Important Changes for US Authors/Affiliates/Service Providers

Did I hear/read right that direct deposit to a bank account will be possible starting in January 2016, and PayPal may no longer be needed for US Authors?

Isn’t this already possible with SWIFT withdrawal?

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I do not use SWIFT. Currently I use PayPal, then direct deposit from PayPal to my bank account. I thought I read somewhere that Envato was going to add an option to Direct Deposit’s to US Authors bank accounts if they choose. It would just skip PayPal, which is always a plus in my book.

:smile:

For US authors living in other countries. Will there be a withholding tax deducted. Will it be for just US sales or all sales?

Hi everyone, as there were only a few new questions overnight, we won’t be posting today but instead going out with two days’ worth of Q&A tomorrow. See you then!

Hello again, we’re still looking into @Luminary’s and @moveNshake’s questions and likely won’t be ready to come back with answers until mid-next week - apologies for the delay!

As we’re no longer seeing many new questions each day, we’ll hold off on answering any others until then as well.

If you’re stumbling across this news for the first time or still unclear on a few details, you should be able to find answers to most of your questions in the following locations:

Thanks and see you later next week!

The way I understanding, we are not fully compensated for business expenses, so if we consider the envato fee as a business expense, we are still getting screwed by envato. I think you only get 20% or less in compensations for business expenses. yeah, I get the feeling that envato is taking advantage of our ignorance and hope that we’ll be complacent. Once I start making enough money on other sites (which is increasing) I am completely leaving audiojungle. This tax issue is so ridiculous. Maybe they’re also trying to scare away people who don’t make much so they can keep the top sellers who still it as being worth it. Whilst filing for some government programs, my case worker didn’t understand the envato system at all when I tried to explain it to her, so I ended up just going with my NET earnings from envato, and the case worker seemed fine with that. Sorry envato, I don’t have time to get a degree in financing and taxes, nor do I have the money to hire a tax attorney/accountant. So it looks like your inadvertent (or not) attempt to shove the little guy off is working, cause I want to run from you as soon as I can.

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Collis, no offense, but this seems wholly arbitrary (not substantive or functional). It seems like you are creating a transaction out of thin air. I guess within the 0’s and 1’s there is a magically hidden fee that we are paying you? You see, I understand WHAT you are saying, I just think it’s superfluous and unnecessary. You guys still have not answered why you had to create some transaction (our fee to you) out of thin air. It never existed before. We simply split the buyers cost 2 ways. Now it’s become some complicated mess. You still have not answered that for us. We understand that you have complicated things for us, and have shifted the tax burden to us, we understand.
All you have done is changed the face value (again, arbitrarily, not seemingly functional) of the process of selling the music on your site. In reality nothing has changed except our tax burden. Please, please, explain why you’ve done this.

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+1

I do aware that this is US authors thread and I am a non US author. However regarding this particular issue, the same complexities / risks exist for authors from any country. I approached two tax consultants and they confirmed me that only way to avoid misunderstandings from local income tax authority is reporting only the net earnings from Envato (the amount we withdraw).

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Look for the answer inside your question :wink:

And the confusion deepens. The answer is a riddle, hidden in the deepest recesses of our soul… :smile:Look for the answer in the question, or maybe the question that you thought was an answer, or the answer that looks like a question, or maybe the answer is hidden under the bed. Actually, the answer is unlocked by an act of true love.

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I’ll post this here too: Just a little note, to help people having trouble with the form save some time. When you submit the Tax Information form and get an error saying that “some of the details are incorrect”, yet nothing is marked with red and everything is filled out correctly: make sure to first enter your last name and then your first name in the signature field at the end of the form.
Correct example: Gates Bill
Incorrect example: Bill Gates

I’ve been trying to submit the form for about 30 minutes until I figured that out.

I’d like to hear from their US tax attorney (if they have one). They have less than 2 months to get this figured out. I really don’t think they care. I also believe Envato thinks that most authors aren’t even going to worry about the taxes, and that they (Envato) are doing us a favor. They are wrong on both accounts. The heart of the matter is that Envato has forgotten that they work for us, not the other way around. Without content, they have nothing to sell. We do our part, it’s time they do theirs and treat us in an honest and straightforward business like manner. For goodeness sakes, they make 2 times more off of our creations than we do!! If they can’t treat us right it’s time to move on and do business with people that appreciate what you do, not come up with shady business practices that hurt their greatest asset, the creators. I have done ok with them, and would love to continue working with them, but the ball is in their court.

So let me use an example. Let’s say I sold a pack for 28 USD. The sale price on my invoice says 22. It says author fee is 12. So do I report the 22 USD sale price as my income? And what is the 12$ considered in taxes? So 28$ pack, invoice sale 22$, author fee 12$. What is my income as it relates to taxes and what is the fee considered???

