Paying taxes on income earned from foreign stock sales?
Discussion
3 replies
Posted by John W. Wall on November 29, 2007 at 4:29 PM
Anybody know the skinny on this? If you live and work in the US, but generate income from sales made by a stock agency in a foreign country, how do the taxes work?
Reconfirm with your CPA, but as I understand it, any income you earn overseas is taxable unless you are out of the US when you earn it. Even then, there's an upper ceiling on how much you can earn tax free. In working in another country, you may nonetheless be subject to their local taxes. We manage overseas income from sales as simple income to our business and report it on our quarterlies accordingly. You are doing quarterlies, aren't you?
Posted by Richard Durnan on November 30, 2007 at 9:30 AM
First I am not aa CPA, justra a photographer that does this.
My understanding, and the way I have operated for years is that your income is taxable in the US and you need to declare it. Additionally your payment may be taxed in the foreign country (double taxation). Check with the accountign department for the client you are working with to see if theyu need to tax you. If so you will need to do the following.
Fill out some paperwork ( APPLICATION FORM FOR INCOME TAX CONVENTION - or similar) that should be provided by the country paying you. They will probably ask you to provide a proof of residency certificate (form 6166) from the IRS. You need to obtain the IRS application form (Residency Certificate Form App f8802) first, fill it out and send it in with a check. This can be downloaded from the IRS web site. The form comes with the usual complicated instructions and any error will void the form and they will make you do it again.
Only the Philly PA office deals with this form and I highly recomend you talk with someone in the office as you fill out theapplication. Here is the number as it is difficult to find (215) 516-1035. Let them walk you through it so there are no errors. You can get up to 20 forms for $35.00. Get all 20 even if they are for the same country. They get lost in the mail or by the couontry you are sending them to and this will save you having to fill out the paperwork and writing another chek.
You will need to do this every year you work for a foreign client.
Hope this helps.
Posted by Ron Niebrugge on November 30, 2007 at 10:41 AM
I highly recommend talking to a CPA first.
I have found that most foreign buyers aren't aware of the paperwork that Richard writes about, but the big buyers, such as large foreign magazines and ad agencies are, and will ask for it. It is a time consuming process, it helps to have it in place in advance.
Otherwise you do need to claim those sales on your U.S. income tax return.
Discussion
3 repliesMy understanding, and the way I have operated for years is that your income is taxable in the US and you need to declare it. Additionally your payment may be taxed in the foreign country (double taxation). Check with the accountign department for the client you are working with to see if theyu need to tax you. If so you will need to do the following.
Fill out some paperwork ( APPLICATION FORM FOR INCOME TAX CONVENTION - or similar) that should be provided by the country paying you. They will probably ask you to provide a proof of residency certificate (form 6166) from the IRS. You need to obtain the IRS application form (Residency Certificate Form App f8802) first, fill it out and send it in with a check. This can be downloaded from the IRS web site. The form comes with the usual complicated instructions and any error will void the form and they will make you do it again.
Only the Philly PA office deals with this form and I highly recomend you talk with someone in the office as you fill out theapplication. Here is the number as it is difficult to find (215) 516-1035. Let them walk you through it so there are no errors. You can get up to 20 forms for $35.00. Get all 20 even if they are for the same country. They get lost in the mail or by the couontry you are sending them to and this will save you having to fill out the paperwork and writing another chek.
You will need to do this every year you work for a foreign client.
Hope this helps.
I have found that most foreign buyers aren't aware of the paperwork that Richard writes about, but the big buyers, such as large foreign magazines and ad agencies are, and will ask for it. It is a time consuming process, it helps to have it in place in advance.
Otherwise you do need to claim those sales on your U.S. income tax return.