Unlike last decade, earning money online became much easier nowadays. You can make a blog and monetize or post videos in YouTube to earn through AdSense. However, paying income tax is always a grey area when it comes to earnings through online. Though paying tax depends on the regulations of your country, you have to submit tax info in AdSense account. In this article, we will explain how to fill tax info in AdSense account.
Why You Should Submit Tax Info?
First, it is not necessary to submit tax info for all AdSense account holders. You will receive an email or see a warning message in your AdSense account if you need to submit the details.
You should submit the tax info to avoid the following stuff:
- You will not be paid if there is an action point open for submitting tax info in your AdSense account.
- By default, the withholding tax rate is 30% and hence Google will deduct the amount from your payment. You should submit tax info to reduce or avoid paying this withholding tax amount.
Therefore, you do not have other option than submitting the details to get payment.
Tax Info in AdSense for Non-US Citizens or Residents
In this article, we only cover filing tax info non-US citizens. Google will use this information to decide how much money to withhold when paying to you. That essentially means the followings:
- Your payment country in AdSense account is located outside US.
- Check the tax treaty between US and your country to claim exception in withholding tax.
- Tax info is to be submitted by the payee in AdSense account and not the account holder.
Now that, this will be a big blow to many AdSense account holder’s earning that you need to pay tax for YouTube and blog monetization. However, you should check the tax treaty carefully to claim the deductions. For example, if you are an Indian AdSense account holder, you can reduce the tax to 0% for AdSense and 15% for YouTube from 30%.
How to Submit Tax Info in AdSense Account?
When you see a warning message in your account, click on “Manage Tax Info” link. This will take you to the “Payments” section and click on “Add Tax Info” button. Before proceeding further, you have to provide some details by answering the following three simple questions:
- What type of account? – select individual account holder or a business. We will explain the process for individual account holder in this article.
- Are you a citizen or resident or the United States? – select “No”.
- Select W-8 tax form type – choose W-8BEN which is applicable for individuals.
Click on “Next” button to proceed further to next step. Google makes the entire process into 6 steps like a wizard.
Step#1 – Tax Identity
Under the tax identity step, Google will automatically fill up the “Name of individual”. Make sure to check the name is correct as per the payee name in your AdSense account.
You can leave the “DBA (doing business as) name or disregarded entity” and select your country of citizenship. Below that type your foreign TIN number. This is a mandatory field for non-US residents and is the tax identification number from your country.
TIN can vary depending on the country you live. For example, Indian account holders need to provide your Permanent Account Number (PAN) as TIN. Leave the “US ITIN or SSN” blank and click on “Next” button.
Step#2 – Address
The next step is to provide your address details. You have an option to select the resident and mailing address same or provide different details for these. In addition, you may need to provide additional proof if you choose the permanent address check box.
Step#3 – Tax Treaty
This is an important step in filling tax info in your AdSense account to get exemption in withholding tax deduction. First choose “Yes” for the question “Are you claiming a reduced rate of withholding under a tax treaty?”.
Check the box against “Resident of country claiming treaty with the US” and choose your country from the dropdown list. In this example, we will explain for Indian AdSense account holder. Depending upon your country, the dropdown options and the tax rate claim will change. The “Special rates and conditions” has three options for AdSense, YouTube and copyright.
- Select “Service (AdSense)” checkbox.
- Choose “Article 7 and paragraph” under “Article and paragraph”.
- Finally choose withholding rate as “0% (reduced rate)”.
If you have YouTube account, then fill up other two sections similarly. If you do not make earnings through YouTube, you can leave these two sections as it is and click on “Next” button.
Step#4 – Document Preview
Under this section, you can download and preview W-8BEN form to make sure all the provided details are correct in the tax info for your AdSense payee. Check the confirmation declaration and click on “Next” button.
Step#5 – Certification
Here you have to again read and confirm the details are correct by entering your legal name. Google will treat the full legal name as your signature in the form.
Choose yes or no, depending upon whether you fill the form for yourself or on behalf of someone and click “Next”.
Step#6 – Activities and Services Performed in US Affidavit
This is the last step to confirm whether you have any services offered in US and providing tax info for existing or new payment profile in your AdSense account.
After selecting the radio buttons, you also have to confirm the check box that will appear below each section. Finally, click on the “Submit” button to finish the process.
Check Tax Info Details
Google will instantly approve the submitted details and send you a confirmation emails. Any time later, you can go to “Payments” section and check the tax info details. It should show the status as “Approved” and WHT rate as 0% claimed for services.
If you have submitted details for YouTube then you should see the claiming rate for all three sections like below.
Do not worry if you have filled wrongly and submitted. Simply, click on “Submit New Form” button to delete already submitted details and submit new form. However, be careful to submit correct details to avoid paying higher withholding tax rate.
Hope this article helped you to fill tax info in AdSense account without mistakes. As you can see, Indian publishers can make the AdSense withholding tax as 0%. However, they still need to pay 15% tax for YouTube and Google Play earnings. This may be a big blow for small content creators and discourage them to discontinue. Most importantly, you should check the applicable treaty rates for your country to evaluate the impact on your earnings.