MicrostockGroup
Agency Based Discussion => Shutterstock.com => Topic started by: luceluceluce on June 02, 2009, 02:51
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Yeah, I know, I've been blah blah blah di blah on this topic.
.....
I would have felt privelaged to have studied with him in one of the ancient arts.
x
to quote another fine poster from a place far far away
- crickets - : D
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I have da solution. Sell more pics to make up the money ! It's probably the easiest route.
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alias, im trying to find the forum option where i can officially mark you down as 'cheeky' but I can't find it : (
How can i offically register you as cheeky? I'm really confused, please help.
You know, i think i might delete the original post and replace it with my musings on why i wish Laurin Rinder had never taken up photography, but had studied the martial arts instead. I would so carry buckets of water up flights of stairs in lead shoes at 4am if he were my sensei.
x
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I have da solution. Sell more pics to make up the money ! It's probably the easiest route.
Ha ha ha. Brilliant!
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Does anybody know the difference between a tax and withholding taxes. The first one you pay the second you get back when you file. All this complaining quitting name calling about witholding taxes until you file and get the balance back when you pay your USA taxes if you pay anything. What does the word withold mean?
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Does anybody know the difference between a tax and withholding taxes. The first one you pay the second you get back when you file. All this complaining quitting name calling about witholding taxes until you file and get the balance back when you pay your USA taxes if you pay anything. What does the word withold mean?
I don't know. I've also been unsure as to whether to use one H or two.
I mean, i know that 2 is probably correct, but i have found myself wavering between the two forms (i.e. witholding and withholding).
I really feel that the term should be stripped of the word 'with', and proceed as the naked 'hold'. The word 'with' implies a certain amount of togetherness that would be entirely inapprioriate in the context.
I hope that helps.
If i can clear up any further international tax complications for anybody, please do not hesitate to ask.
x
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Does anybody know the difference between a tax and withholding taxes. The first one you pay the second you get back when you file. All this complaining quitting name calling about witholding taxes until you file and get the balance back when you pay your USA taxes if you pay anything. What does the word withold mean?
I don't know. I've also been unsure as to whether to use one H or two.
I mean, i know that 2 is probably correct, but i have found myself wavering between the two forms (i.e. witholding and withholding).
I really feel that the term should be stripped of the word 'with', and proceed as the naked 'hold'. The word 'with' implies a certain amount of togetherness that would be entirely inapprioriate in the context.
I hope that helps.
If i can clear up any further international tax complications for anybody, please do not hesitate to ask.
x
GREAT EXPLANATION!
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Answer is? ;D
Recovery of withholding tax
The tax withheld from a payment may be more than the recipient's tax liability in the country where the tax is withheld. This may be because
* there is a tax treaty which reduces the liability below the statutory withholding tax rate; or
* costs can be deducted from the income to reduce the tax liability
In these circumstances the recipient will need to file a tax return or other claim form in the source country, to recover the tax overpaid. Procedures and time limits for refund claims vary considerably.
Some countries permit the withholding tax itself to be reduced, thus avoiding the need for the recipient to file a refund claim. It is generally necessary to file documentary evidence of the reduced liability, for example evidence of residence if the liability is reduced by a tax treaty.
The recipient may be liable to tax on the income in his home country, but will be able to claim a credit for the withholding tax paid and not refunded or refundable. Some countries exempt income which has been taxed in another country.
You get the money at the end of the year when you file a tax return or claim your refund.
SS has been forced to comply by the US government. They didn't impose this, the Feds did. The point of all of this is, it's not a tax, where they keep everything, it's withholding to assure that the proper taxes are paid, if need be.
How about someone complain to the source, the IRS and get a straight answer to why you have to pay and what forms you need to file, so you don't have to have funds held back?
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In reality, a withholding tax means that the government gets all the money you earn. They give you some of it after they take what they want.
If you live in a country other than the US and the IRS is 'withholding' tax, it means that the US gov actually gets all the money you earn from US companies. It is not your money, it is their money, and after seizing it, they give you some. For the time being. Maybe next year they will seize it all and give you nothing. If so, there will be nothing you can do about it except to stop earning money.
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In reality, a withholding tax means that the government gets all the money you earn. They give you some of it after they take what they want.
