Shutterstock and the IRS
Posted by mattantonino | Posted in Agencies, Challenges, Earnings, Goals, Microstock World, N2M, Results, Tricks, business, education, workflow | Posted on 28-05-2009
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Yikes!? Ok, full disclosure I am a photographer in the US so all of this new tax & Shutterstock doesn’t apply to me.? I would bet it applies to many of my friends and readers though so I want to cover this to the best of my ability so you guys get some clear, exact answers in one place.
If you post your questions here, I will do my best to get an answer and post it here as well.? I’ve read all 75 pages of the long thread as well as many of the other threads and have seen a lot of answers already.
Edit to add: Shutterstock just emailed me to let me know that whatever questions you post, we can try and get answers to.
What is the issue?
First, read the original post.
If you are not a US citizen or resident, and you do not obtain an ITIN and provide Shutterstock with a Form W-8BEN, US law requires them to withhold 30% from your earnings. If you are a member of one of our tax treaty countries you will have less withheld, sometimes 0% extra.? If your country is not on the list, you will have 30% withheld for income on Royalties.
Why?
US tax law imposes a 30% withholding tax on US source passive income, such as royalties, that are paid to persons who are not citizens or residents of the United States. US tax law requires the person paying the royalties to withhold the tax and pay it to the US Internal Revenue Service. If the person receiving the royalties is a resident of a country that has an income tax treaty with the United States, the withholding tax may be reduced or eliminated. However, to take advantage of the lower withholding tax US tax law requires that the person receiving the royalty payments provide a properly completed Form W-8BEN. US tax law also requires that the person who provides a Form W-8BEN for this purpose have an ITIN.
A lot of people are wondering “why do we pay this – what benefit do we get in the US?”? The answer, although you won’t like it, is that you get the benefit of selling your work in the US and under IRS tax law, you ARE doing business in the United States if you sell to US companies.
More Details
If you are in a country with no tax treaty with the US, you seem to be stuck paying 30% no matter what.
The payouts going out for May will not be affected but June’s may be affected.
If you wish for your account to be removed, the SS CEO is offering to remove it for you.
Yes, US residents pay their tax – we pay it in April as income tax.? We know you pay yours in your home country too.
At the end of the year, you will get a Form 1042 from Shutterstock.? This can be found here: http://www.irs.gov/pub/irs-pdf/f1042.pdf? You will know your tax liabilities in the US.
ITIN Info
So what can we do?
How to Notarize a passport (copy) info (multiple countries)
All questions for Shutterstock about taxes can be directed to their new forum on tax questions.
Again, if you post your questions here, I will do my best to get an answer and post it here as well.? I’ve read all 50 pages of the long thread as well as many of the other threads and have seen a lot of answers already.
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Better info than Ss seems to be dishing out to our non-us friends. Good work!
Dennis
Give me a brek
Thanks Dennis – I’ll keep it updated as much as possible.
Thanks for the italian link…
thanks for that! I asked a few questions in SS forum but haven’t seen any answers so far, so I’ll repeat here:
1) If I don’t fill any forms now and SS will pay 30% of my tax to IRS – will I get an official statement about amount paid? When will I get it?
2) If I apply for ITIN – it is my understanding that IRS asks for a paper letter from SS, on official form with SS letterhead and signature – are you sure the email from SS is sufficient substitute?
3) Many of contributors are registered companies – some are self-employed individuals, some are real companies. According to IRS website such entities should obtain EIN instead of ITIN and use EIN when filling W-8BEN form. However SS only refers to ITIN in all messages – could you confirm that SS will accept W-8BEN with EIN instead of ITIN?
apparently my question 2) is already answered here -> http://submit.shutterstock.com/forum/viewtopic.php?t=62405 – yes, SS believes that their email is sufficient.
My other 2 questions are asked there too but not answered (yet)
As far as your EIN, supposedly Shutterstock SHOULD accept that and not charge you. However, if you use an EIN to avoid ITIN taxation you must fill out a tax return with the US IRS by the deadline for US taxes.
Will I have to submit US tax return even if I am self-employed individual residing outside of the US? Are you sure?
Here’s what I found MikLav:
If you are a nonresident alien doing business in the United States (with an EIN qualifies), you are required to file a tax return if you have US source income greater than your personal exemption ($3,400 as of 2007).
1. So am I now required to apply for an EIN if microstock is part of my business income? Or can I decide to apply for an ITIN.
2. In the W7 form it says I should not apply if I have a U.S. social security number. Well I have worked in the U.S. when I was a student there and got an SSN, but am now in Germany and am also a German citizen. What now?
Mat thanks a lot for all your effort!!
Jan,
If you have a SSN I do not think you need another ID number. ITIN, SSN and EIN are all similar – they are tax identification numbers. If you have one, you should contact Support@Shutterstock.com and tell them “I have an SSN and live in Germany. How do I file?” And let them sort out the SSN people. You definitely do not need an EIN.
Will there be the possibility to download an overview of income and payed US tax. Preferably within a selectable period like a year. With that overview my accountant can get this (double) tax back ones a year from the ‘IRS’ in my own country (double tax correction).
Thanks Mat!
Danny – I’ll check on that – would be a good idea, and I’m sure there’s going to be a way to do *something* you can use. What I would guess is that you can download your earnings the way you do now and take 1/3 of it – that will be your tax if they leave it as-is. We’ll have to see where that goes but I bet you can.
Just so everyone is updated – the letter Shutterstock sent is NOT going to cover your “signed letter” requirement so it seems they will need to mail one to everyone.
MikLav – You will receive a form 1042 from Shutterstock at the end of the year which will show your withholding for the year.
[...] Please see my previous post for a country-by-country list of threads on Shutterstock to help you deal with the situation.? I [...]
Your second link to the German form thread actually points to the Italian thread again. Can be deleted.
Ahhhh! Too many edits – thanks for correcting me. I deleted that one.
[...] of information on the Shutterstock situation is their FAQ thread here, plus Matt has collected some helpful links to more information and exploration of the details over at Niltomil. Tags: Microstock, Microstock News, [...]
Oh what fun we are having…
SS support have failed to answer a direct question twice now, each time just being ‘Copy/Paste’ until my reply asking why they don’t answer my question… Then they ask for me to re-state my question (even though it is still contained in email correspondence).
Re-stated, and waiting…
Which Q are you trying to have answered?
I have summarized information on this subject from various sources and placed it on one of Russian microstock forums.
The summary can be found here –> http://www.zastavkin.com/forum/viewtopic.php?f=11&t=7622&p=235755#p235755
(I keep it updated when new facts get known)