Hi,

Can you have the full lists of the exempted category on all marketplaces? Thanks!

Hi Collis,

Exactly how is it possible that a buyer is paying us (The Author)? It’s completely ridiculous to say that this is a transaction between the author and the buyer. It’s a transaction where the buyer pays Envato first. You do agree that Envato is the first entity to receive money when a purchase transaction happens do you not? After Envato sells the item, Envato pays authors their percentage of all sales in a given month. .Envato sets the price of all items. If we are selling directly to buyers, should we not be able to set our own price? If we truly are the seller, Shouldn’t we receive the money instantaneously ( at point of purchase, literally a couple of moments after the buyer clicks “buy”?)

I just do not see how authors are directly selling items to buyers? We all have to first go through a very strict approval process by your employees to get an item approved for sale, then your algorithms dictate which items will be presented to customers. Envato has developed the entire infrastructure to sell these digital items. By all accounts, Envato is the seller. Authors are merely the suppliers of products to sell at a price set by Envato. The only way we truly are the seller is if we set our own prices, and we collect the money the moment a buyer clicks “buy”. I do agree that we will all be able to deduct these author fees as business expenses, but you should really let us know if we should be prepared to send Envato a 1099 for all of these author fees. My educated guess would be that we will have to take that action, and that is absurd. If an author, for example, receives a 1099 from Envato for say $20,000, yet she really only actually received $16,000 in compensation from Envato in the 12 monthly payments throughout 2016, how does she cleanly write off the $4,000 in “author fees”? I have received 1099’s for 20 plus years now and I have never encountered such a bizarre situation. My company sends 1099’s to vendors all the time (including free-lance musicians and singers). The amount of the 1099 always reflects exactly what the vendor was paid, not more than what the vendor was paid. Basically you do admit that we all will receive 1099’s for more than Envato will actually pay us…correct? Is this even legal under U.S. Tax codes/ laws?

Every U.S. company that musicians and composers deal with (as supplliers/ vendors) sends a 1099 for the exact amount that the composer/ musician was paid in a given year, not more than what they were compensated.

Collis, I really do not have a problem with these “author fees” that does just amount to “semantics”. I just think Envato should only send us a 1099 for exactly what you pay us in 2016. Example, If you send an author $1000 a month for 12 months, the 1099 should be for $12,000 (misc business income). Not more and not less but exactly what Envato pays an author for an entire year. Do you agree with this example? In the eyes of the IRS, authors are Envato’s vendors/ suppliers, not the other way around.

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Hi @Luminary and @moveNshake - sorry for the delay in getting back to you on these. Here you go!

We will continue to offer swift bank transfers (as well as PayPal, etc). It sounds like you’re referring to something different? We’re currently investigating ACH transfers and other similar US offerings, but don’t have a firm view yet on which options we’ll make available.

All US authors, regardless of where they are living, will need to complete a W-9 Form in order to avoid 28% backup withholding on all sales.

This is because Form W-9 defines a US person (for US federal tax purposes) as:

  • An individual who is a US citizen or US resident alien, or who satisfies the substantial presence test,
  • A partnership, limited liability company, corporation, company or association created or organized in the United States or under the laws of the United States,
  • An estate (other than a foreign estate), or
  • A domestic trust (as defined in Regulations section 301.7701-7).

If a valid W-9 has been submitted, then no withholding tax will be applied.

Good post! Like I said earlier, we are not compensated 100% for business expenses, so I will be inflating my income (which is dishonest) just to pay more in taxes, and then get only 20% of that "business expense back? Just as I said earlier, this system you have created is solely arbitrary. You are the ones getting paid Envato, then you are cutting us our share. That’s how it works. Changing the semantics and the virtual order of things doesn’t make it otherwise. I agree with you 100% SteelSound.

Your system of payment is starting to lean towards a particularly bad freelancer site which I will not name. Needless to say they have had some of the worst reviews across the net. Can I ask a question. If you are getting that money paid to you long before us, does it sit in your bank accounts? Do you make any interest from that? Just a question. Because if you are saying that the buyer is buying directly from us, but then you are making money from interest from those payments, then that is a severe contradiction. I’m really not sure how it works. Do you get paid when you pay us? There’s no issue if that’s the case. But I think this is a very important issue that we deserve to know. It would not be right to make money from interest from our money which you consider to be paid directly to us. I’m pretty sure there are laws about gains from interest in this context regardless of whether you consider the buyer buying directly from us. However, it just makes it all the more pertinent if you are making interest income from our money at the same time as considering the transaction to be between us and the buyer.

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A post was merged into an existing topic: Important Changes for Non-US Authors/Affiliates/Service Providers