LabelGrid Tax Withholding Information
- Pete Callaghan
By U.S. tax regulations and in light of tax treaties between the United States and other countries, LabelGrid is legally required to apply tax withholding on U.S. sourced earnings. The amount withheld depends on whether the United States has an income tax treaty with your country, which may reduce the rate from the default 30% to a lower percentage.
Key Points:
U.S.-Sourced Income Only:
Withholding applies exclusively to earnings sourced from the United States. Income earned outside the U.S. is not subject to this withholding.
Tax Withholding Rates:
The statutory rate is 30% on U.S.-sourced income paid to non-U.S. persons. However, if your country has an income tax treaty with the United States, a reduced rate, ranging from 0% to 30%, may apply.
Documentation Requirement (W-8BEN):
If you are not a U.S. resident, you must submit a completed Form W-8BEN. Failure to submit this form will result in the full 30% withholding on your U.S.-sourced earnings.
How Tax Withholding Works
Determination of Source:
U.S. tax law requires withholding only on income from the United States. LabelGrid identifies U.S.-sourced income based on established IRS guidelines.
Application of Withholding Rates:
Without a Valid Tax Treaty:
If no valid Form W-8BEN is received or your country does not have a tax treaty with the United States, a 30% withholding will be applied.
With a Tax Treaty:
When a tax treaty exists, and you have submitted the required documentation, the withholding rate will be adjusted according to your country’s treaty rate. For example, if your country’s treaty provides a 5% rate, LabelGrid will withhold 5% of your U.S.-sourced earnings.
Remittance to the IRS:
The funds withheld from your earnings are remitted directly to the United States Internal Revenue Service (IRS) by LabelGrid.
What You Need to Do
Submit Form W-8BEN:
If you are a non-U.S. resident receiving U.S.-sourced income, please complete and submit Form W-8BEN as soon as possible. This form certifies your foreign status and enables you to claim applicable tax treaty benefits.
Review Your Earnings:
Remember that the withholding applies only to U.S.-sourced income. If you receive earnings from outside the United States, those amounts will not be subject to U.S. tax withholding.
Keep Documentation:
We recommend you retain copies of your Form W-8BEN and any correspondence related to your tax status. This documentation is essential for your records and may be required for future reference or IRS reporting purposes.
Additional Resources
For further reading and to better understand the underlying U.S. tax regulations, please review the following IRS resource:
Please get in touch with our support team or your tax advisor if you have any further questions or need clarification about your tax withholding status.
By following the above guidelines, LabelGrid ensures compliance with U.S. tax law while providing clear information about your earnings and any tax withholding that applies.
If you have any questions about this process, please submit a support request, and our team will be happy to assist.
Disclaimer:
LabelGrid is not a legal or tax authority. We do not provide legal or tax advice. This document merely communicates information provided by our tax administrators. Please consult a tax professional or legal authority for any questions or advice.