United States regulations require US entities to collect certain information from payees for tax reporting purposes, even if the payee is outside the US. If you submit invoice expenses for more than $600 USD per year to a Collective with a Fiscal Host in the US, you will be asked to fill out a tax information form.
The $600 threshold only applies to invoice expenses, not receipt reimbursements or other modes of payment (like grants or payroll).
The form for US persons is called a W9. For internationals, it's a W8-BEN/E depending on whether you're an individual or a company.
Please wait for the fiscal host to request a tax form before submitting one - they will provide further guidance about the forms.
No. Only US persons are liable for US income tax. However, hosts are still required to collect the form even if you live outside the US.
US persons who invoice over $600 per year and submit a W9 will be issued a 1099 from the fiscal host by the end of January of the following year, which they need to file their taxes—with the following exceptions:
- Corporations - 1099s are generally issued to contractors and service providers, not vendors who are corporations.
- PayPal payees - PayPal issues 1099s to its payees where required, so the fiscal host will not issue one (more details).
- Reimbursement expenses - receipt reimbursement payments do not trigger the tax form requirement or lead to a 1099 being issued, only invoices.
If you don’t meet the $600 threshold, simply report your earnings as miscellaneous self-employment income when you file your taxes.
If you submit expenses for multiple profiles, e.g. your personal profile and your company profile, a tax form will be requested for each one separately. Also, if you use one profile to submit expenses to multiple fiscal hosts, you will be asked to submit a tax form to each host.
Open Source Collective and Open Collective Foundation are the two largest US fiscal hosts on the platform, and they use an automated system to collect tax forms (more info below).
Other fiscal hosts each have their own system for collecting these forms (they'll likely just contact you personally by email).
If you have submitted >$600 in invoice expenses to Open Source Collective and Open Collective Foundation, you will be automatically sent an email with a link to complete your tax form online.
You will also see a warning on the pending expense tell you that you will not be paid until you submit the tax form.
The automated system works through Dropbox Forms, a service we use to make submitting the info easier for users and to collect it securely and accurately.
Yes. Forms submitted through the automated system are encrypted and only shared with the fiscal hosts' accountants, who are bound by extensive data security regulations.
We can not advise you on how to fill in the forms. If you have specific questions regarding your countries requirements, it would be best to talk to your tax advisor or a tax preparer.
Collectives that live under the umbrella of a Fiscal Host, don't need to worry about accounting and tax obligations, because the host manages that (this is the awesome value of fiscal hosting). If you need tax or accounting information for some reason, get in touch with your fiscal host.
Some Collectives run their own Fiscal Host, and they have all the normal tax and reporting obligations of any legal entity. In that case, consult with your accountant to understand the requirements for taxes.