_coyote_
Jan 16, 2010, 04:12 AM
Hello,
I am a registered sole proprietor in Croatia. I develop computer games which are sold by some US companies and for that I receive royalties. Croatia and USA still hasn't signed the tax treaty therefore I didn't bother (yet) to get a US TIN because with or without it 30% of my royalties must be withheld and paid to the IRS. However, recently my country joined the NATO and I have a feeling that tax treaty is soon to be signed, so I have several questions:
1. Am I correct in assuming that the proper tax identification number to get is EIN since I am not just a plain individual but a sole proprietor?
2. When preparing the SS-4 should I fill the name of the country in the line 9b?
My guess is not, because 9b is only for corporations, and IRS supposedly derive the country from the mailing address in line 4b. I suppose it shouldn't make any difference if I fill 9b too, but again, I wouldn't want to create an inconsistency of my type of entity.
3. Should I fill the section 16 (principal activity) and 17 (principal line of merchandise)?
At one place on the IRS website it says that foreign persons who apply for EIN only for the tax treaty purposes should not fill anything but 1-5b, 7a-b, 8a, 8b-c, 9a, 9b, 10 and 18, but in the instructions for the SS-4 they say that 16 and 17 must be filled. I am confused.
4. If 16 and 17 must be filled then what should I put there?
I suppose "16 other - software development", "17 - software", but I am not certain.
5. When I prepare the W-8BEN what should I put in the line 1 that asks for the "Name of the individual or organization..." - should I put my own name, or my trade name of business?
The business name of my registered sole proprietorship is different than my own name, and in the SS-4 instructions IRS says that one must use either legal name (SS-4 line 1) or trade name (SS-4 line 2) for all subsequent tax returns. In other words it seems to me that this is arbitrary, but once chosen must be stick to.
However, for example, in the past I received couple of 1042-S, and the company that withheld the 30% of my royalties have written both my trade name and my own name, one below another in that order, followed by my address. They have a form 1042-S in which 13a-e fields are joined to a one big field in which they put the aggregated recipient's (i.e. my) information.
7. Finally, am I correct in assuming that if my only income from the US is in form of royalties for which the payer withheld and paid the taxes, then I as a foreign citizen and a non-US resident do not have to file an annual tax return to the IRS?
I apologize for so many questions, but I would like to understand the US tax system better.
Thanks in advance to anyone who is willing to answer my questions.
I am a registered sole proprietor in Croatia. I develop computer games which are sold by some US companies and for that I receive royalties. Croatia and USA still hasn't signed the tax treaty therefore I didn't bother (yet) to get a US TIN because with or without it 30% of my royalties must be withheld and paid to the IRS. However, recently my country joined the NATO and I have a feeling that tax treaty is soon to be signed, so I have several questions:
1. Am I correct in assuming that the proper tax identification number to get is EIN since I am not just a plain individual but a sole proprietor?
2. When preparing the SS-4 should I fill the name of the country in the line 9b?
My guess is not, because 9b is only for corporations, and IRS supposedly derive the country from the mailing address in line 4b. I suppose it shouldn't make any difference if I fill 9b too, but again, I wouldn't want to create an inconsistency of my type of entity.
3. Should I fill the section 16 (principal activity) and 17 (principal line of merchandise)?
At one place on the IRS website it says that foreign persons who apply for EIN only for the tax treaty purposes should not fill anything but 1-5b, 7a-b, 8a, 8b-c, 9a, 9b, 10 and 18, but in the instructions for the SS-4 they say that 16 and 17 must be filled. I am confused.
4. If 16 and 17 must be filled then what should I put there?
I suppose "16 other - software development", "17 - software", but I am not certain.
5. When I prepare the W-8BEN what should I put in the line 1 that asks for the "Name of the individual or organization..." - should I put my own name, or my trade name of business?
The business name of my registered sole proprietorship is different than my own name, and in the SS-4 instructions IRS says that one must use either legal name (SS-4 line 1) or trade name (SS-4 line 2) for all subsequent tax returns. In other words it seems to me that this is arbitrary, but once chosen must be stick to.
However, for example, in the past I received couple of 1042-S, and the company that withheld the 30% of my royalties have written both my trade name and my own name, one below another in that order, followed by my address. They have a form 1042-S in which 13a-e fields are joined to a one big field in which they put the aggregated recipient's (i.e. my) information.
7. Finally, am I correct in assuming that if my only income from the US is in form of royalties for which the payer withheld and paid the taxes, then I as a foreign citizen and a non-US resident do not have to file an annual tax return to the IRS?
I apologize for so many questions, but I would like to understand the US tax system better.
Thanks in advance to anyone who is willing to answer my questions.