Where can I see if my sale was from a U.S. or non-U.S. customer?

You can see where the customer was located in the sales monthly details report.  From here you will see the location in the source column. U.S. tax withholding is only ever applicable for sales from U.S. buyers.

Why doesn’t TurboSquid pay withholding out of the company’s share of the sale?

We already pay taxes on TurboSquid’s share of all sales. What we are doing here is fulfilling our withholding obligations with regard to our artists’ US Source Income, as we understand them. Again, TurboSquid is neither keeping any of this money nor benefiting in any way from this policy.

Why can’t TurboSquid and the IRS fix the tax issue between each other?

This is not an issue between the IRS and TurboSquid. Rather, it is an issue between the IRS and each artist. TurboSquid’s only involvement is the fact that, if we do not withhold as per the IRS’s instructions, we could be held liable for each of our artists’ tax liabilities for failing to do so.

Which sales are subject to 30% tax withholding?

Withholding covers a tax due on your Royalty Income.

You are subject to a 30% withholding rate (unless you are eligible for tax treaty benefit) only on your U.S. Source Income. Generally speaking, this would apply to your sales proceeds attributable to buyers located in the United States and planning on using the models in the U.S.

You can find a thorough explanation of income sourcing at the United States IRS website.

Where can I find a list of U.S. tax treaty rates?

We maintain a simplified list of all U.S. tax treaty rates. This list links to the relevant articles on the IRS or U.S. treasury sites where you can get more information on each treaty. You can also find a list of treaties on the IRS United States Income Tax Treaty A to Z page.

Do I earn interest on taxes held?

TurboSquid pays withholdings to the U.S. IRS for all artists on a monthly basis, and does not hold any money due to the IRS in interest-bearing accounts. Therefore, neither artists nor TurboSquid accrue interest on the withholdings that we send to the IRS. If you receive a refund from the IRS after turning in an ITIN, for example, the previous withholding amounts refunded will, by IRS policy, be only the “principal” amount withheld, and will not include interest.

There are businesses that want to earn interest on other people’s money, but TurboSquid isn’t one of them. The IRS gets relatively little from us because almost everyone gets a tax ID and doesn’t have to pay withholdings.

Does TurboSquid keep any money that artists pay in taxes?

No. All taxes collected are turned over to the Internal Revenue Service per their policies and procedures.

How does TurboSquid know that the buyer is in the U.S.?

We use a combination of factors including IP address, credit card address, and home address to make the best possible determination of where our buyers live and intend to use the product.

What is a 1042-S form?

Form 1042-S is used to report income paid to a non-resident regardless of whether the payment is taxable. The form has a number of purposes. It can be used to report wages exempt under a tax treaty, wages earned as an independent contractor, royalties, and scholarship or fellowship grants. The 1042-S may have value in your home country if they tax that US-source income and offer any deductions or credits for the US taxes paid. If you are unsure if you have to report form 1042-S in your country, please seek advisement from a tax professional in your area.

Please visit our Knowledge Base article for information about recent changes to Form 1042-S.

What is a 1099-Misc form?

A 1099 – Misc form is used to report miscellaneous income to the IRS. This form is used to report the following: Income earned by an independent contractor but not an employee; Fees, commissions, rents, or royalties paid.

1099 forms are sent to those whom have made $600.00 or more as a non-employee or $10.00 or more in royalties and is also submitted to the Internal Revenue Service.