If you are a non US person looking for information on how to submit a Form W8BEN or Form W8BEN-E, please click here.
This article is a guide for US Authors including;
- How to Complete and Submit a Form W-9 to Envato
- Backup Withholding Tax
- Getting More Help
- Frequently Asked Questions
US federal tax law requires Envato to collect US Author tax information through an IRS Form W-9 and report on income paid. A US Author is an author considered to be a US person because the person is a US citizen, a resident alien, or otherwise satisfies the substantial presence test.
What’s required?
US Authors are required to complete a standard IRS form called the Form W-9 which includes some basic information about you, including a Tax Identification Number (TIN). The TIN can either be your Social Security Number (SSN) or the Employer Identification Number (EIN) of your business.
An author account has one owner, and it is their details which should be in the W-8. That owner can be a corporation or other type of entity, but not a partnership. Partners must nominate one partner to submit a W-8 or W-9. Withdrawals will only be made to the nominated partner.
How to Complete and Submit a Form W-9 to Envato
To help you provide this information quickly and easily, we have provided a form on Envato Market.
The form is available under Tax Information on your Settings page. You can also access the form by copying the following link and simply updating it with your username "https://themeforest.net/user/<username>/tax_information/new". We take your privacy and information security seriously, and will use industry standard practices to securely store any details you provide in this form.
Detailed instructions for completing Form-W9 are available on the Form W-9 in PDF format from the IRS website.
What will we do with this information?
At the end of each financial year, we'll send to you and the IRS the appropriate IRS Form 1099 so that you can accurately report your income.
Backup Withholding Tax
If you are a US Author and do not provide accurate tax information, we may be required to withhold 28% of your sales revenue and send it to the IRS. Effectively this is paying part or all of your income tax upfront, and you’ll simply take credit for this amount on your regular tax return for the year. Please note that high net worth persons are subject to a tax rate in excess of backup withholding and may owe additional tax on their income.
You will not be subject to backup withholding on payments you receive if you provide your correct TIN and make the proper certifications. Backup withholding is 28% of the total value of your sales (the total of item prices, exclusive of any buyer or handling fees we charge the buyer, but inclusive of our author fees to you).
Any tax withheld will be remitted to the IRS - and not held by Envato.
Most US taxpayers are not subject to backup withholding and won’t have to worry about it applying so long as the US taxpayer provides a Form W-9. So, if you are a US Author, please correctly complete your details as soon as possible to avoid backup withholding.
We will begin collecting backup withholding tax from authors who have not provided tax information on January 1st, 2016. Please ensure that your taxpayer identification number (TIN) and name on the form are correct and accurate, according to IRS records.
Learn more about Backup Withholding Tax at IRS.Gov
Learn more about Backup Withholding Tax at About.com
Learn more about the Form W-9 at About.com
Getting More Help
We’ve provided lots of helpful answers in the FAQs below, and we also have a special email address you can write to where we’ll provide as much help as we can. Of course, this has the caveat that you should always seek advice from a professional accountant / tax advisor because we can’t advise about your specific tax situation,including filling out your specific W-9 form.
You can email taxinfo@envato.com if you need any additional help or general assistance.
Frequently Asked Questions
Does this apply to non-US Authors?
No, this is a US tax form from the IRS (the US tax authority) for US Persons (including resident aliens).
Definition of a US person (from Form W-9)
For federal tax purposes, you are considered a US person if you are:
- 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)
What’s this for?
This process is to help US Authors to report their earnings properly and to make sure that the appropriate taxes are applied.
What about the past?
Backup withholding will take effect from earnings made on or after January 1, 2016.
What happens if I don’t complete my tax info until after withholding starts?
Any amounts withheld prior to receiving your tax information will be sent to the IRS, and you’ll need to settle any corrections with the IRS as part of your income tax return.
What happens if I don't provide my details, Backup Withholding is applied, but I also pay my tax?
You should consult your accountant or tax advisor on how to ensure you’ve paid your correct taxes on your end of year tax return.
How secure is my tax information stored with Envato?
We take your privacy and information security seriously, and will use industry standard practices to securely store any details you provide in this form.
What documentation will I get about amounts withheld?
You will be able to see tax withheld on your statement page and will receive a 1099 form.
Should I be seeking tax or legal advice?
Anytime you earn money as an independent contractor, freelancer, or through an online service, you should make sure you have informed your accountant or tax advisor so they can help make sure that you are correctly paying your taxes.
What if there are multiple owners of the account?
Envato Market enters into a legal agreement with the person who creates an account and agrees to the terms and conditions. If you are a US Person (a definition which includes Partnerships, LLCs amongst other things, as well as individuals) then you should complete the Form W-9 details.
An author account has one owner, and it is their details which should be in the W-8. That owner can be a corporation or other type of entity, but not a partnership. Partners must nominate one partner to submit a W-8 or W-9. Withdrawals will only be made to the nominated partner.
Does this apply to Envato Studio?
Yes, Envato Studio providers will be required to complete these details.
What additional documentation will you be collecting?
We regularly receive information from different sources and in cases where this information contradicts information you provided us we may need to get in touch with you and get clarification.
I’m a US Person, but I reside elsewhere or am traveling
You should consult your tax advisor. If you are liable for tax in the US, please ensure you complete the steps to submit your information.