Dear friends, as you know for a long time, like most of you, I am in the microstock business.

I am not a citizen or resident of the United States, and every year I receive several 1042-S forms reporting the 30% withholding for sales made in the USA (due to royalties).

As a non-US resident, I never paid much attention to these forms, nothing to do with them.

But, last year my situation changed. Although I continue to receive a significant income from royalties from the sale of my images, the business has dropped significantly and I have been forced to look for new ways to make money. For this reason, last year I formed an LLC in the United States (to carry out a business not related to microstock, by the way).

Therefore, I must now respond to the IRS. As a non-US resident with an LLC in the USA, every year I must fill out forms 1120 and 5472; but also the 1040NR, the latter only if I have sales associated with the United States.

A single member LLC reports taxes through the owner, so business and personal profits are the same.

My question is: Should I report anything for receiving the 1042-S forms from the microstock agencies?

I am clear that I do not have to pay taxes since the agencies already pay them through the 30% withholding, but this issue of taxes and the IRS is very complicated and sometimes you have to report things and if you don't you have big penalties.

I would appreciate if anyone could give me any information regarding this.

Quote from: Mrblues101 on April 06, 2024, 11:59

...I am clear that I do not have to pay taxes since the agencies already pay them through the 30% withholding, but...

I am a US resident and am not an expert in tax law or the IRS, but I wanted to clarify what you said about withholding.

Taxes are owed on the basis of your return, filed with the IRS. The return will show the calculation of total tax owed and also the amount already withheld during the tax year. If there is a difference, you either pay the extra or get a refund.

There is no correspondence between what you owe and what was withheld - although it's important to try and have the right amount withheld to avoid incurring penalties for underpayment during the tax year. So you could owe more than the 30% withheld and the only way to know that is complete a return.

My suggestion is that you get whoever helped you to set up the LLC to help with the tax issues - or recommend an accountant to do it.

Thank you for your clarification Jo Ann

To be honest, my ability to check if SS or any other agency made more or less sales within the US is completely null. I just have to trust in the information they send me, and if I have to report, just report it.

Now my big issue is if I have to fill 1040NR or not, because if I have to fill I have also to get an ITIN as soon as possible.

I used TurboTax and I remember that there are provisions to declare taxes withheld outside the US.
I have a bit of that myself, not from microstock, but from a non-US investment fund.

You have ITIN?