Note: The below answer applies to payments issued between 1/1/2019 - 12/31/2019. We will communicate any updates for tax year 2020 by Jan. 1, 2020.
No, a portion of your earnings will not be withheld for US taxes: the amount of money you see in your dashboard and then receive is the amount you have earned. No money will be withheld by us, and no money will be withheld by the US government. Specifically:
- When we calculate the amount that each of your Partner Program stories has earned in a given week, we do not remove any part of that calculated amount for tax withholding. If our payout algorithm (based on member engagement) says that you have earned, for example, $100, you will see $100 listed in your Partner Program dashboard.
- The amount you see listed in your Partner Program dashboard is the amount you will receive in your account when we send out payments. We will not withhold any percent of your earnings for taxes. If, for example, your dashboard lists $100 in earnings, you will receive the full $100 through Stripe.
- When you report your 2019 Partner Program earnings for taxes in early 2020, the IRS will not take out additional amount for taxes as long as the taxpayer information you provided is true and accurate. So, in cases where your dashboard lists $100, you would still end up with $100.
To go into detail, because we treat our Partner Program payments as royalties, we must comply with royalty tax requirements on withholding for non-US countries. For 2019, we will calculate and cover any withholdings — this means that nothing changes for you, and you will not lose out on earnings. Below, we will walk through a detailed example for transparency:
Say you earned $100 in 2019 based on member engagement and reside in a country with a 10% tax rate according to the IRS. We show you $100 in your dashboard, and you will take home $100.
In order for this to happen, we will mark in our records that you earned a larger “grossed up” amount. This figure is larger because it accounts for us paying the tax on your earning, the tax on that tax, and so on. The textbook formula to calculate a grossed up amount is: grossed up amount = initial amount /(1 - tax rate). So for our example, we calculate: $100 / (1 - 0.1) = $111 as the grossed up amount.
At the beginning of 2020, we will send you a 1042s tax form that references the “grossed up” $111. You will be asked to file your earnings with the IRS, but the government will not deduct any further amount for taxes as long as the taxpayer information you provided is true and accurate. You still will have taken home $100.
One request from us: If you qualify for a US tax treaty, please claim it in the “Claim of Treaty Benefits (Part II)” section of your W-8 form, as described here. You can check if your country of residence is on this list. By doing so, you will help us out at no cost to you or your earnings.
We will share any updates for tax year 2020 in the coming months.
Note: We are not able to give advice on how or when you should file your taxes. We recommend that you contact a tax professional for any questions or recommendations.