• Tax Forms and Documents Udemy Provides Instructors

    This article outlines what tax forms and applicable documents instructors can expect from Udemy after the end of a calendar year, in return for the tax documentation that instructors have already provided to Udemy. 

    Additional resources:

    Note: Udemy is not able to provide tax advice. This article is intended to outline relevant tax forms and documents instructors can expect from Udemy. For individual tax advice, please consult a tax professional.

    Overview

    Udemy is based in the United States, which means that we have certain obligations to the U.S. government for tax withholding and reporting. 

    Upon making their first sales on the platform, instructors submit U.S. Internal Revenue Service (IRS) tax forms to Udemy. In return, in the months following the end of each calendar year, instructors can expect forms from Udemy summarizing their payout totals and withholding totals from the previous year. Udemy also files copies of these forms with the IRS.

    While Udemy uses instructors’ submitted tax information to determine the correct amount of IRS withholding to apply to payouts, all instructors are responsible to report their earnings to the government authorities relevant to them for the purposes of income tax collection, and the 1099 or 1042-S form that instructors receive from Udemy may be helpful in that effort (see below for more information). If you have questions about what your income tax obligations are, consult the help of a tax professional.

    Frequently asked questions

    Which tax forms will Udemy send me?

    1099-MISC forms

    Instructors who provided a valid W-9 certifying their U.S. status for tax purposes will receive IRS Form 1099-MISC if they had at least $10 in payments in a calendar year, unless they indicated status as an S or C Corporation on their W-9. S and C Corporations will not receive any yearly tax form from Udemy, nor will US instructors who earned less than $10 in a calendar year. 

    More about IRS Form 1099 can be found directly at the IRS site.

    1042-S forms

    Instructors who provided tax forms certifying non-U.S. tax status (i.e. W-8BEN, W-8BEN-E most commonly) should expect Form 1042-S in return from Udemy, if they had any earnings from U.S. sources (such as transactional sales to U.S. learners or course consumption from U.S. subscribers). The form will be provided in the first quarter of the year, reflecting the U.S.-sourced payouts and withheld amounts (if any) from the previously completed calendar year. More about Form 1042-S can be found directly at the IRS site.

    How will I receive my 1099 or 1042-S from Udemy?

    A physical tax form will be sent to the mailing address you provided when you completed your tax documentation. You'll also be able to download a digital copy via your Payout & Tax Details page once your form is ready.

    When will I receive my tax forms?

    If you provided Form W-9 or had tax withheld prior to submitting a tax form, you can expect a copy of Form 1099 by mid-February the following year.

    If you provided any other form, such as a W-8BEN or a W-8BEN-E, you can expect a copy of Form 1042-S by mid-March the following year.

    Is a 1099-MISC required to file my taxes?

    No. You are obligated to report income you receive, whether or not that income is reported on IRS Form 1099-MISC or any other tax report.

    What if I get a 1099-MISC from PayPal? Will this cause my earnings to be double-reported to the IRS?

    No. Udemy payouts to instructors are not reported on PayPal’s 1099-MISC forms.

     How can I see right now how much I made from Udemy last year?

    The most reliable way to see how much you earned from Udemy over a given date range is to query your PayPal or Payoneer account for payments received from Udemy. If you’re using direct deposit (U.S. only) to receive your Udemy payments, the applicable bank account should have these payments documented.

    Why does my paid amount on my 1042-S appear different from what I see on my Udemy Revenue Report?

    The amount shown in Line 2 of Form 1042-S (“Gross Income”), refers only to the taxable amount of income for the purpose of IRS withholding. For Udemy, this number represents only the portion of your Udemy revenue that came from sales to or subscription revenues derived from US students.

    What taxes am I responsible for? What do I owe?

    Udemy is not able to provide tax advice. Instructors are responsible for remitting any income tax relevant to them to their local tax authorities. Please consult a tax professional for individual tax advice, or to understand your tax responsibilities for the income you have received from Udemy.

