Royalty Reporting for US Publishers
May 24, 2008
The Internal Revenue Service requires that companies report royalties paid to US Authors via form 1099MISC. Royalty payments of $10 or more must be reported to the IRS.
Royalties Paid to Foreign Authors
Foreign persons are subject to U.S. tax at a 30% rate on income they receive from U.S. sources that consists of royalty income. This tax is imposed on the gross amount paid and is generally collected by withholding on that amount. The publisher must report this withholding to the IRS on form 1042S.
Foreign authors can file form W-8BEN to claim a reduced rate of, or exemption form withholding, as a resident of a foreign country with which the US has a tax treaty.
For example the withholding rate for a UK citizien is 0% and an Italian citizen 5%, if they file a W-8BEN form. The W-8BEN form submission is good for a period of 3 years if filed without a US taxpayer ID number.
Tax Forms
Copies of all forms and publications referred to on this page can be obtained at www.irs.gov.
Software Tip: If you are a US company and deal with a substantial number of foreign authors you should ask if the vendor’s accounting module can print the 1042S forms, in addition to the 1099 forms.