If you live in a country other than the US and the IRS is 'withholding' tax, it means that the US gov actually gets all the money you earn from US companies. It is not your money, it is their money, and after seizing it, they give you some. For the time being. Maybe next year they will seize it all and give you nothing. If so, there will be nothing you can do about it except to stop earning money.
Yes, this is definitely not an SS problem. It's an IRS problem.
They are sticking to the letter rather than the spirit of the treaties. They are the only tx department to do this.
How, as a Brit, can i complain to the US govt or the IRS? I can't :D
Sure, it's the law and taxes are taxes. I fully support law and taxes. But i also support fair play, and the reality of this is that we will face difficulties and costs both in the application process (ITIN can be refused for putting na instead of n/a) and in the return of rightful funds to avoid double taxation.
This is way beyond microstock. And the debate needs to move to a higher level. Especially for the non-treaty suppliers.
The truth of it all is starting to sink in : US stock sites may all soon become less competitive because of the obstacles to legitimate business.
It is such a dilemma, because SS is by far my largest earner - although my port there is 10 times larger than anywhere else.
So, i am taking a long term approach. I shall start focussing my uploads on non-US sites until this can be resolved enough to make it worthwhile focussing on the US sites again. and other plans... : D
x
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You know, i think i might delete the original post and replace it with my musings on why i wish Laurin Rinder had never taken up photography, but had studied the martial arts instead. I would so carry buckets of water up flights of stairs in lead shoes at 4am if he were my sensei.
x
...not a nice image!
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Something I have been trying to find out (no success so far) is whether people living in non-treaty-countries who have tax withheld at the full 30% can (go the long way round) and submit a US tax return.
Since 30% will almost certainly be an over-payment in many cases there should, at least, ultimately be some rebate due.
I am guessing that this would be an argument in favor of getting a US tax code and completing the forms even if living in a non treaty nation.
This might also have implications for people in treaty-countries but who are also having taxes withheld since a rate greater than 0% is applied.
This might also have implications for people who are having taxes withheld in other than US jurisdictions. Eg Alamy UK. So there is a wider issue than just SS and the USA.
If anyone has any ideas about that I would be very interested to hear. Sensible answers only please :)
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Alias,
Unfortunately, I believe the answer is that it is not possible to claim a refund by filing a tax return, because the tax due is indeed 30%.
Below is the excerpt from the following IRS page:
Federal Income Tax Withholding and Reporting on Other Kinds of U.S. - Source Income Paid to Nonresident Aliens (http://www.irs.gov/businesses/small/international/article/0,,id=129241,00.html)
Royalties
If the royalties income is from a U.S. source and paid to a nonresident alien, then it is reportable for any amount in excess of zero. Withhold at 30% or lesser tax treaty rate, if applicable (See Table 1 in IRS Publication 515 or 901). The beneficial owner of the income may claim the benefit of the tax treaty article which deals with "Royalties Income." The beneficial owner may claim the lesser tax treaty rate by filing Form W-8BEN with the withholding agent. The withholding agent will report the payment on Forms 1042 and 1042-S, even if the entire amount of income is exempt under a tax treaty."
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You know, i think i might delete the original post and replace it with my musings on why i wish Laurin Rinder had never taken up photography, but had studied the martial arts instead. I would so carry buckets of water up flights of stairs in lead shoes at 4am if he were my sensei.
x
...not a nice image!
Oops! I forgot to mention the cherry trees in blossom, and the babbling brook also.
x
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Alias,
Unfortunately, I believe the answer is that it is not possible to claim a refund by filing a tax return, because the tax due is indeed 30%.
Below is the excerpt from the following IRS page:
Federal Income Tax Withholding and Reporting on Other Kinds of U.S. - Source Income Paid to Nonresident Aliens ([url]http://www.irs.gov/businesses/small/international/article/0,,id=129241,00.html[/url])
Royalties
If the royalties income is from a U.S. source and paid to a nonresident alien, then it is reportable for any amount in excess of zero. Withhold at 30% or lesser tax treaty rate, if applicable (See Table 1 in IRS Publication 515 or 901). The beneficial owner of the income may claim the benefit of the tax treaty article which deals with "Royalties Income." The beneficial owner may claim the lesser tax treaty rate by filing Form W-8BEN with the withholding agent. The withholding agent will report the payment on Forms 1042 and 1042-S, even if the entire amount of income is exempt under a tax treaty."