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  • Common Instructor Questions About The W-8BEN

    Introduction

    The W-8BEN is the most common form for non-U.S. instructors who are individuals. You should fill out the W-8BEN if you are “a foreign person” and the beneficial owner of “an amount subject to withholding” (such as Udemy earnings derived from U.S. students).

    Because we know many non-U.S. instructors will be filling out a W-8BEN and may not have encountered U.S. tax forms before, we’ve provided some general information about the tax form platform for the W-8BEN below. These instructions are adapted from the official IRS instructions for the W-8BEN, available in English on the IRS website. 

    For questions about your specific tax details, you’ll need to consult a tax advisor. Udemy is not legally permitted to advise you on how your specific circumstances should be represented on your tax forms.

    Table of Contents

    Basic details

    United States citizenship status

    Taxpayer Identification Number

    Treaty claim

    Special rates & conditions

    Basic details

    Summary: On this page, you’ll be asked for some basic information about yourself, such as your name, residential address, and taxpayer identification number. This page is the same for all tax forms, but the information you enter may determine what questions you’re prompted to answer later in the process.

    Common instructor questions: 

    • I am a citizen of one country, but a resident of another. What am I supposed to enter under “country of citizenship”?

    The IRS writes that if you are “not a resident in any country in which you have citizenship”, you should enter “the country where you were most recently a resident.” 

    For example, if you’re a citizen of Atlantis but currently living in Malaysia, and you’re not a resident of Atlantis anymore, you would enter Malaysia as your “country of citizenship” on line 2.

    • To my knowledge, I don’t have a taxpayer identification number in my country. What should I enter?

    For non-U.S. instructors, your TIN will be the taxpayer identification number issued by your local government. The Organization for Economic Cooperation and Development (OECD) provides a helpful page in English here that details the names and formats that various countries use as TINs.

    • I’m having trouble entering my Taxpayer Identification Number. What’s going on?

    The Udemy tax form platform uses the country you enter to pre-format your TIN. However, it’s possible that your TIN format may not perfectly match your country’s standard TIN format. If that’s the case, simply check the box for “TIN format non-standard” and enter your TIN. 

    United States citizenship status

    Summary text: On this page, you’ll provide additional details about your relationship with the United States. This will help us determine if you should actually be considered a U.S. person for tax purposes, even though you live outside the U.S. 

    Common instructor questions:

    • Why can’t I edit my country of citizenship?

    The country of citizenship shown on this page pre-populates based on your selection from the “Basic details” page. If you want to edit your country of citizenship, you’ll need to use the “Back” button to return to the previous page.

    As with the “country of citizenship” question on the “Basic details” page, your “country of citizenship” is your most recent residential country (your “tax citizenship”).

    Taxpayer Identification Number

    Summary: On this page, you’ll confirm that your taxpayer identity information is correct.

    Common instructor questions:

    • Why am I being asked to provide my TIN again?

    Your TIN is crucial to confirming your taxpayer identity and correctly calculating any applicable withholding. If you do not enter a valid TIN, Udemy will need to withhold at the maximum rate regardless of any other information you provide. This page is here so you can confirm that you’ve correctly entered your TIN.

    Treaty claim

    Summary: On this page, you may claim the benefits of any tax treaty between your country and the United States and reduce your rate of withholding. 

    Common instructor questions:

    • Do I have to make a treaty claim to receive a reduced rate of withholding?

    Yes. If you live in a country with a tax treaty that would reduce your rate of withholding, you must claim the benefits of the treaty on this page for the reduction to apply.

    If you’re unfamiliar with IRS withholding, here’s a little more detail: 

    By default, Udemy must withhold 30% of income from U.S. student sales when paying out non-U.S. instructors. If you make a valid tax form submission without a treaty claim, you’ll see that 30% rate applied to the portion of your income derived from your U.S. students. (No IRS withholding will apply for income from non-U.S. students.)

