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tkazaks
New Member

I'm selling a course online. The co. is deducting taxes before my payouts. I have to pay royalties to outside hires. Do I pay them based on my pre-tax income, or post?

The course is on Teachable. I owe royalties to contractors for added work to the course. Do I pay them the royalty % based on my pre-tax income, or post-tax income? If it's from my post-tax income, do they still owe taxes?
2 Replies
Carl
Level 15

I'm selling a course online. The co. is deducting taxes before my payouts. I have to pay royalties to outside hires. Do I pay them based on my pre-tax income, or post?

Royalty payments you make generally are paid at the contracted amount with no taxes withheld. At tax time you will report those payments to the IRS and to the entities/person's you paid those royalties to on 1099-MISC in box 1 of that form if the total amount paid to any one individual exceeds $600.

You will "REQUIRE" to have the payee's SSN or ITIN in order to issue the 1099-MISC and if you don't, you will pay a penalty for each one you don't have. Before you make the first royalty payment you should send the intended recipient of such payment an IRS Form W-9 and require them to return it to you filled out, as a condition of payment. Get the blank form at https://www.irs.gov/pub/irs-pdf/fw9.pdf

 

Critter-3
Level 15

I'm selling a course online. The co. is deducting taxes before my payouts. I have to pay royalties to outside hires. Do I pay them based on my pre-tax income, or post?

If the sales includes sales taxes and the co you are working thru is collecting those and paying them for you then sending you the remainder then you only report the amount you actually got as income.  This should match the 1099 you get at the end of the year.  If you don't understand this then speak to the processing center you are using for directions. 

 

 

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