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Tax FAQ for US Shop Owners

United States Persons: Generally, "United States persons" include citizens or residents of the US (including green card holders or US resident aliens that satisfy the 183 day "substantial presence test"), and partnerships or corporations created or organized in the US or under the laws of the United States.

If you are a US person, please complete and submit Form W-9 here.

For US persons, the purpose of a Form W-9 is to provide your identifying information (name, address, TIN, tax classification, etc.) and establish your status as a US person. We are required to obtain a US taxpayer identification number ("US TIN") from each US person prior to making payment. If we do not receive a valid US TIN (e.g., SSN or EIN), then we are required to withhold 30% of your gross payments and deposit the amounts with the IRS.

Q. If I don't fill out the tax page in my shop will any of my earnings be withheld?
A. If you do not complete your W9 tax page then 30% of your earnings will be withheld.

Q. Do I need to supply all of the tax information Creative Market asks for or can I choose to only supply a portion?
A. The IRS requires that the relevant forms be filled out completely. The absence of required tax information may result in (additional) withholding.

Q. If I am a US citizen but live and maintain a residence or address in another country does that affect the tax information I must supply to Creative Market and/or how much (if any) of my earnings will be withheld?
A. No, US citizens must provide a completed Form W-9. Once received, Creative Market will no longer be required to withhold on your earnings.

Q. Does the amount of my Creative Market earnings affect what tax information I need to supply or the amount (if any) that will be withheld?
A. No, at this time, all shop owners on Creative Market must provide their Form W-9.

Q. Do I need to pay tax to the IRS directly?
A. Creative Market will be collecting and remitting any withholding to the IRS. The US government will not expect you to self-assess this tax.

Q. Are my Creative Market earnings classified as royalties?
A. Generally, transactions in digital creative content gives rise to royalty earnings.

Q. What is a Form 1099-MISC?
A. This form reports the amount of your gross sales on Creative Market that may be taxable in the US, as well as any amounts required to be withheld from your sales and/or affiliate commissions.

Q. What is the difference between a Form 1099-MISC and a 1099-K?
A. The term 1099-MISC is a general term for reporting that encompassing a large variety of types of earnings. The 1099-K reports only certain types of income.

Q. Do I report my total/gross amount of sales for my taxes or the 70% I get after Creative Market takes their percentage?
A. Shop owners will be required to list the gross amount shown on their Form 1099-MISC.

Q. What time period does my 1099-MISC cover?
A. The 1099-MISC covers one calendar year (Jan 1st through Dec 31st).

Q. The bulk of my Creative Market earnings were from sales I made in a previous year. If I withdraw those earnings in a subsequent year do I show those earnings on the current year’s taxes or do I need to amend the tax forms I submitted last year?
A. US income tax rules require that your sales be reported in the year they occur. The time that a shop owner requests payout is generally not determinative.

Q. Does the gross amount on the 1099-MISC include money I withdrew and money I left in my Creative Market account?
A. Yes, the IRS considers all sales as part of the gross amount regardless of whether or not you withdrew none, some, or all of your earnings.

Q. Are all US sellers getting a 1099-MISC?
A. You will receive a 1099-MISC unless you fall under one of the following situations:

  1. You will not receive a 1099-MISC if your product sales were $10 or less. Please note that if you had affiliate commissions, but no product sales you will not receive a 1099-MISC and we don’t report affiliate commissions in a situation like that.
  2. You will not receive a 1099-MISC if you selected C Corporation or S Corporation as your Tax Classification on your W9. The IRS does not require Creative Market to file a 1099 for these types of shops as they are corporate entities.
  3. You will not receive a 1099-MISC if you failed to provide an address or entered the wrong address.
  4. You will not receive a 1099-MISC if you changed your address after we pulled the information to mail it.

Please note that in the situations above you can still find your gross Royalties and breakdowns here: https://creativemarket.com/account/taxes/statements

Q. Why haven’t I received a 1099-MISC for both of my shops?
A. If you have more than one shop you will only receive one if you indicated the same info on your W9 for both. The Royalties listed would be the gross for product sales and bundle commissions for all shops you own. The Other Income listed would be the total amount of affiliate commissions for all shops you own.

Q. Where can I find my tax statement?
A. Creative Market provides you with a tax statement PDF which you can easily download. It is important to note that this is not an official government tax document however, it does include the numbers which we report to the IRS. 

This statement is typically available before the official tax documents are mailed and will allow you to get a head start on your taxes. 

Total Gross Royalties: This is the total amount of sales your shop generated before any tax withholdings or Creative Market’s cuts, including bundles.

Gross Product Sales: Total amount of product sales (non bundle), before tax withholdings, or Creative Market’s cut.

Gross Bundle Commissions: Total amount of bundle commissions, before tax withholdings, or Creative Market’s cut.

Total Net: This is your final earnings for all products, including bundles, but less tax withholdings and Creative Market’s cut.

Net Product Sales: This is your total final earnings for product sales (non bundle), less Creative Market’s cut and tax withholdings.

Net Bundle Commissions: This is your total final earnings for bundle commissions, less Creative Market’s cut and tax withholdings.

Amount Withheld: Total amount withheld and paid to the IRS based on your tax status and tax treaty with the U.S. Read more on tax withholding.

Q. Why does my sales page not match what’s on my 1099-MISC?
A. Your sales page may not match up where it lists Total Revenue because of things such as discounts, bundles, etc. The Sales page is not a tax information page.

Q. Are refunds included in the gross on my 1099-MISC?
A. No.

Q. Is the amount on my 1099-MISC the correct?
A. Yes, the number reported on the 1099-MISC is the gross amount of royalties earned by each Shop Owner for product sales and bundle commissions. The number (if any) under Other Income is your gross affiliate commissions.

Q. Why did Creative Market report the gross and not the net on my 1099-MISC?
A. US federal income tax law requires that Creative Market report the royalties earned by Shop Owners, as the gross amount (i.e., prior to reduction for the fees charged by Creative Market). Our legal counsel instructed that this is the proper method of reporting. Please note that we are unable to comment on the operations of other businesses that may or may not do this differently.

Q. How do I find out what Creative Market’s cut was versus my net?
A. The breakdown of the numbers reported on your 1099-MISC can be found here.

Q. How do I claim a deduction for Creative Market’s cut?
A. The Internal Revenue Code generally provides for a deduction of business expenses against the revenue earned in a person’s business activities. These deductions should be claimed on your US income tax return.

Q. Another site I sell on does not add sales of fonts and add-ons into taxes so why does Creative Market?
A. Based on advice of legal counsel CM is required to treat sales of digital content as giving rise to royalty income for US purposes. We cannot comment on the business practices of other companies.

Disclaimer: Creative Market does not provide tax advice. For further information and to ensure you are complying with tax laws, please consult a tax professional.

 

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