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On a W-8BEN What does "Exempt from Backup Withholding" mean

Discussion in 'Business & Tax Advice' started by Siek, Nov 27, 2008.

  1. Siek

    Siek Regular Member

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    Exempt from Backup Withholding

    So its payday at CJ and i forgot to fill out my W-8BEN. I'm from Canada so this is why i have to fill it out, they made it easy with their online form etc etc.

    What does the Except from Backup Withholding mean? I am signed up to CJ as an individual and not under any US corporation.
     
  2. justthinking

    justthinking BANNED BANNED

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    How much have you made with them in round about numbers? Under $600 usd?
     
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  3. rjj4181

    rjj4181 Newbie

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    Backup withholding is required when there is a failure to provide the proper identification when requested. It means that the payer MUST withhold tax from any payments. The withholding percentage is usually 15-20%. "Exempt From Backup Withholding" means you are exempt from this withholding of tax from payments.

    this is for US taxes; I'm not sure if there is an equivalent for Canada.

    Hope this helps.

    RJ
     
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  4. Siek

    Siek Regular Member

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    I've made more then 600USD and i do own a hosting server in the US
     
  5. Siek

    Siek Regular Member

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    So that means that they'll just take 15-20% back from what they owe me to pay for the taxes? How do i know if I am "EXEMPT" from withholding or not?
     
  6. Siek

    Siek Regular Member

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    Thats perfect then, I figured it out. Thanks for the help guys.
     
  7. rjj4181

    rjj4181 Newbie

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    In other words, you are Exempt until you are told you are "NOT EXEMPT."
     
  8. Uptownbulker

    Uptownbulker BANNED BANNED

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    In fact, witholdings may be as high as 28% for individuals but as a corporation, you may quite legally elect to have no witholdings.
     
  9. Freddie

    Freddie Registered Member

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    As I am not in the US either, I looked into this one a while ago.

    I assume that Google has a solid legal department even if they are stating that you need to get your own advice. Here are 3 quotes from their site regarding to adsense and taxes:

    Quote #1

    Publishers will fall into one of three main tax categories:

    * U.S. Business: The payee is based in, and pays taxes in, the U.S.
    * Non U.S. Business (No U.S. Activities): The payee's operations related to participation in AdSense are based entirely outside of the U.S., and payee does not pay taxes in the U.S.
    * Non U.S. Business with U.S. Activities: The payee is based outside of the U.S., but has equipment or employees in the U.S. that are involved with payee's participation in AdSense.


    Quote #2

    Non U.S. Business (No U.S. Activities )

    United States (U.S.) Activities involve having employees or owning equipment in the U.S. that are involved in any way with revenue earned through the AdSense program. This includes, but is not limited to, owning a web server or owning a hosting service in the U.S., or having employees in the U.S. who are involved in either:

    1. setting up a web server, hosting service, or website
    2. developing content for your website
    3. marketing to create a user base for your site
    4. telephone support for your site
    5. buying products for your site
    6. maintaining your site

    Generally, utilizing an unrelated third-party U.S. web hosting service to host your web pages, renting web servers that are located in the U.S. from an unrelated third party, or having your payment sent to a U.S. Post Office Box or mail forwarding address, do not of themselves constitute U.S. Activities.

    Quote #3

    If you do not have U.S. Activities, please visit the Tax Information page under your My Account tab where you will agree to a statement to that effect. No tax forms are required in this instance.

    End of quotes from Google


    Now I am NOT a lawyer and not a CPA or anything along those lines so DON'T rely on anything I say here, but it looks like you are having to fill in this form because of the server you OWN.

    Now the way I read the info from Google is that if you do NOT have any U.S. Activities, you should NOT have to fill out that form.

    I nor any of my businesses engage in/have any U.S. Activities as defined above therefore I would assume I should not have to bother with any of that form filling.

    So WHY does CJ present all foreign affiliates with that form?

    As I don't particularly like paperwork and did not want to go through the trouble of hiring someone in the U.S. qualified to advise on these matters, I took my business elsewhere.


    Anybody got any solid thoughts on this form and withholding issues for Non U.S. Businesses with no U.S. Activities?

    BTW I do not have, never had and don't intend to ever get an adsense account.....
     
    Last edited: Dec 8, 2008