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Taxes question.
Kind of confusing...

 4:02 am on Nov 11, 2004 (gmt 0)

Here is the problem.
I am originally from Europe but currently I am studying in the USA.
While I was at home I received two Adsense paychecks from Google, and then came to USA.
I will cash those checks here in the USA because I have a bank account here.
This is what I do not understand. DO I need to pay taxes here in the USA where I will cash those checks, or I need to pay taxes in a country where the checks were sent to. That is to the country that is on file in my adsense account, which is not USA.



 4:28 am on Nov 11, 2004 (gmt 0)

you pay tax only if google has your SIN.
location of the cashing does not matter
location of the address matters, but you can select not to give your SIN.

in your case, it is very easy to pay zero tax.


 5:27 am on Nov 11, 2004 (gmt 0)

sshhhhh ; )


 8:43 am on Nov 11, 2004 (gmt 0)

Your tax situation would partly depend on whether you're a US citizen or not. Are you?


 9:40 am on Nov 11, 2004 (gmt 0)

>>Your tax situation would partly depend on whether you're a US citizen or not.

Wrong, IMHO. He said that he's a student, presumably on an F1 visa. He will have been issued with a Social Security number and money he earns in the US will be subject to US taxes (above a certain limit).

This is a tricky question. The current cheques, I would have thought, do not come under US tax as he earned them when he was outside the US and is only cashing them in the US. However, subsequent Adsense cheques may be subject to tax. The question is - did he earn that money in the US? It could well be argued that it was an asset back home that was generating money for him and therefore possibly outside the scope of US taxes.

If the cheque is sufficiently large it will still attract the attention of the authorities who are paranoid about laundering. (laundering through Adsense does happen).

Most universities have a department to help foreign students with questions like these. Give them this poser ;)


 10:32 am on Nov 11, 2004 (gmt 0)

Well, it's always possible he has dual nationality - and therefore falls under the tax regimes of two seperate countries. In which case they would be taxing his Adsense cheque whether he was in the US or not. Also, I presume he's getting further Adsense cheques. Are you entitled to work on a student visa in the US? Technically paying in the cheque could be classed as "work".


 10:43 am on Nov 11, 2004 (gmt 0)

I am now in the UK but I have been a student in the US. Yes, you can work on an F1 (student) visa. It used to be restricted to 20 hours a week - and you are restricted in what kind of jobs you can take - but that could have changed. And you are taxed at source. You can file a state and federal tax return at the end of the year and get most of it back.

In the absence of any mention of dual nationality I have to assume he does not have it. But, if he did have dual nationality then the no-double-taxation treaty of the two countries would need to be examined. Technically, or otherwise, I don't believe that paying a cheque in would be considered work.


 4:22 pm on Nov 11, 2004 (gmt 0)

I recommmend the person contact their countries tax department for clarification.

I'll throw into this thread... :-) My permanent address is in Canada and most of the money I earn comes from US companies. Whether I am here or staying in the US for a period of time and working online, I pay Canadian taxes on all income. US companies do not withhold taxes since I don't meet the criteria for them to withhold tax. Even though my income earned is from online ventures, my "primary residence" address is considered to be determining factor in calculating who I pay tax too.

I know of many many people who don't even bother to report the commission cheques. Lucky for you if you don't get caught, but if you do, its not worth the penalties involved (i.e. tax fraud). You'll pay more in fines and penalties than the money you make. On the flip side of that, if you are lucky enough to be a "fedex member" then its worth it to have an accountant to make the best of your tax situation.

Just my 2 cents..currently worth a little more based on today's dollar value. :-)


 6:15 pm on Nov 11, 2004 (gmt 0)

No I'm not a US citizen.
I mean this is just so confusing.
I am allowed to work 20 hours per week as I'm on F1 visa, but since I am making money off adsense how can anyone prove how many hours I have worked for!? Or even if I have worked from States or any other country out there. At this point I dont even have to work on my websites because adsense makes me money by it self.
However, from your posts it looks like I am supposed to pay taxes in the country that they were mailed to.


 6:50 pm on Nov 11, 2004 (gmt 0)

It doesn't matter which country the cheques are mailed to - what does matter is which country you're a citizen of. Which country is it by the way? On the plus side though - most countries allow you to earn a certain amount before it's taxed. For example here in the UK (for this tax year) 4,745 is disregarded (about US$8,700). Your Adsense earnings may be below the level that incurs tax in your country (whatever that is).


 7:19 pm on Nov 11, 2004 (gmt 0)

Hi HellaCool,

I doubt very much that "hours of work" has anything to do it. Even if you don't work at it, it would still be classified as somthing like "residual income" or "other income" on your tax return. Like I said, get in touch with your country's (your citizenship) tax department. Find out if you have to claim and see if there's an amount that you can earn without claiming (as was said earlier).

Here in Canada, everything has to be reported, whether or not it meets any type of tax-free status for low income earners. It may be a great place to live but you are taxed to death. :-)


 8:18 pm on Nov 11, 2004 (gmt 0)

At this point I dont even have to work on my websites because adsense makes me money by it self.

It doesn't matter - it's still classed as income. You could have a million pounds sitting in a bank account earning interest - not have to "do" anything to it - you'd still get taxed on it. The hours of work are also irrelevant.


 8:23 pm on Nov 11, 2004 (gmt 0)

>> it's still classed as income
But income earned in which country? That's why I suggested he contact his international student department. He is best off getting specialist advice.


 8:53 pm on Nov 11, 2004 (gmt 0)

what does matter is which country you're a citizen of

What matters is what country, or countries, you are a "tax resident" of at the time the money was earnt. Citizenship rarely has anything to do with it.

Two or three countries, including the US, tax their cititzens anywhere, but almost all others tax on the basis of residence.

If you are a non-US citizen who is physically present in the US for more than 6 months in a calendar year (or shorter periods for several consecutive years under some conditions, too detailed to go into), then you are "tax resident" in the US (and state).

You are then liable for US tax on WORLDWIDE income from ALL sources earnt during that time. To stress: worldwide income.

Earnings for periods before you became a tax resident are not taxed there. But presumably taxable in the previous country. When the earnings were earnt is the big question here.

It's also quite possible to still be treated as tax resident in your previous country for a long while after you leave (varies by country), which then gets complex.

But in short, if you spend most of the year in the US, as a student or technically even as a visitor, you are liable to US tax on worldwide income from all sources while there. In practice of course the income has to be visible before the US is aware of it, depositing it in a US bank does help them.

Of course, I'm not a tax lawyer, etc, but I have lived and worked in a lot of countries and have used these rules in a practical way.

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