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Thread: Tax on Clip sales as a non-U.S citz.

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    Default Tax on Clip sales as a non-U.S citz.

    Was looking on IRS website (maybe I'm misinterpreting). But the below seems to mean that non US citzens who don't live in USA are supposed to file tax returns to IRS for Royalties from US based websites such as C4S

    Anyone else know know about this?


    Tax Treatment of FDAP Income Which is Not Effectively Connected Income (ECI)


    Tax at a 30% (or lower treaty) rate applies to FDAP income or gains from U.S. sources, but only if they are not effectively connected with your U.S. trade or business. The 30% (or lower treaty) rate applies to the gross amount of U.S. source fixed or determinable, annual or periodical gains, profits, or income. Deductions and netting are not allowed against FDAP income.
    The following items are examples of FDAP income:
    • Compensation for personal services (such as commissions and gross proceeds from performances)
    • Dividends
    • Interest
    • Original issue discount
    • Pensions and annuities
    • Alimony
    • Real property income, such as rents, other than gains from the sale of real property
    • Royalties
    • Scholarships and fellowship grants
    • Other grants, prizes and awards
    • A sales commission paid or credited monthly
    • A commission paid for a single transaction
    • The distributable net income of an estate or trust that is FDAP income, and that must be distributed currently, or has been paid or credited during the tax year, to a nonresident alien beneficiary
    • A distribution from a partnership that is FDAP income, or such an amount that, although not actually distributed, is includible in the gross income of a foreign partner
    • Taxes, mortgage interest, or insurance premiums paid to, or for the account of, a nonresident alien landlord by a tenant under the terms of a lease
    • Prizes awarded to nonresident alien artists for pictures exhibited in the United States
    • Purses paid to nonresident alien boxers for prize fights in the United States
    • Prizes awarded to nonresident alien professional golfers in golfing tournaments in the United States
    • Payments to U.S. parties when an nonresident alien entertainer has rights to the performance

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    Default Re: Tax on Clip sales as a non-U.S citz.

    ^^^ yes, this tax exists, and the description is accurate. Camming and video clip income resulting from paid sales via US based websites would certainly appear to be FDAP income ... either as a 'commission' payment or a 'royalty' payment to a non-US person.

    Additionally, as of January 1st, unless something changes, all FACTA compliant foreign financial entities will start withholding FDAP 'estimated tax' money from US origin payments made to non-US citizen / resident recipients. See

    I guess, technically speaking, that non-US girls don't actually need to file a non-resident tax return with the US IRS even if they do have FDAP income from US sources. OF course, the consequence is probably going to be that the IRS will keep the entire 30% 'estimated tax' on their US earnings which will be withheld under FACTA FDAP regulations from all US based payments at the point where the money crosses the US border. Filing a non-resident US tax return is likely to result in the non US girl actually paying a lower effective tax rate than the arbitrary 30% 'estimated tax' withholding rate.

    Of course, filing a non-resident US tax return is something which the IRS is likely to share with tax authorities in the girl's FACTA 'partner' home country. This in turn may lead to a new need to 'reconcile' the amount of income reported on the girl's home country tax return with the FDAP income she has received from US sources.

    We'll find out a lot of these answers 'the hard way' once the first of January arrives.
    Last edited by Melonie; 10-14-2014 at 08:05 AM.

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