Tax Information & IRS Form W-8 Requirements for Non-US Authors
This article is a guide for Non-US Guest Authors about how payments for articles may be subject to U.S. Taxation by the Internal Revenue Service (IRS).
What is This About?
Max Digital Web operates the ReviewResorts.com website. Max Digital Web is located in the USA and therefore must abide by U.S. tax laws. Yet, many of our guest authors are located outside of the United States. The United States Internal Revenue Service (IRS) enforces and collects taxes on all income generated by U.S. citizens and also foreign nationals who receive payments from U.S. companies for services rendered.
What’s Required to Comply?
We must require Non-US Authors to complete a standard IRS form called Form W-8BEN for individuals (Instructions) or Form W-8BEN-E for companies (Instructions). The form will request some basic information about you including your Foreign Tax Identification Number (FTIN) and country of residence. You get a U.S. Taxpayer ID Number (TIN) using IRS form W-7.
The purpose of IRS Form W-8BEN and IRS Form W-8BEN-E is to establish your identity and status as a non-U.S. person who has earned income from a U.S. based company or you have sold goods or services to a U.S. based company. When you submit the completed IRS form W-8BEN-E to Max Digital Web it is your responsibility to account for the income.
Submitting IRS Form W-8BEN or W-8BEN-E to Max Digital Web
Mailing Address:
Max Digital Web
P.O. Box 23712 San Jose, California 95153 USA
Electronically via email: info@maxdigitalweb.com
When you complete the IRS tax form, you must provide your U.S. Foreign Tax Identification Number or Social Security Number otherwise we are required to deduct withholding tax of 24% from your guest author payment and forward it the the IRS.
Please note that an author account has one owner which has their details in the tax information. That owner may be an individual person who writes under different author names. It may also be a corporation or other type of business entity. It cannot be a partnership. Partners must nominate one partner to submit their tax information.
If you do not submit your tax information, the IRS requires Max Digital Web to assume that you are a US taxpaying person and we have to apply the 24% backup withholding tax.
Privacy
We take your privacy and information security seriously and will use industry standard practices to securely store any details you provide in this form.
What will we do with this information?
When you complete your tax information, you are certifying that you are not a US person. The Form W-8BEN or Form W-8BEN-E form will determine the appropriate withholding tax rate that will be applied to your guest author article payments. At the end of each calendar year we’ll send to you and the IRS a summary of your earnings from US customers, Form 1042, so that you can accurately report your income to your local tax authorities and claim any credits for the taxes withheld and remitted to the IRS.
Backup Withholding Tax
If you are a non-US Author and do not provide your tax information, we are required under US tax law to treat you as a US Author and your earnings will be subject to 24% backup withholding tax.
Note: Any Backup Withholding Tax will be remitted to the IRS – and not held by Max Digital Web.
Any backup withholding tax deducted by Max Digital Web (either royalty withholding tax or backup withholding tax) will be remitted to the IRS. We will also be preparing and filing form 1042 with the IRS that will show the amount of your gross earnings and taxes we paid from your earnings. You will be provided a copy of your Form 1042 from 15th March in the year following the year you made your earnings. These forms can be provided to your tax accountant to assist with claiming any tax credits that may be available in your home country.
Frequently Asked Questions:
I don’t have a US TIN or a Foreign Tax Identity Number (FTIN). What should I do?
If your country of residence has a tax treaty with the US, you need to include your Foreign Tax ID Number on your tax information. Your Foreign Tax ID Number is usually the number that you quote when you lodge your tax return or pay tax in your own country. To find your Foreign Tax ID Number, please see the guidance provided by the various jurisdictions and the OECD here. Alternatively, you may also find the guidance provided by the European Commission.
You may also apply for a US Tax ID Number by submitting a Form W-7 to the IRS. Here is a link to Form W-7 and this is the link to the instructions.
I need a letter from Max Digital Web to support my W-7 application for a Tax Identity Number, who should I contact?
As part of the IRS ITIN application process, an author may be required to provide a signed letter or document from Max Digital Web, on official letterhead, showing their name and verifying that an ITIN is required to make distributions to them during the current tax year that are subject to IRS information reporting and/or federal tax withholding.
If you require this document, please contact send a request at: info@maxdigitalweb.com. You will need to provide us with your Full Legal Name that matches the W-7 application. The IRS will not accept Pen Names, Ghost Writer Names or Usernames.
