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Tax interview UK questions - what are "tax documents"

A topic by Harry created Apr 12, 2021 Views: 1,375 Replies: 6

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Hello!

I need to do my tax interview to set up the itch.io payouts but I'm nervous about the process and just want to check a couple of things. I'm 19 from the UK so this is the first time I've ever had to sort something like this out and I don't want to screw up.

The interview keeps mentioning how Tax Identity will send me "tax documents" (and when I click help on the interview it mentions they will send me "appropriate information return"). Do I need to do anything with this? The IRS scares me and I want to avoid having to fill out tax forms as much as possible so I don't do something wrong and then accumulate thousands of dollars of debt for getting a small payout.

As far as I understand, the Collected by itch.io (payouts) option means that itch and Tax Identity will deal with all the actual Finance Stuff in America, I don't touch that stuff apart from this tax interview, then I separately deal with the tax side of things in the UK?

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Afloof.devModerator3 years ago(+2)

As far as I understand, the Collected by itch.io (payouts) option means that itch and Tax Identity will deal with all the actual Finance Stuff in America, I don’t touch that stuff apart from this tax interview, then I separately deal with the tax side of things in the UK?

This is for the most part correct. With “Collected by itch.io”, the site will take care of sales, and any sale taxes involved (including VAT for europe sales). Then when requested you can claim that money. It’s then up to you to declare that money as income and pay any relevant taxes in the UK.

When doing your tax interview, make sure to put all your details. Living in the UK should mean the withholding rate is 0%. I believe you need to supply your National Insurance Number as a foreign tax id for that.

Hope that helps :)

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Harry3 years ago

Thank you, that really helps. The wording of "tax documents" and "tax forms" on the documentation and interview portal had me worried as I thought it meant I'll be sent tax forms every year that I need to fill in for the IRS. That shouldn't be the case, correct? Would these documents that I'll be sent every year be like a receipt or is there more to the documents I would need to do?

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Afloof.devModerator3 years ago(+2)

The wording of “tax documents” and “tax forms” on the documentation and interview portal had me worried

To my understanding, “Tax forms” is any form related to taxes, in this case it would be the “W8BEN-I” form you complete during the tax interview. It also mentions that Itch.io will send you any relevant “Tax documents” when needed, that should be when earning money, you would get an e-mail of all the details, so you can easily declare that as income in the UK.

as I thought it meant I’ll be sent tax forms every year that I need to fill in for the IRS. That shouldn’t be the case, correct?

Correct, with “Collected by Itch.io” you wouldn’t need to send anything to the IRS directly.

Would these documents that I’ll be sent every year be like a receipt or is there more to the documents I would need to do?

They are basically receipts, used to help you when paying for income tax.

Also worth keeping in mind that I’m not a lawyer, but this is my understanding of the situation :)

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Harry3 years ago

Awesome. Thanks so much for help, feeling a lot more confident about it now!

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Harry3 years ago

Also regarding the National Insurance Number, I'll have a go but I thought they can't be used as ID (although that might be for stuff like trying to buy stuff behind the counter rather than this use case?)

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Afloof.devModerator3 years ago(+1)

I’m not sure what you mean by ID. It can’t be used as a personal ID.

At some point during your tax interview, you will be asked for a foreign tax ID, to calculate the withholding tax. You can skip that, but you will be paying 30% as withholding tax, on top of everything else.

The UK and the US have a trading agreement that reduces that withholding tax to 0%. To claim that, if you operate from the UK, you can provide your National Insurance Number when asked for a “Foreign Tax ID”.

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