[quote=“BarBeeCues, post:37, topic:12386, full:true”]
“The author fees we charge authors (along with the buyer fees we charge buyers) are Envato’s revenue.”
Exactly, they are you’re income not ours, so why send us a 1099 for your income?
“The 1099-MISC you are issued will show the royalty revenue you have generated.”
No, according to every other Envato explanation, the 1099 you will send will reflect what I earned plus what Envato earned. I’d like someone with a U.S. tax background to tell us how this is legal. If I sell TV’s at Best Buy, and got a 10% commission, would best buy send me a 1099 for the price of all of the TV’s I sold, no way. They would give me a 1099 for the 10% commission. I truly think Envato has found some tax loophole, and they are letting their authors be the scapegoats, because this make zero business or tax sense. If you want to do it like this, send us a bill at the end of the month for our fees. Otherwise, how can you claim an expense you never paid. Income tax is all about money going in and out. Envato is saying it went in, but we can’t show it went out.[/quote]
hi Barbeecues, I think the key things to understand here are that:
- When a sale happens, your account is credited with that sale and you have earned royalty revenue from the buyer of your work
- At that moment we apply any relevant taxes (e.g. backup withholding if it applies)
- At the next moment, we charge you our author fee. You have an invoice every month as documentation that you paid Envato these author fees, like any other expense you might incur in the course of your business
- Still later if you withdraw to a bank account, you’d incur another fee - the SWIFT fee
Because of the magic of technology, the first three steps happen virtually instantenously, but that’s the sequence. When reporting your total royalty revenue, we report the total of all the sales, before taxes and before our author fees, before swift fees, before purchases you make, etc.
You should talk to your tax advisor or accountant, and keep records of the author fee invoices we provide you in the statement section of your account, and if you make purchases from your account, you should keep copies of the invoices you receive for those purchases.
I hope that helps!
As I mentioned above, the best thing to do is to keep records of your account, the total sales, and all costs incurred (our fees, any purchases you make on your account, etc), and discuss with your tax advisor or accountant.