    However, many countries have treaties with the United States that reduce this rate, sometimes even to 0%. The IRS provides an English list of these treaties here. Your Udemy earnings are considered “copyright royalties,” so please refer to that section of the PDF to see if your country has an applicable treaty. 

    • I’d like to make a treaty claim, but my country isn’t listed. Why? 

    Our tax platform will only let you select countries with applicable tax treaties. If you’ve indicated you’d like to make a treaty claim, but your country isn’t listed on the dropdown menu, your country does not have an applicable tax treaty, and you will need to decline to make a treaty claim. 

    Special rates & conditions

    Summary: On this page, you can let us know if you have any less common circumstances that require you to give additional details about your tax treaty claim.

    Common instructor questions:

    • How is this different from the regular treaty claim?

    For this section, you should only select "Yes" and proceed through the flow if you are claiming specific treaty benefits that require you to meet conditions you haven't already declared in your submission. For example, for copyright royalty income, you must complete this line if your country's treaty specifies different withholding rates for different kinds of royalties. 

    See the IRS's Tax Treaty Table (February 2019 version available in English here) for more about the treaty rates that different countries have negotiated with the U.S.

    Legal certification

    Summary: On this page, you’ll confirm that the information you’ve provided is complete and accurate, in preparation for your electronic signature in the final step of the process.

    Common instructor questions:

    • Some of the legal certifications aren’t relevant to me, but I can’t proceed without checking the boxes. What should I do?

    Our platform treats each certification from Part III of the W-8BEN as an individual checkbox. On the original W-8BEN form, these are simply bullet points before the final signature, so they cover all possible scenarios in which an individual might be submitting the form. Checking the box confirms that you have reviewed the statement, and that if it applies to you, it’s correct. 

    For example, one of the certifications reads: “The person named on line 1 of this form is a resident of the treaty country listed on line 9 of the form (if any).” If you did not make a treaty claim, then the phrase “if any” indicates that this statement doesn’t apply to you.

    As an additional example, another of the certifications reads: “For broker transactions or barter exchanges, the beneficial owner is an exempt foreign person as defined in the instructions.” Since you aren’t submitting this form to cover income from broker transactions or barter exchanges (your Udemy income is considered copyright royalties), this statement doesn’t apply to you.

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  • Taxes: What do Instructors Need to Submit to Udemy?

    This article includes answers to frequently asked questions we receive, regarding what tax forms instructors need to submit to Udemy. 

    Please note: Udemy is not able to provide tax help or give any advice about what to include in your tax form submission. This guide is intended to help answer common questions that Udemy instructors might have about their obligation to submit tax documentation. 

    Do all instructors have to submit their tax form? Regardless of their country of citizenship?

    Yes. ​​Udemy is based in the United States, which means Udemy instructors have certain tax obligations to the U.S. Government. 

    Once you begin the submission flow you will see the option to choose whether you are a U.S. or non-U.S. instructor as one of the first selections you make. Depending on what you choose, the platform will guide you through options that are unique to the selection you made as a U.S. or non-U.S. citizen.

    Submitting your form is important because it ensures that Udemy will withhold the correct amount for IRS withholding (more info at this link).

    What do I need to do? How do I submit my tax forms?

    Instructors do not need to submit a tax form until they start earning revenue from their Udemy courses,  if they’re notified by Udemy their tax documentation has expired,  or if their tax circumstances have changed.

    Learn how to securely submit your tax forms to Udemy.

    How do I know which form to submit?

    If you’re not sure which form to submit or how to answer a question about your tax status, we recommend that you consult with a tax advisor to ensure you’re using the right form and entering information correctly.

