- Spoonflower is asking me to complete tax information, which is something I’ve never had to do on other POD sites. What does this mean?
Spoonflower is required by the IRS, the tax authority for the US, to collect tax information from all designers who make their work available for sale in the Spoonflower marketplace. What this means for designers who make their designs available for sale through Spoonflower is that if you earn money through selling on our site, we will need to report Spoondollar commission payments (over USD$10.00) in an annual statement to the IRS known as a Form 1099 or 1042-S.
- What tax information do you need and how do I submit it?
For US citizens, we are required to collect Form W-9, the form on which you report your taxpayer ID number: either your Social Security Number (for an individual US citizen) or your Federal Tax ID (if you are a US business).
If you are an individual who is not a US taxpayer, we will ask you to complete the Form W-8BEN (for an individual) or form W-8BEN-E (for a business).
The most secure way to complete these forms electronically is to enter your information on the tax info tab of your Spoonflower account page. You may also download a copy of the Form W-9 here, or the Form W-8BEN here. The Form W-8BEN-E, a form used by non-US entities (businesses rather than individuals), can be downloaded here. Please DO NOT email your completed tax forms; email is not a secure form of transmission. If you have any questions, please contact us at firstname.lastname@example.org.
- I have earned a small amount of commission but have only ever used it (or plan to use it) to buy fabric. Do I still need to complete the form?
Yes. We ask that every designer who participates in the Spoonflower marketplace as a seller complete a Form W-9 (for US designers), W-8BEN or W-8BEN-E (for non-US designers), regardless of how they plan to use their Spoondollars.
- I just use my Spoondollars for ordering swatches and proofing designs, which is part of my business. So I’m actually spending more than I make!
You should consult with your tax advisor regarding whether you are able to deduct swatches for proofing, or other Spoonflower-related purchases, as a business expense. But we remain obligated to collect tax information and, above certain dollar thresholds, to report your earnings to the IRS.
- What if I don’t complete the form? Can I continue to sell designs and earn commissions?
Unfortunately not. While we were able to support this option previously, fees from the IRS are forcing us to disable this option. Should we not receive your tax documentation via the tax information tab on your Spoonflower account page, you will not be able to make your designs available for sale, and any designs already available for sale will be removed from the Marketplace as of October 2017.
- The money I have earned in Spoondollars sits in my account and I have no plans to use it. Do you still need me to complete tax information?
If you plan to participate in the Spoonflower Marketplace as a seller, we need you to complete the tax forms regardless of how much you have earned or how you plan to use the funds.
- I already report any money I make through hobbies as “other income” on my tax return. Do I still need to complete a W-9 and if so, would it change how I report this income?
You should report any income earned from commissions on your income tax. However, we still need to collect tax information from sellers and report the Spoondollars they earn on Forms 1099 or 1042-S as appropriate.
- I would rather not send my SSN via the Internet. Can I fax or mail a copy of this document to you instead?
A lot of people have this concern, and we totally get it. We’re using a secure third-party to collect the documents called RightSignature.com, which uses advanced encryption technology and is far more secure than any other submission method, including email, fax, and post. You can see that company’s security help page here. The personal information you provide on the form, apart from your name and address, will not be held in the Spoonflower database at all, and will be accessed only by our financial team when and if they are required to report the data to the IRS.
- I live outside the US and do not understand why the IRS wants this information from me. I pay my taxes in my own country. Why do I have to provide this information to the US?
The Internal Revenue Service (IRS) requires Spoonflower to report all the money it pays to non-US persons earning US-source income and, in some cases, to withhold taxes from the amounts it pays out. In order to comply with the IRS requirement to report and withhold, we need you to complete the W-8BEN or the W-8BEN-E. Payments to you for use of your designs (i.e., royalties) are considered to be US-source if the designs are used in the US. Please note that when you complete the W-8 form, there is a field where you can note if your country has a treaty with the US that reduces or eliminates the obligation to withhold taxes from your payments. A chart showing treaty rates for royalties by country is located at page 51 of IRS Publication 515, available at www.irs.gov/pub/irs-pdf/p515.pdf.
- Can I choose to make my designs available for sale without earning commissions?
Interesting idea. We may need to develop this option, but for now it is not possible. You can still make your designs public without making them available for sale.
- Will I be taxed on Spoondollars given to me by customer service in lieu of a refund or for some other reason?
In general, if our customer service team gives you Spoondollars, they are not considered income and will not be taxable. Please consult your tax advisor if you have questions about specific credits or compensation.
- So they’ll take out the taxes every month, quarterly…? I take out my own taxes anyway, so just wondering when and how often.
Spoonflower will no longer be withholding taxes from Spoondollar commissions for US-based designers or those located in treaty countries beginning January 1, 2018. We will send you a 1099 form annually (or 1042-S for non-US sellers) that will show the amount you have earned in commissions on Spoonflower for the year.
- I run a business outside of the US. It looks like the W-8 is for individuals; is there another form I need to fill out? When filling the form, it asks for our birthday but we are a company, not an individual, so do not have a birthday date. How should we proceed?
If you are a non-US entity rather than an individual, please use form W-8BEN-E, which can be found here. Please select this option when completing your forms under the Tax Info tab of your Spoonflower account.
- How will you send me my 1099?
Spoonflower will email you your 1099 (or 1042-S) via a service called Track1099, to the email address connected to your Spoonflower account. Should that email bounce back for any reason, we will mail a copy to the address you provided when you filled out your tax information tab.
- I receive a 1099 from PayPal for my Spoonflower sales, will Spoonflower still issue a 1099 for the same income?
Our tax advisors indicate that unless we have a record indicating the income is otherwise being reported to the IRS, we are still obligated to issue a 1099. If you have received a 1099-k from PayPal for income resulting from the sale of your Content through Spoonflower and don't want to deal with complicated tax reporting and avoid challenges of potential double reporting you can send a copy of your PayPal 1099-k to Spoonflower at email@example.com. This will allow Spoonflower to amend your Spoonflower 1099 to reduce it by the amount of corresponding income on the PayPal 1099-k. By sending your PayPal 1099-k you acknowledge that Spoonflower will have to keep a copy of the record on file in the event Spoonflower gets audited by IRS. By sending a PayPal 1099-k to Spoonflower, you are representing that the income reflected on the statement relates to the sale of Content through Spoonflower. You are ultimately responsible for ensuring that the income you report to the IRS is correct.