We have a small software development company. We often outsource our work to individuals via elance.com. These individuals live in USA, Britain, India and Germany.

For individuals that are living in USA, we issue 1099 forms. But how do we deduct the expenses that we paid to the individuals living abroad? When we outsource to foreign companies, we get an invoice (which I believe should be good enough to show expense), but we are not sure what to do for individuals.