    We can offer some basic information about the types of forms you can fill out via our tax platform:

    • W-9: used by U.S. individuals and entities to certify their Tax ID number
    • W-8BEN: used by non-U.S. individuals to certify that they are a beneficial owner or a financial account-holder, and claim treaty benefits
    • W-8BEN-E: used by non-U.S. entities to certify they’re a beneficial owner or a financial account-holder, and claim treaty benefits

    We also support the ability to submit certain less-common types of forms manually by contacting our Support team directly:

    • W-8ECI: used by non-U.S. individuals or entities to certify they’re a beneficial owner receiving U.S.-sourced income that is effectively connected with U.S. trade or business
    • W-8EXP: used by non-U.S. governments or other tax-exempt entities to certify they’re a beneficial owner or a financial account-holder
    • W-8IMY: used by non-U.S. entities to certify they’re an intermediary or flow-through entity receiving payments on behalf of another person

    What happens if I don’t submit a form?

    If we don’t have your tax form on file, IRS rules generally require us to apply the maximum withholding rate of 24% for all sales. Once your earnings have been paid out, that tax amount is immediately remitted to the IRS. 

    Learn more about tax withholding.

    Should I expect a 1099 in return for the form I submit?

    Beginning in early 2021, Udemy will issue an annual Form 1099 (for U.S. instructors) or Form 1042-S (for non-U.S. instructors) to all instructors who have submitted valid tax information.

    I previously submitted my tax forms to Udemy. Do I need to complete this process again?

    There are some requirements concerning the recency of the tax information you provide. We may be asking you to provide your information again to be absolutely sure we have your most up-to-date tax status. The IRS requires that you submit updated tax information any time your tax status changes (i.e. a change of address or name).

    Some forms, like the W-8BEN, must also be resubmitted every few years. If your form is set to expire, you'll be prompted to make a new submission. In any case, if you see a prompt to submit a tax form in your Udemy account, or you receive a notice that a tax form is needed, you will need to submit your tax forms to Udemy again.

    Where can I find more information on tax forms?

    The U.S. Internal Revenue Service (IRS) provides instructions in English for its tax forms that our tax form tool supports:

    Since Udemy is unable to provide tax advice, we recommend that you consult with a tax advisor to ensure you’re using the right form and entering information correctly. 

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  • Instructor Withholding Tax Status: FAQ

    This article includes answers to frequently asked questions we receive regarding tax withholding for instructors.

    What is Internal Revenue Service (IRS) withholding?

    Withholding tax is a type of tax on income derived from certain types of earnings sales (in Udemy's case, copyright royalties). Withholding is distinct from sales tax, which is paid by the consumer on purchase of an item (like a course). Sales tax is charged to students at the point of sale. Withholding is calculated at the time of payout to instructors, and the withholding rate depends on the details of your tax form submission.

    As a United States based company, Udemy has to follow guidance from the U.S. Internal Revenue Service to determine if tax should be withheld from instructors’ monthly payments.

    I’m not from the United States and I pay taxes in my own country, so why does this tax apply to me?

    Udemy is based in the United States. All companies based in the US have to comply with IRS (Internal Revenue Service) regulations, which include withholding tax from certain types of income paid to non-US individuals or entities. 

    In Udemy's case, we are required to withhold tax from copyright royalties when the student taking the course is in the US. This is separate from any tax you owe in your country.

    What will my withholding rate be?

    Generally, IRS withholding only applies to course purchases made by students from the U.S. Your rate of withholding will depend on a number of factors, most importantly your country of tax citizenship. We can’t tell you exactly what rate of withholding will apply to your Udemy earnings until your form is submitted and approved, but when we do begin automatically withholding, you’ll be able to see the rate in your revenue report. 

    If we have your tax form on file, your withholding rate for these purchases will depend on the details of your submission, including whether your country has negotiated a tax treaty with the U.S.

    For instructors in the U.S. who supply a valid W-9 and are not subject to backup withholding, the rate of IRS withholding is 0%.

    What happens if I don’t submit a tax form?

    If we don’t have your tax form on file, we will be required to apply the maximum withholding rate of 24% for all sales.

    This might mean that we withhold more from your payouts than the Internal Revenue Service (IRS) actually requires. Depending on your circumstances, there may be avenues for instructors to recoup funds that were withheld in excess of your legal obligation.

