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I think you need to clarify this with them. If they are just keeping a running total and not paying anything to anyone until you close out the transaction by making a claim then it wouldn't be a problem for you, would it?

If they are deducting the money and paying it to the IRS before the payout falls due then it might be a problem for you.

Some agencies I use don't calculate it until payout (e.g. SS) others issue monthly statements showing what is earmarked as tax which is effectively the same as Fotolia is doing on a sale-by-sale basis.

Ok here's the deal. All employee's subject to withholding tax must fill out a form W-4. This form is to show withholding allowances. Employers are suppose to have copies of these. Now as for social security and medicaid...THIS IS FROM 2007 Circular E Employers Tax Guide, not 2010, but I doubt anything has changed. As an employer they are to withhold 6.2% social security and 1.45% medicaid tax from their employee's check. They are to pay the same percentage as the above, which is 12.4% social security and 2.9% medicare, which is a total of 15.3% which only half of that amount can be withheld from the employees check which would equal 7.65% holding from their check. Now I am going to contact support to find out where they are coming up with the extra 20.35% without having that W-4 form, which thay are suppose to have on file in case of an audit from the IRS.

I know but I didn't do it and the withholding tax they would withhold would only be a few cents, which isn't a big deal to me, but those who aren't even aware what they are doing would be effected. I am going to fill it out, but I plan on dropping them anyway and won't get the money so it really doesn't matter to me. Do you know of anyone that they are withholding taxes from that has gotten a payout from them since the first of the year. How do they show what was withheld and how much of it was Federal, social security and medicare. Last year they didn't withhold taxes but sent me a 1099. Did they not do this last year? I guess what is bothering me is the principle behind it and rather they are doing it legally. The way they are doing business it really makes me wonder if they are doing it legally. Oh and I am a US citizen. I wish I knew someone who worked for the IRS to find out, if for nothing else than to find out if they are doing it legally or not.

Me too!

Only this year they started to reduce 30% of sales in the USA.  As Brazil and USA don't have a tax treaty, I can not ask not to be taxed.  I'm ok with that, except that 30% is a lot, IMHO, given the small sums involved.  It's not that I am making thousands of dollars in the USA, you know.

Also in my country we have tax refund if income is less of some amount...
I am sure that USA have something similar, so certainly we will see changing of this in the future...

What about Canadians??? I pay my taxes on my US income here in Canada. Now I get double taxed?

taxation is usually done when you reach a certain threshold say $30,000 a year. So I don't understand why they can just tax us like that. Sigh

I am not questioning the right to tax us high or not, I was only wondering if the 30% is correct, given that there was a doubt about the 28% a colleague was being charged. 

I think it's wrong to tax a small income so heavily, but unfortunately it's the country's prerogative.