Difference between Backup and Royalty withholding tax


#1

Hi everyone, I would like to know what the difference between the US Backup Withholding Tax and the US Royalty Withholding Tax.

I recently sold 2 tracks both worth $15. After the buyer fee, its $12. However the backup withholding tax is -$3.36 for one track, and the US royalty withholding tax is -$3.60 on the other track.

Then, the author fee is $6,60 on both tracks meaning after I’ve sold two tracks, I’ve gained $3.84.

I’m a non-exclusive author so I know that I get a smaller slice but surely that doesn’t sound right. Can anyone give me any advice on this?

Thanks!


#2

Just fill your tax information (W9 form) in your settings tab and tax withholding should cease.

As Envato calculates tax withholding on item price rather than on author’s share, it is painfully unfair for non-ex authors.


#3

Thanks for the reply. I filled out my tax information about a month ago, does it just take a while to get processed? I’ve also read that I have to wait until next year for my form to take effect, which would be brutal.

Cheers.


#4

No, it should take effect immediately upon form completion. You should check that your form was indeed sent. Some authors thought they had completed it but but for some reason their submissions did not go through. Also make sure you used a valid ID number.

I think the wait until next year thing relates to you being able to redeem the backup withholding tax as a tax return/deduction from your income tax.