Soundrop complies with the tax laws and regulations of the United States. You are responsible for reporting your income for taxation purposes based on all laws you may be subject to, including local and national. If you have any questions about how to report your income for your taxes, please consult a tax professional.
The U.S. tax treatment of music income varies depending upon your status (U.S. or non-U.S.) and the specific type of income earned. U.S. citizens, residents, and entities are taxed on all of their income regardless of where the income is earned, whereas non-US citizens, residents, and entities are taxed only on their U.S. source income.
Due to the differences in treatment, U.S. taxpayers are subject to different tax reporting and withholding rules than non-U.S. taxpayers. Further, some non-U.S. taxpayers may reside in a country that has entered into an income tax treaty with the United States. In such a case, the non-U.S. taxpayer may be able to make a claim for treaty relief that may reduce or eliminate withholding (the IRS publishes a list of pertinent information related to U.S. income tax treaties at this link).
Disclaimer: We cannot offer advice about your specific tax obligations. If you have questions please consult a local tax professional.
Forms you need to fill out as a Soundrop artist
To establish your status for U.S. tax purposes, U.S. taxpayers must provide Soundrop a Form W-9 (Request for Taxpayer Identification Number and Certification), and non-U.S. taxpayers must provide Soundrop with an applicable Form W-8.
Please provide or update (if your information has changed) your Form W-8 or W-9 no later than December 31 to ensure proper year-end tax reporting.
In general, non-U.S. individuals should provide Soundrop with the latest version of IRS Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)), and non-U.S. entities should provide an applicable Form W-8 (i.e., Form W-8BEN-E, W-8IMY, W-8ECI, or W-8EXP). You'll be asked for something called a TIN or an FTIN.
If this sounds really complicated, don't worry! Our new payout system will walk you through each step of submitting the correct form within your Soundrop account.
Helpful information for non-U.S. taxpayers may be found at the following IRS publications:
- Publication 505, Tax Withholding and Estimated Tax
- Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
- Publication 519, U.S. Tax Guide for Aliens
- Publication 525, Taxable and Non-taxable Income
- Publication 901, U.S. Tax Treaties
I don't have or don't know my TIN / FTIN
You probably do! In many countries, this will be something like a National ID Number. It's very important to make sure you enter a valid TIN so that we withhold the correct amount of taxes for your location, and your tax forms are approved without any problems. Here are some examples of types of Foreign Tax ID numbers (FTIN) for different countries:
- Canada: Nine-digit Canadian Social Insurance Number (SIN) or Business Number (BN)
- Finland: Finnish Social Security Number or Business ID
- Italy: TIN or Codice fiscale
- Poland: PESEL number or TIN
- Turkey: National Identity Number or TIN
- UK: Unique taxpayer reference (UTR) or National Insurance Number (NINO)
- Romania: 13-digit Personal Identification Number (CNP) found on Personal ID or passport
Click here to lookup more info about Tax Identification Numbers in your country.
Forms you may receive from Soundrop
Soundrop artists who are citizens or residents of the United States will receive a Form 1099-MISC if they received more than $10 in tax-reportable payments for the year. Soundrop makes one copy of this form available to you, and one to the IRS. The 1099 reported income is based on earnings actually paid to you during the year, not earned for the year. Your 1099 will be e-delivered or postmarked by January 31st of the following year.
Generally, unless backup withholding was applied, the following tax classifications are not issued a Form 1099: C Corporation, S Corporation, LLC C Corporation, LLC S Corporation, and Tax Exempt Organizations.
Form 1042-S is used to report U.S. sourced income paid to non-U.S. citizens or residents and withholding information to the United States Internal Revenue Service. Soundrop makes one copy of this form available to you, and one to the IRS.
If you supply a form W-8 and receive at least one tax-reportable payment from Soundrop, you will receive form 1042-S from Soundrop the following year. Your 1042-S will be e-delivered or postmarked by March 15th of the following year.
In general, US-based artists are not subject to tax withholding, as long as Soundrop has a valid Form W-9 on file for you.
The statutory withholding rate applicable to non-U.S. taxpayers (i.e., individuals, corporations) who receive payments of US source royalties (e.g., earnings from music streams) is 30%. However, this rate may be reduced (including to zero) in the case of an artist who is a resident of a country that has entered into an income tax treaty with the United States. Not all countries have an income tax treaty in effect with the United States.
To claim treaty relief, the non-US taxpayer must submit a properly completed Form W-8BEN (or Form W-8BEN-E in the case of certain business entities) that includes a U.S. or foreign tax identification number. You may find the list of the countries with which the United States currently has US tax treaties in force here.
Click here to view charts with examples of different types of music income and the related tax reporting and withholding treatment for U.S. taxpayers and non-U.S. taxpayers.
When should I update my W8/W9?
You’ll want to update your W-8/W-9 within your Soundrop account if the information on the form changes, such as if you move to a new address.
What if I need to update my W8/W9?
If you need to update your W8/W9, you can do so within your Soundrop account. You will not be able to edit the original document, but you will be able to re-submit a new one that will replace the previous one.
As a non-profit, we know organizations are exempt from paying taxes, but we are still required to submit tax information in order to verify this with the IRS. We will not need to issue you a 1099 informational tax statement.
In order to do so in our system, please follow these instructions:
- Select the Tax Classification of "Other"
- Provide an EIN or SSN for IRS verification