Isn't the money being withheld somewhat in excess of what might actually be due if the actual tax due was calculated ?
By submitting a US tax return - would a non US company or 'alien' potentially be able to offset costs etc ?
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Alias, as I understand, by reading their tax guide for aliens (as they call it), nonresident aliens are taxed in two different ways depending whether their income is "effectively connected to a trade or business in the US" or not.
"Nonresident Aliens
A nonresident alien's income that is subject to U.S. income tax must be divided into two categories:
1. Income that is effectively connected with a trade or business in the United States, and
2. Income that is not effectively connected with a trade or business in the United States (discussed under The 30% Tax, later).
The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. These are the same rates that apply to U.S. citizens and residents. Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. "
Later in the text:
"Other items of income, such as royalties, also may be subject to the 30% tax."
So I believe that the actual tax due is 30% in this case.
This is the whole IRS publication:
Publication 519 (2008), U.S. Tax Guide for Aliens (http://www.irs.gov/publications/p519/index.html)
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How, as a Brit, can i complain to the US govt or the IRS? I can't :D
Who said: "No taxation without representation?"
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I have already unistalled the tax report program for this year, which might have helped me get a definitive answer about the Brazilian tax regarding this. I declared gross earnings, as no company has taken any tax from me, but if I remember it right there was a field for tax retained at the source, so that only the net value would be taxable in Brazil. That is, for every US$100 earned in SS, US$30 would have been retained, so I would pay taxes here only on US$70.
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How, as a Brit, can i complain to the US govt or the IRS? I can't :D
Who said: "No taxation without representation?"
Somebody in the past i think : D
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In reality, a withholding tax means that the government gets all the money you earn. They give you some of it after they take what they want.
If you live in a country other than the US and the IRS is 'withholding' tax, it means that the US gov actually gets all the money you earn from US companies. It is not your money, it is their money, and after seizing it, they give you some. For the time being. Maybe next year they will seize it all and give you nothing. If so, there will be nothing you can do about it except to stop earning money.
Yes, this is definitely not an SS problem. It's an IRS problem.
They are sticking to the letter rather than the spirit of the treaties. They are the only tx department to do this.
How, as a Brit, can i complain to the US govt or the IRS? I can't :D
Sure, it's the law and taxes are taxes. I fully support law and taxes. But i also support fair play, and the reality of this is that we will face difficulties and costs both in the application process (ITIN can be refused for putting na instead of n/a) and in the return of rightful funds to avoid double taxation.
This is way beyond microstock. And the debate needs to move to a higher level. Especially for the non-treaty suppliers.
The truth of it all is starting to sink in : US stock sites may all soon become less competitive because of the obstacles to legitimate business.
It is such a dilemma, because SS is by far my largest earner - although my port there is 10 times larger than anywhere else.
So, i am taking a long term approach. I shall start focussing my uploads on non-US sites until this can be resolved enough to make it worthwhile focussing on the US sites again. and other plans... : D
x
If you really want to make a difference start working with the governments in the countries who have not completed tax treaty's and convince them to sign one. Our governments have already agreed that implementing tax treaties is the best way for them to proceed. They put the wheel in motion long ago and no amount of US or SS bashing is going to change your outcome.
As far as your numerous comments that only the US implements it's tax collection rights as outlined in those tax treaties. You are making a comment that is blatantly inaccurate. The global music industry has been doing it for many years.
As far as requiring withholding's for royalties on stock images, Alamy in the UK has been requiring the documentation you are are all caterwauling about for some time, the UK does exercise its right to tax royalties on stock photos. I am certain they are not the only macrostock company to require the documentation required from their tax offices to collect withholding's or grant exceptions as outlined in tax treaties.
http://en.wikipedia.org/wiki/Alamy (http://en.wikipedia.org/wiki/Alamy)
http://www.alamy.com/stock-photography-faqs-tax-non-uk.asp (http://www.alamy.com/stock-photography-faqs-tax-non-uk.asp)
# What is Withholding Tax (WHT)?
Withholding Tax (WHT) is a government's imposition of a tax on distributions being made to foreigners. The purpose of the tax is to allow the government to make sure it exacts its share of a taxable event before the wealth leaves its shores and moves beyond its control. Thus, in Alamy's case it is the tax Alamy has to deduct and account for to the UK government when it is making royalty payments for the use of images to providers of those images who are not tax resident in the UK. It will only apply to Contributors who are NOT tax resident in the United Kingdom and who are paid outside of the UK mainland.
