Some of the most popular posts on this blog are about the non-US self-publisher’s headache of receiving all your royalties as opposed to having 30% of them withheld for tax reasons. We’ve long established that you can either go the long way around and apply for an ITIN, or the take the shortest route from A to B—or 70% to 100%—and apply for an EIN instead. Once you have those magic numbers, whichever ones they may be, you send a W8 form to the tax compliance department of each company you self-publish with and sit back and wait for your considerably bigger cheques.
But what’s happens to the tax that’s already been withheld? What about the 30% that’s been skimmed off each and every US-based royalty payment you’ve thus far received? How do you get your US tax back?
Up until the beginning of this year withholdings in the year to date was automatically refunded when you submitted your W8 forms, but that’s not the case anymore. And if you were as sluggish as me in applying for your ITIN or EIN, you may even have had withholdings taken in the previous year. So how do you get your money back? The long way around is to apply to the IRS—file a US tax return.
But if you have an ITIN, you’ll have already experienced the joy that is IRS forms, and the foreign language that is their instructions for filling them out. If you live in Europe, you’ll also have to contend with the fact that the IRS seemingly has no clue how long mail takes to get across the Atlantic—they love to send notices warning you to get back them in 30 days or ELSE, but those notices don’t arrive until 29 days after they mailed them.
The IRS owed me about $500 from 2010, and to be honest $500 was not worth engaging in anymore correspondence with the IRS. (Yes, that’s how annoying it is. I got an ITIN, so I was all too familiar with them. Getting the ITIN took me something like eight months.) There was no way I was doing that.
Then I heard about Taxback.com, a company that, in basic terms, helps people get tax back from countries they don’t live in anymore, or countries they never lived in but from where they’ve earned money.
Like royalties.
The company was founded by an Irishman and I’ve been dealing with the Irish office, but anyone can avail of their services from anywhere in the world, as far as I know. Everything is done via e-mail anyway so location is not an issue in that sense.
Taxback.com will be the first people to tell you that the service they offer is something you can do yourself, if you have the patience and like to fill out forms. But I don’t have any patience and I hate IRS forms, so I was more than happy to get someone else to do it.
There’s still some form-filling, but their Taxback.com‘s forms, and there’s only a couple of them. And you have someone you can call or e-mail whenever you have a question. And they’ll check everything is perfect before they get sent to the IRS and if it isn’t, they’ll fix it.
The real benefit to using their service is that if something goes wrong, they deal with it. Right about the time I should’ve been getting my refund cheque, I got a notice from the IRS saying that the ITIN I’d submitted to them wasn’t the ITIN I’d been assigned, and that I needed to submit more qualifying documents—and of course, this being the IRS and them not having a clue about mailing times between the US and Ireland, they’d given me 30 days to get the documents back of which only a couple hadn’t passed yet. But all I had to do was send TaxBack a scan of the letter and hey presto, the problem was fixed. They called the IRS on my behalf and proved to them that the mistake was in fact the fault of the IRS (they’d transposed some digits when entering the data from one of my forms), and within hours, my refund was back on track.
How much does this service cost? You’ve two options, I think: pay a flat free for them to prepare the documents and mail them yourself, or pay a percentage of your refund for them to take care of everything. I did the “take care of everything” one and personally, I thought it was worth penny. (Or cent.) They also have a no refund, no fee policy.
I e-mailed them scans of my forms in April, I think, and I received my refund a couple of weeks ago. I haven’t used them for this, but I believe that Taxback.com can also help you with ITINs, EINs and W8s.
You can find out more about Taxback.com here.
This is really interesting, thanks Catherine. I am still a little way off from needing this but it is great to have the information and be prepared! Ruth.
Thank you for that invaluable info Catherine. I live in Australia and no one needs to tell me about the ‘sheer joy’ in filling out those American IRS tax forms. You need a PhD in economics to understand them! But, that said, my W-7 form and all other accompanying paper work has been sent (for the second time, since I supposedly hadn’t filled out ‘section h’ to their satisfaction the first time). So, now it’s a 6-8 week wait (again) for my ITIN.
Thankfully, I’m still going through the proofs of my manuscript and it’ll be at least 6-8 weeks before my book is ready to appear on Amazon.But, I’ve decided to print off your page and keep it handy just in case…
Thanks Catherine, this is a really useful tip. It’s still early days for me and my income from book sales isn’t worth writing home about but I feel I need to be prepared for the day I’ll become famous overnight (ha ha!)
More great info for those not living in the USA. I have my ITIN (the long way round) and so don’t need this personally, but boy, will those I know need it. You’re bookmarked!
That is a good advise. Thank you Catherine!
Now you have me wondering about something I didn’t think about. I do live in the US so I know how it works here, sort of. But, if I have my book on Amazon UK for instance, or any other Amazon country do I need to pay some kind of tax for those countries, or does it all come under my own US tax? Wow, so much to think about. Thanks for this post. Inquiring minds need to know.
I too live in Australia. I got as far as submitting my Application for Employer Identification Number to the IRS. Six weeks later, back it came, with the instruction that I needed to supply my Social Security Number. The sheer effort involved in bridging distance and time zones in order to convince some IRS bureaucrat that as an Australian I do not possess a US SSN seemed insurmountable, and I gave up. Luckily (?) the book is selling very badly, so I may never even reach the minimum $100 in royalties before Amazon et al will pay me, with or without that 30% to the IRS. Always look at the bright side, right?
Interesting. There is so much to learn about US taxes, more to the point- how to get as much of your royalty as poss! Your blog post is going to help me take the next step in figuring out what is next for me. Thanks for the info!
Haha! I live in the US, and I think your portrayal of the IRS was hilarious.
i’m glad I got an EIN first – i hate all the extra work. good find
Good information, thank for sharing this.
Reblogged this on NewsLetter and commented:
Taxback.com also arranges EIN for a $200 fee ….
Excellent stuff; I see Taxback.com also arranges EIN for $200; admittedly, the cost of a phone call direct would be cheaper, but if you have any nervousness about filling in forms etc . . I for one am relieved to see there is reasonably affordable service available . .
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Greeeaaat Post! I love that. I’m happy I got to read this information.
I got my EIN # for a magazine I had started a few years back. It cost me a couple hundred dollars to set it all up but well worth it as I do a lot of freelance writing. Thanks for the info Catherine.