Well, I see several votes for providing my SSN, and at least
one that says I don't need to, so I'm still a bit confused.

I'm not concerned about declaring the income at my end or
declaring the payment at their end, as I always declare
everything, anyway. My essential concern is finding a way
not to give my Social Security number to everyone to whom I
sell an image license. Some clients might take care to keep
it confidential, but some might not, and giving away a SSN
is only just short of handing someone your wallet.

I looked at 26 USC 6050N, which seems to be the relevant
text in this case, and it mentions only providing a name and
address for the payee, not a SSN. It does mention the
"forms or regulations prescribed by the Secretary," but I
don't know how to look those up.

If there is a way to provide my client with the information
he needs without giving away my SSN, I'd like to know what
that is. If there isn't, then I'd at least like to know if
there are any precautions I can take to prevent misuse or
dissemination of the SSN to anyone other than the IRS.

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Mxsmanic <mxsmanic[at]hotmail.com> wrote:

- quote -

Royalties. Payments other people make to you for licenses to
use copyrighted works of art, such as photographs, belonging
to you are generally royalties. Since you're a sole prop.
receiving royalties on work you created in the course of
your trade, they're reported on Schedule C and are subject
to self-employment tax.

Royalties paid to a sole prop. require a W-9 from you to
them, with your Employer ID number (if you have one) or your
Social Security number (if you don't); and a 1099-MISC from
them to you. Since they need your Employer ID or Social
Security number on the W-9 (and if they don't get it, they
may be required to do backup withholding) and to make out
the 1099-MISC, there's no getting around giving it to them.

You're right about the W-8 being the wrong form. That's for
a non-resident operating a business in the US.

--
Chris Green

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Mxsmanic wrote:

- quote -

If you were selling a product and the customer would then
own the product after paying you for it, there are no
reporting requirements. But you say you're licensing the
photo, which as I see it, implies that you still own the
image, in which case they should report these payments to
you on a form 1099-misc at year's end.

So they will need some kind of ID# for this purpose, either
your SSN if you're a proprietor, or an IRS issued FEI# in
other cases, but that can also be used by a proprietor these
days.

Cheer$,
Harlan Lunsford, EA in LA

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mxsmanic <mxsmanic[at]hotmail.com> wrote:

- quote -

If the person paying you the fees is obligated to file an
information return with the IRS (Form 1099-Misc) then they
are obligated to obtain a W-9 from you. They would have to
file a 1099 if they paid you at least $600 for services or
$10 in royalties. To you, it doesn't matter what the
payment represents as services or royalties would both be
reported by you as self-employment income on IRS Form 1040
Schedule C. I believe that these fees would be considered
royalty payments if they are amounts paid to you for the
right to use your copyrighted images over a specified period
of time. In this instance, the $10 rule would kick-in rather
than the $600 rule.

Alan
http://taxtopics.net

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"Mxsmanic" <mxsmanic[at]hotmail.com> wrote

- quote -

Earned income.

- quote -

They shouldn't have to report payments to you (you aren't
providing a service)

- quote -

It doesn't.

- quote -

Nope.

--
Paul A. Thomas, CPA
taxman at negia.net

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Mxsmanic <mxsmanic[at]hotmail.com> wrote:

- quote -

Sounds like this might be royalty income? If so it gets
reported on Schedule E. Payers will need for you to give
them a W-9 so they can send you a 1099.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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"Mxsmanic" <mxsmanic[at]hotmail.com> wrote:

- quote -

Just because you are living and working outside the U.S.
does not change your reporting requirements or those of your
clients.

As you are conducting a "trade or business" the income, and
the expenses, are reportable on Schedule C. It does not
matter whether the client is in the U.S. or not, all income,
from worldwide sources must be included on your return.
Also, the net income is subject to the Self-Employment
Social Security tax from Schedule SE.

Your clients should be providing you with a 1099 at the end
of the year if they pay you more than $600 and if they,
themselves, are in business. If the client is an
individual, that person is not required to file 1999s, only
businesses must file these forms. So, if the client asks
for your number, Form W-9 is the correct form, you must
provide it; if they don't ask, you don't need to give it to
them.

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I've been looking at IRS documents and all over USENET and
the Web, but I can't find out exactly how income from image
licensing fees is reported and handled.

If I, as a sole proprietor, license images I've photographed
to clients, and my primary business is in fact photography,
is this income earned or unearned income? How do clients
report their payments to me? Note that I am a U.S. person
living outside the U.S., and my photography and services
were performed outside the U.S. as well, but the client is
in the U.S. (if any of this makes a difference).

The basic reason I am asking this is that I want to know if
I must provide my SSN to clients. I have no problem with
giving my SSN to the IRS, of course (they already have all
that, anyway), but I'm not at all keen on providing my SSN
to every single client that comes along and wants to buy a
photo. I send the client an invoice with the licensing fee
and a small fee for burning a CD or whatever other expenses
are associated with the licensing. It seems to me that he
should just be able to pay the invoice, and if the IRS wants
documentation, he can just hand a copy of the invoice to the
IRS. The IRS can identify me based on my name and address,
and so it shouldn't need my SSN. Some of the IRS
regulations I've looked at imply that this is sufficient
(?).

Ultimately I wish to avoid giving my SSN to any more people
than really necessary, given the security risks inherent in
this. Can I avoid it?

The behavior of clients has been inconsistent. Most accept
the invoice and pay it. Some ask for a SSN. A few ask for
a W-8 (not applicable in my case, as I'm not a foreigner) or
a W-9 (not sure if this is applicable or not).

Note that I am just licensing images for publication in most
cases; it is not a transfer of copyright (if that makes a
difference).

If anyone can explain how this works to me and/or point to
IRS or other documents or regulations that explicitly state
how this situation is to be treated, I'd appreciate it.
Like I said, I don't care about the IRS having my SSN, but
passing this number out to hundreds of clients seems very
insecure (given the possibilities it offers for identity
theft).

--
Transpose hotmail and mxsmanic in my e-mail address to reach
me directly.

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