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I am a UK citizen living in the UK and tax based in the UK. I have created a small Windows Store App which will be sold at about $4. I will be very lucky to get about 250 sales in a year (ie $1,000 per year). In my Windows Store account it is asking me about 'Effectively Connected Income'. I have not got a clue what they are on about.
It says the following:
"Certificate of Foreign Status Numbers in parentheses refer to line numbers on the official IRS W8 forms. Is the income you receive from Microsoft effectively connected with the conduct of a trade or business in the United States? Persons/entities must file an annual U.S. income tax return to report income claimed to be effectively connected with a U.S. trade or business (See Effectively Connected Income)"
It then has two radio buttons with 'Yes' and 'No'.
- What do I click?
- Do I really have to submit tax forms to the US every year?
- How on earth do I go about doing that?