Tax Help for U.S. Amazon Sellers Living Abroad
Determining your tax obligations can feel like an overwhelming responsibility if you live in another country and earn money in the U.S. Even in the simplest of circumstances, the U.S. tax code can seem convoluted and arcane; add in the idiosyncrasies of a global online marketplace like Amazon, and you have a recipe for a difficult tax situation.
For something as important as settling your bill with the U.S. Internal Revenue Service (IRS), it’s best to call on a professional, especially if you find yourself in a complicated financial situation. Ted Kleinman, head of the team at US Tax Help, has decades of experience helping international clients navigate the U.S. tax code, and our team stands ready to provide tax help for U.S. Amazon sellers living abroad. To set up a consultation from anywhere in the world, visit US Tax Help online or call us today at (541) 362-9127.
Differences in U.S. Tax Requirements for Amazon Sellers Living Abroad
There are a number of factors that can influence the U.S. tax requirements for a particular Amazon seller living in another country, but the two biggest ones are their filing status and whether there is a tax treaty in place with the country where they reside. We’ll tackle each of these points below:
Effects of U.S. Tax Filing Statuses for Overseas Amazon Sellers
For tax purposes, U.S. law separates people into citizens, resident aliens, and nonresident aliens, each of which has different requirements come Tax Day. Although the first two of these are substantially similar, it is unlikely that someone selling goods on Amazon while living abroad qualifies as a U.S. resident, so we’ll focus on the citizens and nonresident aliens who sell goods on Amazon.
An American citizen living anywhere in the world will be taxed on their global income by the IRS, since the U.S. is one of the few countries that taxes based on citizenship instead of location; this includes Amazon sellers living abroad who are U.S. citizens. For these taxpayers, a tax obligation to the IRS can be limited through the use of exemptions, exclusions, and credits, but they still have to file an income tax return and pay a variety of U.S. taxes, which could include a self-employment tax.
The tax obligations of a nonresident alien can look very different from those of a U.S. expat. Because they don’t receive financial services like social security or Medicare, nonresident aliens are exempt from things like the U.S. self-employment tax, but the taxes imposed on their sales via Amazon can be pretty steep compared to those for expats. As a general rule, foreign citizens are taxed on U.S. income at a rate of 30%, which is typically withheld by the person or entity paying the money (in this case, Amazon). However, there are ways to apply for an exemption or adjustment to that rate of withholding; by doing so, you can reduce (sometimes drastically) the amount you owe in taxes to the IRS.
Influence of U.S. Tax Treaties on Amazon Sellers Living Abroad
If you live abroad and earn money from sources within the U.S., it’s worth checking whether the country you live in has a current U.S. tax treaty. These treaties typically reduce the rate at which residents of foreign countries are taxed on U.S.-based income, so they can have a definite impact on any taxes levied against Amazon sales in the U.S. However, the details of these treaties can vary widely by country, with some covering types of income that others might ignore, and there are plenty of nations with no treaty in place at all. Be sure to check the stipulations of the treaty with your particular country of residence before assuming that the U.S. taxes on your Amazon sales from abroad will be reduced in this way.
U.S. Sales Taxes for Amazon Sellers Living Abroad
In addition to the considerations outlined above, any U.S. Amazon seller living abroad should be aware that they may be subject to sales taxes levied by state and local governments within the U.S. Many states have laws used to establish what’s called an “economic nexus,” the term for when a person or entity conducts enough business in an area that they are subject to taxes as though they were physically located there.
For someone who sells goods on Amazon from abroad, this could mean even greater tax obligations, depending on requirements that can vary from state to state. Kentucky, for instance, treats any Amazon seller (whether they’re located in the U.S. or not) as a Kentucky business if they earn more than $100,000 through sales or conduct more than 200 transactions. Any foreign Amazon seller who meets one of these thresholds will therefore have to comply with the state’s sales tax laws, which would require filing the appropriate paperwork with the state and collecting taxes on each sale to a buyer in the state.
US Tax Help Can Provide Assistance to Any Amazon Seller Living Abroad
As you can see, the hurdles affecting U.S. Amazon sellers living abroad are significant and can easily trip up an unwary or inexperienced taxpayer. Because these requirements can vary based on the seller’s filing status and country of residence – not to mention which states they operate in and how much business they conduct there – determining your legal and financial obligations under every applicable state and federal tax law can be tough. However, with the aid of the experts at US Tax Help, you can minimize your tax burden and avoid the pitfalls and penalties associated with this complicated filing process. To learn more or to set up an appointment with an international tax accountant, visit US Tax Help online or call (541) 362-9127 today.