Where to obtain the Tax ID Number for NON-US author - W8 form


#1

Hi, I am a NON-USA author and never dealt with taxes in my country (Jordan). So where will I bring the Tax ID Number to fill in the W-8 form? Which option shall I choose? “Foreign Tax ID Number”?

Can I use my identity card number “National Number”?

Thanks a lot!


#2

As a Jordanian author, you really don’t need to provide a number as Jordan doesn’t have tax treaty with the US.
This means that you’ll still have 30% withheld from US sales whether you submit a Tax ID Number or not. So just choose “I will not or am unable to provide a Tax ID Number” and you good to go.


#3

For future references for non-US authors:

I obtained my EIN from US IRS (tax institution) a couple years ago - as a non-US citizen, if your country as a tax treaty with the USA, you can actually fill an SS-4 form (https://www.irs.gov/pub/irs-pdf/fss4.pdf), head to irs.gov and search for instructions. Then, you can fax this form or send it via mail to IRS (again, irs.gov for addresses etc), and after few weeks, you should receive your EIN.

EIN can be obtained if you own a legal business in your country, there’s no need for any employees, you can be a sole proprietor. And you don’t need any type of direct connection with the USA.

I officially run EU-based business, my country has a tax treaty, and obtaining an EIN for non-US citizen wasn’t difficult - it only required patience and reading the instructions :).


#4

Thanks @OsamaSayegh, I am getting only $1.65 after selling $6 item. Can you please tell me if I fill the W-8 form as you told me, how much will I get? I should get 62.5% of the sales as per the sheet, so will I get $3.75?

Thanks a lot.


#5

For non-US sales, you’ll get 50% of the price you see on your item page, and for US sales, it’s quite complicated to calculate how much you’ll get, just to put it in a nutshell here, it’s 26% of the list price. (if you want, see here how the calculation goes step by step).

You get an extra 1% for every $3,750 you sell till you reach 70% for non-US sales and 46% for US sales.


#6

Thanks @OsamaSayegh, that’s too useful, but I don’t understand why 50% for non-US? In the sheet, they stated it is 62.5%.

In the Earnings section:
Sales earnings before taxes for a $6 item is: $2.99 - why not 62.5% ($3.75) ? I don’t understand where the 12.5% went?


#7

And I am selling exclusively on Envato.


#8

50% of the “list price” = 62.5% of the “item price”.
The names are quite confusing, I understand that, so let me explain what each one is. The “list price” is the price you see on your item page, and the “item price” is the list price minus buyers fee (20% of the list price for all marketplaces except Graphicriver).

Let’s take the price or your item as example:
50% * $6 = $3, and 62.5% * (6 * 80%) = $3 as well.


#9

Thank you very much @OsamaSayegh, you are so helpful, since more than a week I was trying to understand how it goes but couldn’t and the support just answered me today in general.

I still can’t understand why should we pay 20% extra?! That’s too much.

Is there a way to get higher percentage if the buyer came from my side (using my username as a reference)? I read about the affiliate but they just give 30% on the first buyer purchase.

In Udemy, if you bring the buyer to your course, you get 97% of the course price, while if you get organic buyer from the Udemy website, you get 50%. No taxes there and it is very smooth.


#10

It’s just the US laws, nothing can be done unless… moving to another country.

Get someone to buy your product, and you will receive 30% of his first purchase/cash deposit + [your %] of the sale. I think if you were an elite author, and referred a non-US user to buy one of your items, I think you would receive a total of 100% of the list price of the item.


#11

That’s not true. If you get paid as an instructor by Udemy you are subject for US income tax because Udemy is a US based company.
see their help section about income tax:
https://support.udemy.com//customer/en/portal/articles/2254684-paying-taxes-as-an-instructor


#12

Thanks a lot Osama. Seems the system is very complicated. I filled yesterday the W-8 form and today I got a purchase from US, and I got 1.55 USD :frowning: I checked the statement and couldn’t understand :frowning: Seems I should wait to see when I get a buyer not from US if they will really give me $2.99 for a $6 item…

If they take 30% tax, then I should get more than $1.55… I don’t understand this complicated system.


#13

Hi @OsamaSayegh, many thanks for your kind clarifications. I filled the W-8 form as you told me yesterday, so if I get a sale from a non-USA buyer tomorrow, will I get $3 net amount?

Because today I got a US-buyer and I got only $1.55 out of $6 :frowning: So disappointed.

Thanks bro!


#14

Yeah, like I said yesterday, a bit of complicated math goes behind the scenes of calculating the US taxes, check the link I posted here yesterday to see how calculating the tax goes.

In short, from a $6 sale, you should receive $1.56 (or $1.55) if it comes from the US, and $3 if it comes from outside the US.

It’s worth mentioning that it happened to two authors, they got taxed on non-US sales one of them said that the Help Team sorted it out, and the other one hasn’t posted an update yet. But most likely they’ll refund him.


#15

You could have just filled in your foreign tax ID number. Same outcome, but less form filling, faxing etc.


#16

Thanks but I don’t have a tax ID number here, I don’t have a business here or a job.


#17

Thank you very much @OsamaSayegh, you are a tax specialist here :smiley: Last question, could you please tell me how did you calculate $1.56? As per the website, they will deduct only 30% when we sell to a US buyer, so $3 - 30% = $2.1, so why $1.56?

Many thanks.


#18

The 30% is taken from the item price rather than your net earnings, remember that the item price is the price you see on your item page minus Envato’s buyers fee (the buyers fee is 20% of the list price for CodeCanyon).

So $6 - 20% = $4.8, this is the item price of your item.
Now subtract the 30% from the item price, $4.8 - 30% = $1.44, this goes to the IRS.
Envato’s author fee is 37.5% of the item price, $4.8 - 37.5% = $1.8.
What’s left is your net earnings, $4.8 - ($1.44 + $1.8) = $1.56.


#19

Million Thanks bro @OsamaSayegh, you are the best! I do greatly appreciate your continuous help. Very clear and neat. I wish you the best with your business and life :slight_smile:


#20

You’re welcome :slightly_smiling:, appreciate your kind words, thank you :smile: