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Alien non-resident needs help with 30% witholding

 

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Alien non-resident needs help with 30% witholding refactorizacion 05-05-2007
Posted by refactorizacion on May 5, 2007, 6:17 am
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I am writing a book for a publisher in the US, and I am
payed royalties (only advances so far, book is not finished
yet).

I don't live in the US, nor am I a resident. However, since
the country I live in does not have a double taxation
agreement with the US, they have witheld 30%.

I will still have to pay taxes for what I earn this way in
my country and it does't seem fear to pay taxes in the US,
since I don't live there.

Is there any way to go about this? Someone told me that if
they pay me for services, no taxes apply...

Thanks for your help!

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Posted by davidkaifuku on May 7, 2007, 1:09 pm
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refactorizac...@gmail.com wrote:

> I am writing a book for a publisher in the US, and I am
> payed royalties (only advances so far, book is not finished
> yet).
>
> I don't live in the US, nor am I a resident. However, since
> the country I live in does not have a double taxation
> agreement with the US, they have witheld 30%.
>
> I will still have to pay taxes for what I earn this way in
> my country and it does't seem fear to pay taxes in the US,
> since I don't live there.
>
> Is there any way to go about this? Someone told me that if
> they pay me for services, no taxes apply...

Life isn't fair. Royalties are taxed where they are USED.
Services are taxed where they are DONE. So getting paid
for services will help solve your problem. Just replacing
"royalties" with "services" in your contract is not enough.
You must change the type of contract. Maybe that's not
practical in your case.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by refactorizacion on May 11, 2007, 5:48 pm
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> Life isn't fair. Royalties are taxed where they are USED.
> Services are taxed where they are DONE. So getting paid
> for services will help solve your problem. Just replacing
> "royalties" with "services" in your contract is not enough.
> You must change the type of contract. Maybe that's not
> practical in your case.

Hi David,

Thank you for taking the time to reply to my message.

You are right in saying that changing contract so it is
service based might not be very practical.

What about incorporating in Canada or Delaware?

In that case the witholding would not apply, but I would
have to pay income tax. Would that be a solution for me?

Thank you,

Dan Mayolo

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Dick Adams on May 11, 2007, 5:49 pm
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> I am writing a book for a publisher in the US, and I am
> payed royalties (only advances so far, book is not finished
> yet).
>
> I don't live in the US, nor am I a resident. However, since
> the country I live in does not have a double taxation
> agreement with the US, they have witheld 30%.
>
> I will still have to pay taxes for what I earn this way in
> my country and it does't seem fear to pay taxes in the US,
> since I don't live there.

I find this interesting for several reasons:

1. Publishers should be well aware of this dilemna and
should know how to structure contracts to minimize, if
not avoid, the situation you are in.

2, It was my presumption that anyone filing a U.S. federal
tax return could get credit for taxes paid in their
country of residence (within some limits).

3. Must you be a U.S. Citizen, resident, or Green Card
holder to get the foreigh earned income exclusion if you
file a U.S. federal tax return on all of your income.

Hopefully your publisher is not in California because
Kal-E-Forn-ya tries to tax everything! <g>

Dick

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

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