    However, promptly submitting a valid tax form is the best way to avoid overwithholding. Learn how to securely submit your tax forms to Udemy.

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  • How Instructors Can Submit Their Tax Forms to Udemy

    Udemy provides a secure portal to help instructors complete and submit their tax documentation. This article outlines how instructors can securely submit their tax forms to Udemy.

    Note: 

    • Udemy is not able to provide tax help or give any advice about what to include in your tax form submission. This guide is intended to help instructors navigate the form submission page. For individual tax advice, please consult a tax professional.

    How to submit your tax forms after earning revenue from your course(s)

    After you have registered as a premium instructor and have begun earning revenue from your course, you will be notified in your Udemy account that you need to submit your tax documentation. 

    1. Navigate to your Payout settings page, and click Submit tax documentation to begin the submission process.

    2. You will be guided through the submission process on the secure, Comply Exchange platform.

    submit_tax_documentation.png

    3. After you’ve successfully completed the process, you will be notified in the Withholding Tax Status section of your Payout Settings page that your submission is under review. 

    tax_forms_under_review.png

    4. Once your documents have been reviewed and approved by Comply Exchange, and your withholding tax rate has been confirmed, your withholding tax status will be changed to Active. This review typically takes a few days. If you don’t see a change to your Withholding Tax Status within 5 business days, please contact Udemy Support.

    How to update your tax documents and submit a new form

    Once your documents have been reviewed and your withholding tax rate has been confirmed, your withholding tax status will become Active. If your tax circumstances change or if you’re notified by Udemy that your tax documentation has expired,  simply follow the steps above to submit your current information.

    Is this process safe?

    To collect and store instructor tax forms, Udemy partners with Comply Exchange, a specialized tax platform. The tax information that you provide remains in protected storage designed specifically for financial information, and is only processed as needed to ensure compliance with applicable laws.  All processing and storage is done in accordance with the terms of our Privacy Policy and the provisions of any applicable privacy laws, such as the General Data Protection Regulation (GDPR).

    Can I just fax/email/mail you a copy of my tax form rather than go through the Comply Exchange platform?

    No. With tens of thousands of instructors teaching on Udemy today, we need to make sure we have everyone’s tax information stored securely, in one place, in the same format. 

    How can I save my progress in the form submission process?

    After you have begun to enter your information in the Comply Exchange platform, you can save your progress and exit the process by clicking Save & Exit. When you’re ready to resume, navigate back to the Comply Exchange platform via your Payout settings page

    Troubleshooting

    If you encounter an issue while submitting your tax forms and are unable to continue, please contact our support team. Please be sure to provide as much information as possible about the issue you’re encountering so our team can assist you more effectively. 

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  • Instructors: How Does Udemy Handle VAT/GST?

    Udemy has a legal obligation to collect applicable transaction taxes including VAT (Value Added Tax), GST (Goods & Services Tax), or other types of sales taxes, for purchases, which may vary depending on a student's local, state, and country jurisdiction. 

    This article explains to instructors how Udemy handles VAT/GST.

    How does Udemy handle VAT/GST for purchases?

    The VAT (Value Added Tax) and GST (Goods & Services Tax) is a form of consumption tax on goods and services. The Japanese Consumption Tax in Japan is a type of VAT. VAT / GST rates and regulations vary across geographies.

    Udemy currently handles VAT / GST for all purchases made on the website by students as applicable based on local tax rules. In countries where VAT / GST applies, Udemy displays course prices as “tax-inclusive” and Students in these countries will see the tax-inclusive price as a single total, just as they would for other goods and services sold in their countries. Students will receive an email receipt that breaks down the course price excluding tax and VAT / GST separately.

    VAT/GST on mobile

    Apple and Google, who run the App Store and Google Play stores, respectively, handle all purchases on the mobile platform and will handle VAT / GST.

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