What happens if I don’t provide a US TIN or a foreign tax identity number?
We will deduct 24% from your guest author payment and forward it to the United States Internal Revenue Service. However, if you do provide us with a completed IRS form W-8BEN that includes your tax information we will not have to deduct the backup withholding tax and will pay you the full amount.
Does this apply to US Authors?
No. The U.S. tax form W-8BEN from the IRS (the US tax authority) is only for non-US Persons. A separate IRS Tax Form W-9 which will include your Social Security Number is applicable for US Authors who are also responsible to indicate guest author payments as taxable income on their yearly tax filing.
What is this for?
This process is needed to meet the IRS’ requirement that the appropriate taxes are applied to income paid to both U.S. and Non-U.S. individuals and companies for services rendered.
What happens if I don’t complete my tax info until after backup withholding starts?
As any amounts withheld prior to receiving your tax information will be sent to the IRS immediately. We are unable to give you a refund. However, we will send you an earnings summary (IRS Form 1099) which will show the earnings that you had and the taxes that you paid before your submitted your tax information. You may provide this statement to your tax adviser / accountant to see if you are eligible to claim tax credits in your country.
What happens if I pay Royalty Withholding Tax or Backup Withholding Tax, but I also pay my tax in my home country?
You should consult your accountant or tax advisor on how to ensure you’ve paid your correct taxes on your end of year tax return or if you are eligible to claim tax credits for the royalty withholding tax or backup withholding tax that was paid to the IRS.
How secure is my tax information stored with Max Digital Web?
We take your privacy and information security seriously and will use industry standard practices to securely store any details you provide in this form.
What documentation will I get about amounts withheld?
You will be able to see tax withheld on your statement page and we will also send you a Form 1042 from 15 March following the year you had your earnings.
Should I be seeking tax or legal advice?
Anytime you earn money as an independent contractor, freelancer, or through an online service, you should make sure you have informed your accountant or tax advisor so they can help make sure that you are correctly paying your taxes.
What if there are multiple owners of the account?
Max Digital Web Market enters into a legal agreement with the person who creates an account and agrees to the terms and conditions. If you are a non-US Person then you should complete the Form W-8BEN or Form W-8BEN-E details. An author account has one owner, and it is their details which should be in the tax information.
That owner can be a corporation or other type of entity, but not a partnership. Partners must nominate one partner to submit a tax information. Withdrawals will only be made to the nominated partner.
Does this apply to Max Digital Web?
Yes, Max Digital Web Studio providers will be required to complete these details. If you are an Author on Max Digital Web Market, you only need to complete the tax information form once and we will ensure these details are applied to you Max Digital Web Studio account.
If I already pay taxes in my country for my earnings on Max Digital Web do I still need to provide the tax information Max Digital Web is asking for?
If you do not provide your tax information, , Max Digital Web will be required to withhold 24 percent tax from your gross earnings.
Will I be taxed twice if my country does not have a tax treaty with the US?
The answer will depend entirely on your country of residence.
If my country does have a tax treaty with the US how will that affect what info I need to supply to Max Digital Web?
If your country has an income tax treaty with the US, please fill out the treaty benefits portion of the Form W8BEN or Form W8BEN-E.
If my country has a tax treaty with the US how much tax will be withheld from my earnings?
Generally, an income tax treaty will provide for a reduced or zero rate of withholding on royalty income.
If I am a citizen of another country, but live and maintain a residence or address in the US does that affect the tax information I must supply to Max Digital Web?
You will need to speak with your tax advisor, as circumstances and opinions may differ. We recommend that you speak with your tax advisor, as this may be a very fact specific question.
I am an international author so why is the U.S. taxing me?
US tax law provides that the US government may collect taxes for US source royalty income. A royalty is considered to be US sourced when the sale is made to a person residing within the US.
How will my earnings as an author be calculated after withholding tax is applied?
If the funds owed to a Guest Author WITHOUT a W8-BEN form that has a valid IRS Tax Identification Number (TIN) on file with Max Digital Web, we must withhold $9.60 and process this to the IRS. This calculates to ($40 – $9.60 = $30.40) net payment to author. However, if you have provided Max Digital Web a completed IRS W8-BEN form with a valid Tax Identification Number (TIN) then you would receive all $40.00 as the responsibility for tax payments becomes yours.