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Alien non-resident needs help with 30% witholding

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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Reply to
refactorizacion
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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.

Reply to
davidkaifuku

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

Reply to
refactorizacion

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).

  1. 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!

Dick

Reply to
Dick Adams

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