Do I need to get a W9 form for an affiliate I paid money to in 2020 for a digital product and report the amount? If so, how do I do that?

[osteodl]

I have a digital course and paid over $1,000 to the affiliate as part of the affiliate program for the digital course.

[DMarkM1]

If I understand correctly, you have a sales business.  You are selling a digital product and using an affiliate company to drive business to your product. You will enter the income and expenses for this endeavor in the "Self-employment" topic under the "Income & Expenses" tab. 

The affiliate commissions could be classified as an advertising expense.

You also may need the W9 and issue a 1099-NEC if the affiliate company is not one of these exceptions. 

Payments for which a Form 1099-NEC is not required include all of the following.

• Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation). 

• Payments for merchandise, telegrams, telephone, freight, storage, and similar items.

• Payments of rent to real estate agents or property managers. 

[edited 2/9/2021 3:38pm]

[exweb]

Hello

Thanks for the information. As a foreigned owned US LLC (single member) receiving commissions from US affiliate programs (mine is VIATOR in the USA, reselling tours through affiliate links), do I still need to fill the W9 form? Many people tell me this is only for american citizens ? and is the money earned considered as US income source ? does the income need to be declared on a 1040 NR form ?

I cant get a right answer from any accountant. Thanks for letting me know.

[DianeW777]

No, the form you should complete is Form W-8ECI (effectively connected income). You may have already completed this form.

Form W-9 is to be filled out by US workers that have a SSN or TIN, while W-8 forms are filled out by foreign individuals and non-resident aliens who receive income from US sources. There is only one Form W-9, but five different types of W-8.

How is non-resident income taxed in the US?  Tax treatment of nonresident alien
Who must file

• You must file a return if you are a nonresident alien engaged or considered to be engaged in a trade or business in the United States during the year.
• Even if you are not engaged in a trade or business in the United States, you must file a return if you have U.S. income on which the tax liability was not satisfied by the withholding of tax at the source.
• You also must file an income tax return if you want to claim a refund of excess withholding or want to claim the benefit of any deductions or credits (for example, if you have income from rental property that you choose to treat as income connected to a trade or business).

Please update here if you have more questions.

[exweb]

thank you for your quick reply.  But when you said I must file a return, what form are you talking about ? as I usually fill a 1120 + 5472 return every year. are there any other return to file ? 1040 NR? and are viator affiliate commissions considered as US income or not (and I m resident in brazil, there's a tax treaty)? what If I made less than 600 USD with viator last year should I still file a 1040 NR since all my other clients are foreigners (or I sell a digital marketing service to a few US clients from abroad).

thanks a lot!

[DianeW777]

After reviewing the information, and if the following is all true you do not need to file a 1040-NR return.  If the money you receive from US clients is not US-Sourced income. If you conduct all of your business in Brazil then the income would be taxed as Brazil source income because you live and work strictly in Brazil. 

I was giving the filing requirements for Form 1040-NR, however you are filing the business returns. If you as an individual received US income then as a nonresident you may be required to file.  You should include all income from US sources no matter how big or small, that was received by you as an individual (the business is a separate entity).

• Generally, a non-U.S. person is subject to U.S. tax on his or her U.S. source income.

@exweb