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My 14 year old son born and living in the UK has winnings coming to him from competing in a USA based on-line gaming company (EPIC) international competition (the game is called Fortnite) and he has received an email asking him to complete a tax interview via EPIC games website. Although I had to consent as parent the form W-8Ben that we had to fill in on line didn't really take account of the parent/guardian issue. He had to fill out the form as the winner/account holder yet he doesn't have a TIN (as not USA citizen or living there) so I put in my UK unique tax reference (UTR) as his parent I am responsible for his status.. Anyone help as to whether that was the right thing to do? Also they are saying that he will only receive the winning amount less 30% tax which they have to withhold as prize winning tax - yet he's not resident in the USA. Are they allowed to do that and if so how do we get the 30% tax back?

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    Country code please. – Pete B. Jul 19 at 14:57
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    "yet obviously he doesn't have a TIN". This is not at all obvious, most US persons are assigned a TIN at birth, known as the Social Security number. – Ben Voigt Jul 19 at 14:59
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    What is UTR? Why did you think that was the correct thing to put? – yoozer8 Jul 19 at 15:11
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    Is UTR = Unique Taxpayer Reference, and thus this is referring to the UK? I think it does, and this is a good question fit for this site if the added UK citizen/minor receiving money from a US corporation presumably while residing in the UK is edited into the question. – BrianH Jul 19 at 18:01
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    Yes have edited the question to reflect this is a UK minor winning money from USA corporation and the tax from not reflecting minor status or making it clear which part the parent/guardian has to complete details of. Also whether the USA corporation is correct in withholding tax from UK winner. – mumdenise Jul 22 at 11:36
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Anyone help as to whether that was the right thing to do?

I can't write as to whether or not using your UTR was the right thing to do or not as I am unfamiliar with both US and UK tax laws and procedure.

Are they allowed to do that...?

Yes, they are allowed to do that under withholding tax laws. This IRS publication writes about withholding tax starting in page 3. Essentially, it's the responsibility of the company that is paying your son the prize money to withhold some of the money (in this case, 30%) as taxes.

One of the reasons for withholding tax is to ensure that foreigners who made money from activities in the US pay taxes. As it would be highly inadvisable to pass that responsibility to the payee (due to ease of tax evasion since you aren't in the US), it is usual for countries to hold the payer responsible instead, hence the reduction of 30% prize money.

...and if so how do we get the 30% tax back?

As to getting the tax back, this is usually known as tax relief. This UK Government site has some information on it. As I've mentioned, I am unfamiliar with UK tax laws. Theoretically, you should be able to claim it back as you aren't supposed to be taxed twice on the same income. Practically, however, I would advise giving a call to IRB directly, explaining the situation, and getting a direct answer on this issue.

Do remember that this isn't a clear cut case, due to the actual payee being your son and not yourself. Also, online game winnings are a bit difficult to pin down right now, as far as I can see from Internet research. Most searches jumps straight to gambling winnings, but I would personally link Fortnite to sports/competition winnings. But, and I can't say this enough, I am, in no way, familiar with US and UK tax laws and you should definitely find someone who is to give proper professional advice.

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    Does the US actually charge 30% tax on US-source income for foreign people, or is the withholding just designed to make sure they get at least the correct amount withheld? i.e. if the correct tax rate is actually lower could the payee then ask the IRS for a refund of the difference? – Ganesh Sittampalam Jul 25 at 9:20
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    @GaneshSittampalam 30% is the absolute maximum. In the majority of cases, it should be lower than that. This PwC article has a handy table to display the reductions under Double-Taxation Agreements (DTAs) with various countries. But for this particular case, you'll have to find someone more well-versed in US-UK tax laws and practical application. – Wolfram Jul 25 at 9:43
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    When talking to tax officials I would make sure to choose my words carefully to make clear that the boy won a skill competition in the US, not made any online gambling earnings. You certainly don't want anyone to even consider handling this as gambling earnings of a minor. "Luck vs. Skill in Fortnite" is a debate which is already annoying enough between people who do know what they are talking about. Having it with tax law experts who never played a competitive multiplayer game in their life would be pure pain. – Philipp Jul 25 at 11:11
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    @Philipp I second that. – Wolfram Jul 26 at 0:35
  • that's helpful thank you. i had seen various posts from other winners of US competitions that they had been paid gross so I will try to find some other advice - but to add to the complication of online game competitions and Epic - this was hosted on European Servers not US servers so technically I don't believe it was held in the USA to entitle them to without US tax from foreign nationals. – mumdenise Jul 26 at 6:08

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