Has Google started withholding US tax from all AdSense accounts?

3 years ago, Google alerted YouTube creators that their AdSense account earnings could face US tax deductions, with implementation starting in June of that year. As of 2024, this tax withholding policy has expanded beyond just YouTube accounts; it now applies to all AdSense accounts held by non-US creators. Google is mandated to collect tax information and may withhold up to 30% of earnings from US viewers, depending on the creator’s country of residence and whether they have submitted the appropriate tax forms.

This includes revenue from various sources such as YouTube Premium, Super Chats, and channel memberships. Creators are encouraged to complete their tax forms accurately to potentially benefit from reduced withholding rates based on existing tax treaties between their country and the US.

Updates on Google AdSense Tax Information Requirements

Pursuant to Chapter 3 of the US Internal Revenue Code, Google has a responsibility to collect tax information on creators based outside the US, and withhold taxes accrued on amounts earned from YouTube videos shown to US viewers, whatever the country of origin of the creator. This applies to all forms of YouTube revenue, including YouTube Premium, Super Chat, channel memberships and so on.

As of 2024, Google continues to emphasize the importance of accurate tax information for AdSense account holders. In line with these updates, Google has mandated that users submit their tax information directly through their AdSense accounts. Within the payment settings, there is a dedicated option to manage US tax information and complete the necessary forms from the Internal Revenue Service (IRS).

According to the Google payments center help page (see here), the following forms might be applicable:

• “A Form W-9 will be required from US persons, companies, partnerships and so on.
• Generally, a Form W-8BEN or Form W-8BEN-E is required from individuals and entities (respectively) outside of the US who are the beneficial owner of the income received. It may be used to claim a treaty benefit (in other words, a reduced rate of withholding).
• A Form W-8ECI is used by persons claiming income received and is effectively connected with a US trade or business. A US TIN will be required for all payees that provide a Form W-8ECI.
• A Form W-8IMY is required for certain intermediaries, partnerships and flow-through entities outside of the US. If this form is provided, Google may ask for additional documentation (for example, an allocation statement).
• A Form W-8EXP is used by entities to establish non-US beneficial owner status and eligibility for a reduced rate of tax withholding as a non-US government central bank, international organization, non-US tax-exempt organization, non-US foreign private foundation or government of a US possession.”

If you’re not sure which form you should fill in, contact a local tax advisor for advice.

One last titbit when filling out forms, specifically the W8-BEN. There are three options under the tax treaty section, namely ‘services’, ‘motion picture & TV royalties’ and ‘other copyright royalties’. If your tax treaty applies to all three, make sure you tick all three, even if you currently don’t have income from all three sources.

We’ve also found this useful article that will help you through the prompts on the AdSense forms.

In a significant update, Google announced on October 31, 2024, that all AdSense publishers who submitted W-8 forms in 2021 must resubmit their tax documentation by December 31, 2024. This renewal is crucial to ensure accurate payment processing and withholding rates, as W-8 forms have a validity period of three years.

Publishers who use W-9 forms are not affected by this requirement since those do not expire. To avoid delays in payments or potential withholding of up to 30% on earnings, it is imperative for international publishers to keep their tax information current and complete any necessary forms promptly.

What are the consequences of not supplying information when prompted?

Google may be forced to assume, depending on your circumstances, that you’re a US-resident or US-taxpayer. Chapter 3 withholding, currently 30%, would be applied to all income generated from US viewers and users on business accounts. If Google can’t determine whether you’re a non-US resident, it might be forced to apply the backup withholding rate of 24% across all earnings, not just earnings generated from US viewers.

Can I reduce or stop the tax withholding?

This will depend on whether your territory (or the territory in which you are resident for tax purposes) has a tax treaty with the United States. You can view a list of countries with tax treaties on the IRS website here.

In general, these treaties exist to stop a person being taxed twice on the same income. For example, if you were a publisher from the UK who earned $1000 from YouTube videos shown to US viewers, you could be taxed in the US as this income is related to US viewers, and then declare the remainder to the UK authorities and be taxed again under the UK’s income tax laws. To prevent this, the UK and the US have a mutual agreement to not tax the other’s citizens on earnings generated in their territories.

Not all countries have this agreement in place, and they are not always complete relief. For example, if you submit to Google that you are a UK or Canadian resident, Google can reduce the withholding rate to 0%, while for Mexico and Korea it would reduce to 10%.

Bear in mind that these numbers can change, there can be different rates of withholding for different income streams and new treaties can be signed, so check the latest information for your territory.

Tax for AdSense publishers who don’t have YouTube earnings

According to a post on the AdSense community forum by the community manager, “at the moment, if a valid tax form is provided, only YouTube royalty earnings will be subject to withholding. AdSense services earnings would only be subject to withholding tax if you are performing services in the United States”.

(For this purpose, ‘services in the United States’ would be applicable if some or all of your resources used to create AdSense revenue was within the United States, for example if you had an office there, created content while there, employed staff or writers who lived there, etc. As before, we would recommend you contact a tax advisor if you’re not sure of your exact status.)

However, we’ve started to see circumstances where AdSense publishers with no YouTube revenue are being asked to fill in tax forms. Our advice would be that you should not ignore these prompts; while it might be possible to reclaim withheld US taxation over the next few months, this process will no doubt not be straightforward.

How to Reclaim Withheld Taxes in 2024

If you find that taxes have been withheld from your AdSense earnings, it is crucial to act promptly. As of 2024, Google can assist in refunding these amounts if you submit the completed tax forms by December 31 of the year in which the withholding occurred. After this deadline, any refunds must be claimed directly from the IRS. To initiate the refund process, you will need to provide an affidavit of unchanged circumstances. This affidavit serves as a declaration that your circumstances have not changed since the date the tax was withheld until the date you submitted your completed forms. You can submit this affidavit through your AdSense account.

Steps to Reclaim Withheld Taxes:

1. Log into your AdSense account.
2. Navigate to Payments and select Manage settings.
3. Click on tax info and then choose Manage tax info.
4. Fill out the necessary forms, including the affidavit if applicable.
5. Ensure all information is accurate and submit the forms.

It’s essential to keep track of your tax situation and ensure that you have submitted the correct forms to avoid excessive withholding rates, which can be as high as 30% for non-US creators earning from US viewers. You can do this within AdSense (check here for more information).

If you are already a MonetizeMore partner, and you have questions about your revenue, please contact us here.

Aleesha Jacob

With over seven years at the forefront of programmatic advertising, Aleesha is a renowned Ad-Tech expert, blending innovative strategies with cutting-edge technology. Her insights have reshaped programmatic advertising, leading to groundbreaking campaigns and 10X ROI increases for publishers and global brands. She believes in setting new standards in dynamic ad targeting and optimization.