Please explain me why Envato does not exclude their fees from authors’ tax base?
Before 01/01/2016 I had from 1 item selling $6.40 - $3.52 (envato’s fee) = $2.88 net earnings.
So I have to pay in my country tax from my net earing ($2.88)
Now IRS receive information that my earnings from this sale is $6.40 (because they withholding royalty Tax from this sum) . If I submit my tax identity number IRS send this information to my country Tax Service and I have to pay tax from gross ($6.40) – US Taxes.
Why should I have to pay taxes for Evanto fees? How can I proof that $3.52 is not my earnings?
And if my country decided to make tax rate 40% (for example) I should have to pay tax more money than earn.
Yes, that’s what I’d like to know too. Practically, we’re paying taxes for envato’s earnings. We’re paying their taxes, people! They don’t pay a dime for their earnings. That’s why they moved to USA, so they won’t pay taxes for their earnings from their fees from USA buyers. The USA market is probably their main market and they decided that by moving there, they’ll pass the taxes to us, the authors.
Speak with your accountant. You should be able to claim the Envato fee as an operating expense (i.e. you have to pay the fee in order to make the income). So in the end you still only pay tax on the net earning.
I ‘m sure that Tax Service in my country does not accept document downloaded from internet (and plus on foreign language) as proof of my operating expense. Why should they trust it?
From my $6.4 sail before 01/01/2015 my income was $2.88.
OK if I have to pay 30% of it Royalty tax my income after withholding taxes should be $2.88 – 30% = $2.01
But now I receive $0.92. In fact I pay 68% from my income.
And if Envato rise their fee on $1 my income became -$0.08 It’s absurd situation!
Once again $6.4 not my income. my income $2.88 and Envato income $3.52
I pay taxes from my income, Envato must pay taxes from their income.
Everybody must pay only their own taxes. Not others.
iStock for example withholding tax from what I earn, not from price they sell.
If I submit my tax identity number the information that will be provided to my Tax Service will be that my income $6.4 and I will have to pay income taxes from that sum of money.But $6.4 is not my income!!! It’s my income + Envato income.
In fact i should pay almost all money that i earn because Envato does not exclude their fees and IRS think that all this money is my income!
I’m 90% sure that when you provide your tax ID number, Envato won’t be providing details of your earnings to the IRS or to the Russian tax people. I guess they might have to if specifically requested to do so, but I don’t think it’s standard procedure.
You can declare what you want, but after you’ve filled in your tax ID you won’t have anything withheld and that should be the last you hear about it from Envato, the IRS or the Russian tax authorities.
That’s not true… I have filled my tax information and declared my tax ID… I am supposed to pay %10 to US from “my income” according to the tax treaty, but envato is deducting %22 or something like that… (didn’t do the exact math)
My earnings from an $11 sale was $4.50 last month… after the US tax is deducted which is %10 for me, I should receive $4.05
but is it the case? no… I received $3.50 from that sale and paid %22-23 tax or something like that… (my W8BEN form says %10, not %22…)
envato have been a good company so far and I am sure they will correct this mistake…