# What do you mean by tax resident?
You will normally be tax resident in the country in which you pay your tax bills and where you submit your tax return. However, tax residence is a complex subject which is determined by local legislation and case law in each country. We therefore recommend that you obtain confirmation from your local tax authority if you are uncertain as to your tax residence status.
# What do you mean by UK mainland?
The United Kingdom mainland comprises England, Wales, Scotland and Northern Ireland but excludes the Channel Islands and the Isle of Man.
# How will this affect the payments made to me?
During registration you will be required to supply your tax details including an assurance regarding the country where you are registered for tax. Alamy will deduct withholding tax from your payment in line with the double tax treaty between the country you are tax resident in and the United Kingdom. This rate can vary from between 0% to 22%. For further details, please visit our Table of Treaty Rates.
If you do not answer the questions relating to Withholding Tax within My Alamy, then Alamy will deduct 22% of the net amount due to you in each payment run.
# What is the standard rate of WHT?
The standard rate of the tax in the UK is 22%. This is applicable for all payments relating to photographic royalties to all countries.
# Can I reduce the rate of WHT that I pay?
Yes. If there is a double tax treaty between the country you are resident in and the UK and you can assure Alamy that you are tax resident in that country then we can apply the treaty rate on all payments to you. The treaty rate in many cases, e.g. for the US and Canada reduces the rate of WHT from 22% to 0%.
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I have just checked in our government pages. USA and UK are not countries we have the treaty, but we can deduce the tax paid there. In the case of USA, only federal payments apply (IRS is federal, right?). So I suppose my previous numerical example is correst.
I am not in SS, but this would be important for Alamy, as they will discount 22% when I earn something there (still a wish... :) ).
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As far as requiring withholding's for royalties on stock images, Alamy in the UK has been requiring the documentation you are are all caterwauling about for some time, the UK does exercise its right to tax royalties on stock photos.
I'm sorry. If this is true, then I have been indeed firing off inaccuracies. I really do apologise for being hasty. Clearly I need to research this a lot more thoroughly before posting inaccurate comments.
x
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I have just checked in our government pages. USA and UK are not countries we have the treaty, but we can deduce the tax paid there. In the case of USA, only federal payments apply (IRS is federal, right?). So I suppose my previous numerical example is correst.
I am not in SS, but this would be important for Alamy, as they will discount 22% when I earn something there (still a wish... :) ).
Yes IRS is federal. Luckily no state taxes there (still!)
It's good to know that 22% is the percentage for UK as I'm in Alamy as well.
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In reality, a withholding tax means that the government gets all the money you earn. They give you some of it after they take what they want.
If you live in a country other than the US and the IRS is 'withholding' tax, it means that the US gov actually gets all the money you earn from US companies. It is not your money, it is their money, and after seizing it, they give you some. For the time being. Maybe next year they will seize it all and give you nothing. If so, there will be nothing you can do about it except to stop earning money.
Well not quit accurate, they don't keep "all" the money. But you do make a good point. People often say they are getting money back on their tax return. Hey wake up, it's your own money that you get back, they keep the rest! :o I got back a few hundred dollars of my own money last year. They didn't give me anything, they refunded a small portion.
Here's the reason for withholding taxes. If they had to trust people to not spend everything, and at the end of the year file and pay what they owed, the tax people (any country) would be out collecting and out of luck. You can't get money that someone already spent on food, drinking, or a vacation. Instead they collect in advance, based on what you might owe and send back what's left over.
If someone said the government is holding your money until you file for a partial refund, it would be more accurate.
