November 1, 2023

Giving Bandcamp Your Tax Information: What Happens Next?

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If you’re a Bandcamp seller, Bandcamp might have asked you to provide your tax information, in which case you’re probably wondering what happens if you provide this information.

As a U.S.-based CPA, I’ve written this FAQ to provide clear answers to questions and concerns that I’ve seen in various online forums. Whether you’re a U.S. taxpayer or live outside the U.S., hopefully this guide clarifies what happens after providing your tax information to Bandcamp. 

If you still have questions after reading, please reach out through the website’s contact form or DM me on X at @cputnam_cpa.

Why is Bandcamp asking for my tax information?

Back in 2021, a new law called the “American Rescue Plan Act” changed the tax reporting requirements for online marketplaces such as Bandcamp. Previously, marketplaces were required to issue a tax form called Form 1099-K to sellers who earned more than $20,000 on the platform. ARPA decreased this threshold to $600.

The change has taken a few years to implement, but beginning with tax year 2023, Bandcamp sellers who exceed the $600 threshold will be required to provide their tax information to Bandcamp.

Similar to other online marketplaces based in the U.S., Bandcamp is asking for your tax information to comply with the change in tax law that took effect on January 1st, 2023. By not collecting your tax information, Bandcamp would be liable for penalties, so they’re asking for your tax information to not fall out of compliance.

Will Bandcamp send me a tax bill if I provide tax information? 

No, Bandcamp won’t send you a tax bill if you provide tax information. Bandcamp will, however, use your information to determine whether an informational tax form, called Form 1099-K, is required to be filed on your behalf. 

Bandcamp will issue a Form 1099-K to U.S. residents and U.S. citizens living abroad who earned more than $600 on the platform. U.S. nonresidents typically won’t receive a Form 1099-K, but refer to the next section to see exceptions.

The 1099-K reports the total amount of payouts you received from Bandcamp during the year before deductions. You’ll use this form to file your tax returns and, if you have a tax liability, pay taxes on your Bandcamp warnings.

As a sole proprietor, you must report Bandcamp earnings on Schedule C of your Form 1040. You can take deductions, such as Bandcamp fees, to offset the earnings and reduce your taxable income.

In short, Bandcamp won’t send you a tax bill but you may still owe taxes on your Bandamp earnings when filing a tax return independently of Bandcamp.

For a more detailed walkthrough of filing your taxes as a Bandcamp seller, refer to my Bandcamp 1099-K guide.

If I live outside the U.S., does Bandcamp need my tax info?

If you’re not a “U.S. taxpayer,” meaning that you live and work outside the U.S. and aren’t a citizen of the U.S., you’ll still need to provide Bandcamp with your tax information to continue receiving payouts. 

As a U.S.-based business, Bandcamp must comply with U.S. tax reporting requirements that by collecting tax information from non-U.S. users through Form W-8BEN or W-8BEN-E to determine whether each user is a U.S. taxpayer. 

Will I receive a Bandcamp 1099-K if I live outside the U.S.?

Most Bandcamp users who aren’t in the U.S. and aren’t U.S. citizens won’t receive a 1099-K. However, Bandcamp must issue a Form 1099-K to any non-U.S. user if any of the following conditions apply:

  1. There is a U.S. address associated with the user;
  2. The payments are directed to a bank account in the U.S.;
  3. Bandcamp has reason to believe that the user is a U.S. taxpayer.

Refer to the Form 1099-K instructions for more information.

Bandcamp, or a contracted third-party service provider, reviews your provided tax information to determine whether any of these conditions apply. If so, Bandcamp will file a Form 1099-K with the Internal Revenue Service (“IRS”), the U.S. tax collection authority. You’ll potentially use Form 1099-K to report Bandcamp earnings on a U.S. tax return.

If none of the conditions apply, then you shouldn’t receive a tax form from Bandcamp and your tax information isn’t reportable to the IRS, but you may still need to report Bandcamp earnings to your home country’s tax authority.

If I received a Bandcamp 1099-K as a U.S. nonresident, do I need to file a U.S. tax return?

If you receive a Form 1099-K from Bandcamp then you may need to file a U.S. tax return, even if you have no presence in the U.S. and aren’t a U.S. citizen.

Depending on your situation, you likely won’t owe taxes, but the IRS would have on record that you earned income from Bandcamp but would have no information to offset your potential tax liability. 

To avoid paying taxes, your options are filing a protective tax return, claiming benefits under an income tax treaty, or not filing at all. Consult with an tax professional knowledgeable about international tax issues to understand your next steps.

Why is Bandcamp withholding taxes from my payouts?

In some cases, a 30% tax may be withheld from payouts to Bandcamp users outside the U.S. This might occur if Bandcamp determines that you’re not a U.S. citizen or U.S. resident and you live in a country that doesn’t have an income tax treaty with the U.S.

What happens if I don’t provide tax info to Bandcamp?

According to Bandcamp’s help page, if your earnings are above the $600 threshold and haven’t provided valid tax information, your payouts may become blocked. After you’ve provided valid tax information, Bandcamp will release any blocked payments within 24-48 hours.

Can I speak with someone about Bandcamp taxes?

If you’re wondering how Bandcamp earnings will impact your taxes please get in touch through the contact form below. We can discuss the specifics of your situation to determine the best path forward.

This content is for informational purposes only and does not constitute legal, business, or tax advice. You should consult your own attorney, business advisor, or tax advisor regarding matters mentioned in this post. We take no responsibility for actions taken based on the information provided.

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