A Comprehensive Guide to IRS Filing for Foreign Content Creators
By: U-Ming Lee
Tags: Money, Taxes, Freelancing, Finance, Writing

2. Why You Should Bother With This Guide

If you receive:

Royalty cheques, or

Dividends, or

Salary, or

Scholarships, or

Any other form of compensation from a US entity which is subject to withholding taxes by the IRS,

you are technically obliged to file a return to the IRS.

Medium treats its Partner Program payments as royalties. Thus, Medium may withhold taxes against your Partner Program payments.

For example, my Partner Program page shows this statement identifying my withholding tax rate (30%).

Screenshot from the author’s Partner Program page.

Failing to declare your income taxes appropriately is technically an offence under US law.

If you intend to apply for a visa to enter the USA, your visa is granted on the condition that you fully comply with US law, including the obligation to file a tax return.

Therefore, neglecting to file your tax returns may jeopardise your visa application process.

If you don’t file a tax return, you are very likely leaving significant amounts of money on the table.

Appropriately filed tax returns can be presented as documentary evidence to your local tax authorities to avoid double taxation.

Double taxation occurs when your earnings, which have already been taxed in the US, are taxed again by your local tax authorities.

You may be double taxed if you cannot furnish sufficient proof to your local tax authorities that you have already been taxed by the IRS.

Example 1 (I don't file my IRS tax returns) I earned $1,000 in royalties for my participation in the Medium Partner Program in 2020. My IRS withholding tax rate is 30%. I receive $700 in payments from Medium in 2020. I owe an additional 24% (my tax bracket) * $700 = $168 in taxes to Malaysia's Inland Revenue Board. Example 2 (I file my IRS tax returns) I provide documentary evidence from the IRS of filing my taxes. I save $168 in tax payments to Malaysia because the royalty payments are treated as foreign-sourced income, which is not taxed in Malaysia.

You may have donated to a US-registered tax-exempt nonprofit or charity organisation. Failing to file your tax returns on time means you will be unable to claim any refunds from the IRS arising from your charitable donations.

Also, if you are residing in a tax-treaty country, i.e., a country with which the US has signed a tax treaty, you may be able to claim refunds from the IRS arising from the tax treaty. Failing to file your tax returns promptly means giving up your rights to these refunds.

For clarification, the full list of tax treaty countries, as of June 2020 are:

Australia, Austria, Bangladesh, Barbados, Belgium, Bulgaria, Canada, China, Commonwealth of Independent States (Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan), Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Republic of Korea, Latvia, Lithuania, Luxembourg, Malta, Mexico, Morocco, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Slovak Republic, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Kingdom, and Venezuela

(Source: IRS)