I still think the "Up in arms lets panic" fraternal organization of "the sky is falling" needs to find out what's really behind all of this, before the follow the rest of the Lemmings over the edge. Sorry, not my job, I live here and they already take out withholding and I also have to file as self employed a quarterly estimated tax with payment.
I feel sorry for the people who don't live in this country who are getting stuck with our tax laws and the agency that has been forced to withhold taxes for everyone in that group. Hopefully there's some reasonable solution that will fix the problems. The threats and complaints to SS have nothing to do with the source of the problem, the US IRS.
People writing that 100% of the withholding will be kept are just stirring up the fire. Show me where someone earning $5000 a year in the US is paying a 30% tax rate? People who get $100 a month from SS are not going to be taxed 30% for earning $1200!
http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Year_2008_income_brackets_and_tax_rates (http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Year_2008_income_brackets_and_tax_rates)
Someone who is stuck with the problem needs to contact the IRS and get the real answers. Again, I live here, I'm not working for all of you, for free, so maybe one of you should go find out the facts and report back here?
Contact the IRS help desk and ask questions... http://www.irs.gov/help/article/0,,id=97185,00.html (http://www.irs.gov/help/article/0,,id=97185,00.html) Phone numbers, email or live chat.
Who said: "No taxation without representation?"
The colonists because the Parliament in the UK gave them no voice.
HOWEVER... the countries that people live in, which signed the treaties for international trade and taxation, do have representatives and their country signed this. So don't blame the big bad US for stealing your money. Your country approves of it. :D
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So don't blame the big bad US for stealing your money. Your country approves of it. :D
No it didn't. It just signed a treaty to minimized the damage. The fact stays that the US taxes aliens that have no voting rights on their tax laws. The only way to influence the US on this is by seizing US citizens that travel to the jurisdiction of a country and waterboard them. That's not democracy but aquacracy :P
To the point: I just set my payout limit on SS to 2000$ again, so I will have time to go through all the red tape ordeal before next payout. SS announced on its forum they will help contributors, so that the physical signature isn't necessary any more. But I'd rather be photographing than feeding the bureaucracy machine.
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Somebody pointed out in another thread - to my shame! - that royalties get withheld by the UK government from Alamy photographers.
Now I've been spouting big words like anti-competitive and protectionist - and I would like to learn to what extent I've been a * in this regard.
If the UK is also withholding royalties, then it is definitely not an issue just with the IRS and the U.S. And it could definitely spell more trouble for the other agencies, because now 2 precedents are there.
Really - I'm coming at this with an empty bowl at the moment.
But I do worry that this growing red international red tape will cut the small submitters out of the game. And then that will leave the micro professionals, and then the mid and macro professionals might come in and fill the gaps the hobbyists left. And then everyones' income goes down : (
Right from top to bottom we will all get less.
Personally i don't care right now about money. But what if one day i want to go into space? Virgin Galactic tickets are something like £250,000 although i expect the price will come down significantly in a few years. Or so.
Lucy x
Just cos i'm stumbling in the dark, doesn't mean i can't guess at where the light switch is.
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The way I understand it for most Treaty members is as follows.
I think the key here is will the witheld tax be greater than the tax on profit you will be liable for?
If you think the witheld tax will be greater than what you will owe at the end of the year then fill out the forms and pay tax as required.
If you think you will be liable for more than the witheld tax then you can just let it ride and claim a credit against what you have already paid, this relates to a like scenario.
Under the standard elimination of double taxation Article in our treaties, the UK is obliged to give credit for foreign tax payable on profits, income or chargeable gains from sources within the other state against any UK tax computed by reference to the same profits, income or chargeable gains by reference to which the foreign tax is computed.
http://www.hmrc.gov.uk/manuals/intmanual/INTM163030.htm (http://www.hmrc.gov.uk/manuals/intmanual/INTM163030.htm)
So it looks like you can off-set the witheld tax against your own tax bill, if it was sales of 1000 and 300 was witheld, you would declare the gross 1000 within your turnover take away the costs, calculate tax on your overall profit and then off-set the 300 against what you owe.
David ;D
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@goldenangel
belated thanks for your analysis of the US tax implications in relation to aliens.
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@goldenangel
belated thanks for your analysis of the US tax implications in relation to aliens.
Yes, that was very useful post