SOME USEFUL INFORMATION ABOUT TAXEs.
With each season, more and more presenters are understanding their obligations and withholding 30% of gross fees unless there is a qualifying exemption - usually a Central Withholding Agreement (CWA). Note, just because the U.S. may have a tax treaty with, say, Australia, it does not exempt the artist from withholding at the source. It's imperative artists touring here understand their liabilities or it'll come and kick them in the ass eventually. GAMI/Simonds rarely gets involved with this other than for the artists we represent. It's a real quagmire and made more difficult with new ruling by the IRS for non-residents. However, GAMI/Simonds does offer consultations and then can refer to a colleague that specializes in this. Occasionally, if the artist is new here, has never performed in the past here, hence is starting out clean, we may do a CWA for them, but not year-end tax returns. Do not confuse withholding at the source with the filing of year-end tax returns. The withholding at the source is the IRS’ way of getting their money in advance against any possible year tax liability . If withholding is paid and it exceeds what the artist actually owes one receives a refund after filing year-end tax return.
It is imperative that artist apply for either a Social Security Number (SSN) or Individual Tax Identification Number (ITIN). If tour schedule allows, artists and support personnel should present themselves at a Social Security Administration office (almost all towns/cities have) and apply for a SSN. One must have been in the USA for at least 4 days and have at least 14 days left on visa. More often than not an artist's schedule does not allow for a visit to an administration office. In this case, when filing first tax return, a W-7 application for an ITIN is included. The W-7 must be accompanied by a cover letter explaining why the beneficiary could not get to a Social Security office and a certified scan of passport. The passport scan must be certified by the government agency that issued it. Year-end tax returns are due June 15 of the following year for the year in which filing.
Under the new IRS tax overall is the elimination of the standard personal deduction we all (residents and non-residents alike) use to receive . This personal deduction use to be taken into account when the IRS reviewed a CWA. Without this standard deduction, for the most part, unless the performance/tour is a loss, there will be at least 10% withholding at the source.
And, a new CWA ruling is that if the artist (either an individual O or a P group) grosses less than $10k they are NOT eligible to file a CWA. This holds true also for support personnel. In other words, if an artist has support personnel, unless they are each making at least $10k, they will be subject to 30% withholding.
note - the IRS and USCIS do not communicate with each other.
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