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I have jointly developed a software with a company in India. I live in the US, We have sold that software to a US company and will receive royalties on a monthly basis. If I receive the royalty into my bank account and then send the share of my indian partner to him, do i have to pay tax on the total income or only on my portion? How do i account for the indian partner's share in my tax return?

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    Do you have a company that does the actual selling of the software? Who owns it? What's the legal relationship between you and your partner?
    – DJClayworth
    Aug 15, 2017 at 7:40
  • It is an app, so the royalties come from the app store. Legal partnership between me and partner.
    – Sami
    Aug 17, 2017 at 4:28

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If you have an actual legal entity (legal partnership) that is jointly owned by you and your partner, then the partnership receives the money, and the partnership then sends money to you and your partner. Each of you will pay tax on your share. It's possible that the partnership itself may have to pay taxes.

If you are not following that procedure in terms of actual money flow - for example if the royalties are paid into your personal account instead of a partnership account - then you may have trouble convincing the tax authorities that this is the legal situation. If this is a small amount of money then you may be better off just paying the taxes.

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