and that outcome. This is the single strongest argument for treating the W-8BEN as a hard gate before the first payment goes out.

Where the US-Philippines tax treaty actually fits

Almost no VA hiring guide names the treaty provision, so here it is. The governing article is Article 15, Independent Personal Services, of the 1976 income tax convention between the United States and the Republic of the Philippines. Paragraph 2 sets out the only circumstances in which the other country may tax a resident's independent service income. The United States may tax a Philippine resident's independent personal service income only if that person has a fixed base regularly available in the United States for performing the activities, or is present in the United States for periods aggregating 90 days or more in the taxable year, or derives more than $10,000 of gross remuneration in the taxable year from US residents for services performed in the United States.

A VA who never leaves the Philippines fails all three conditions, which is exactly the point. The treaty result and the sourcing result agree: zero US tax, zero withholding.

Now the honest correction that most blog posts get wrong, and it will save you a rejected form. Part II of the W-8BEN is the treaty claim section, and for a VA working entirely from the Philippines it should normally be left blank. There is no US-source income to exempt, so there is no claim to make. Beyond that, a treaty exemption on personal services income performed in the United States is not claimed on the W-8BEN at all: it goes on Form 8233, which requires the individual to have a US ITIN and which the withholding agent submits to the IRS. So Article 15 is the article you cite, and Form 8233 is where you cite it, in the narrow case where your VA actually travels to the US and works there. For ordinary remote work, the W-8BEN alone with Part II blank is the correct and complete answer.

How long a W-8BEN lasts and when to re-collect it

A W-8BEN is not a one-time task you can forget. Per the IRS instructions for the form, it remains in effect for establishing foreign status from the date it is signed through the last day of the third succeeding calendar year, unless a change in circumstances makes any information on it incorrect. A form signed on March 4, 2026 stays valid through December 31, 2029.

Two things follow. First, put a calendar reminder for December of the third year and request a fresh form then, so you are never paying against expired documentation. Second, the VA is obliged to notify you within 30 days if anything on the form becomes incorrect, for example a change of country of residence or a move to the United States. Say that out loud during onboarding rather than assuming it. A VA who relocates to the US changes your obligations completely, and you want to hear about it from them and not from your accountant a year later.

The payment is still a fully deductible business expense

Nothing above reduces your deduction. Money paid to a Filipino VA for genuine business work is an ordinary and necessary business expense and comes off your books as contract labor in the normal way. The absence of a 1099 is not the absence of a deduction. What substantiates the expense is your own records: the signed contract or SOW, the VA's invoices, and your payment records from Wise, PayPal, Payoneer, or your bank. Keep those three together with the W-8BEN and the file supports itself.

What belongs in the contract alongside the W-8BEN

The W-8BEN handles your tax position. It does not handle your commercial or legal position, and a tax form is not a contract. A short statement of work, signed before the first task, should cover five things.

• Scope. The specific tasks and tools the role covers, and what is explicitly outside it. Vague scope is the most common cause of a VA engagement going wrong, and it also weakens your contractor classification.
• Deliverables and schedule. What gets produced, how often, to what standard, and by when. Independent contractors are engaged for outcomes, not supervised hours.
• Payment terms. Rate, currency, invoicing cadence, payment method, who absorbs transfer fees, and the payment date. Currency and fees cause more friction with overseas hires than the rate itself does.
• Intellectual property assignment. A written assignment of the work product to you, with work-made-for-hire language where applicable. Without it, ownership of the designs, copy, code, or content you paid for is genuinely unclear across borders.
• Termination. Notice period on both sides, how final payment is handled, and the return or deletion of your accounts and data. Pair it with a confidentiality clause if the role touches customer records.

Worth adding: a representation from the VA that they are responsible for their own Philippine tax registration and filings. It is true, it costs nothing to state, and it reinforces the contractor relationship. On classification, remember that Philippine employees carry entitlements that contractors do not, including 13th month pay, rest days, and statutory leave, so a genuinely contractor-shaped engagement should look like one on paper as well as in practice.

Do this now: the five step checklist

• Before the first payment, send the VA a blank Form W-8BEN (individuals) or W-8BEN-E (registered entities) and treat the signed copy as a condition of the first invoice being paid.
• Check the form is complete. Full legal name, country of citizenship, a Philippine residence address rather than a US one, a foreign TIN, date of birth, signature, and date. Part II left blank for remote-only work.
• File it where you can find it. Store it with the signed SOW and the payment records for that VA. You never send it to the IRS, but you must be able to produce it.
• Set a re-collection reminder for December of the third calendar year after signing, and ask for a fresh form then.
• Book the payments as contract labor and file no 1099-NEC and no 1042-S for this VA, so long as all the work stays offshore.

The one page summary

If you are still at the stage before paperwork, my checklist for hiring your first virtual assistant covers defining the role, screening, and onboarding, and my guide to Filipino VA rates in 2026 gives you the numbers to put in the payment terms section of the SOW.

Frequently asked questions

Do I need to send a 1099 to a Filipino virtual assistant?

No. Form 1099-NEC reports nonemployee compensation paid to US persons, and a Filipino VA who is not a US citizen or resident is not a US person. Because the services are performed in the Philippines, the income is also foreign-source under section 862(a)(3), so there is no Form 1042-S and no withholding either. This holds at any payment level.

What form do I need from a Filipino contractor instead of a 1099?

Form W-8BEN if you are paying an individual, or Form W-8BEN-E if you are paying a registered Philippine entity. The contractor completes and signs it, you keep it in your records, and you never send it to the IRS. Collect it before the first payment.

Do I have to withhold 30 percent when paying a Filipino VA?

Not when the work is performed entirely outside the United States and you hold a valid W-8BEN. The 30 percent rate is what the IRS can assess a payer who fails to obtain valid documentation and fails to withhold under the presumption rules, alongside a 24 percent backup withholding rate. Collecting the form is what removes that exposure.

How long is a Form W-8BEN valid?

It remains in effect from the date it is signed through the last day of the third succeeding calendar year, unless a change in circumstances makes the information incorrect. A form signed in March 2026 is valid through December 31, 2029. The contractor must tell you within 30 days if anything on it changes.

Can I still deduct what I pay a Filipino VA?

Yes. Payments for genuine business work are an ordinary and necessary business expense and are deducted as contract labor. The lack of a 1099 does not affect the deduction. Substantiate it with the signed SOW, the VA's invoices, and your payment records.

Does the treaty matter if my VA never comes to the United States?

Article 15 of the US-Philippines treaty confirms the result but you do not need to claim it. Its paragraph 2 conditions, a fixed base in the US, 90 days or more of US presence, or more than $10,000 of remuneration for services performed in the US, are all failed by a VA who works only from the Philippines. If your VA ever does work on US soil, the treaty exemption is claimed on Form 8233, not on the W-8BEN.

Get the paperwork right once and it stops being a January problem. Collect the W-8BEN at onboarding, sign a short SOW alongside it, and hire your next Filipino VA on Galasya.