Tag Archives: ITIN

Non-US Self-Publisher? Tax Issues Don’t Need to be Taxing (Overhauled Oct ’14)

24 Feb

****Update October 2014 – Read Me!****

From the Amazon KDP Tax Interview guide, October 2014:

“If you are claiming a reduced rate of withholding tax under an income tax treaty and do not have a U.S. TIN, provide your foreign (non-U.S.) income tax identification number to receive treaty benefits. This number is issued by your local tax authority or government for income tax purposes.”

That’s right, folks. Now – thanks to changes in something called FATCA (thanks Marcela of Beyond Frontiers Tax for the heads up!) – you only need the tax identification number from your own country to avail of any tax treaty benefits that may exist between your country of residence and the United States. This, for example, is an NI number in the UK and a PPS number in Ireland. This means you will know never know the horror of obtaining an ITIN or the suspicious ease of getting an EIN, but can simply go straight to Amazon KDP, Createspace, Smashwords, etc. and complete your tax interview with information you already have.

If you don’t have a tax identification number for some reason (some countries only give them to individuals who have been employed, for example), you DO need to get an ITIN or an EIN.

If you have past withholdings that you believe you are entitled to get back, you will have to file a US tax return and for this you DO need an ITIN or EIN.

I’m leaving the original post below but you don’t need it unless you’re hellbent on getting an EIN.

Click here for information on filling out the Amazon KDP tax interview with EITHER an ITIN or your own tax identification number. (They won’t take EINs, but you don’t need to enter it if you have your own tax identification number and your country has a tax treaty with the US.)

A word of caution: I’ve never in my life encountered a process that is so gleefully and needlessly overcomplicated by people. It was straightforward before, now it’s downright simple. How about we all act accordingly, eh?

The original post is below but before you click “Read More” please, keep in mind that you don’t actually need it now unless you have to get an EIN and you only need to do that if you have past withholdings you want to get refunded, and if you do I’d recommend you go to a tax specialist who can act as an intermediary like TaxBack.com Continue reading

US Tax Withholdings and Alphabet Soup

20 Feb

[UPDATE: Please make sure to read the comments on this post too, as fellow Irish self-publisher David Gaughran explains how he got his EIN—in minutes.]

[UPDATE #2: Author Melissa Hill advises me that Irish residents might be better off contacting the US Embassy in London. I guess it doesn’t matter which embassy you contact anyway, but it seems that London is better equipped to deal with these kinds of applications/enquiries than the Dublin one is.]

[UPDATE #3: Commenter Janet advises that starting this year, new IRS rules will mean that companies such as CreateSpace, etc. WON’T be able to refund withholdings from the current year. That will mean that any monies withheld will go straight to the IRS, and you’ll have to apply to them to get the refund. If getting an EIN/ITIN is rocket science, filing tax returns with the IRS when you don’t live in the US is string theory and chaos theory combined; my advice would be to get your EIN or ITIN before you’re due a single royalty cheque, if possible.]

You may recall that before Christmas I posted about the saga of obtaining a US Individual Tax Identification Number (ITIN) so that I could receive my royalty cheques from the likes of Amazon, CreateSpace and Smashwords without them withholding 30% from me, which is what they’re obligated by law to do if there’s no tax information provided. Since then there’s been a couple of comments left on the post saying that self-published authors outside the US don’t need an ITIN, only an Employer Identification Number (EIN), and EINs are far, far easier to get.

I’m certain this is true, not only because of the commentors but because I know writers who aren’t self-published who use it for things like getting paid for features from US publications. I’m not an expert but this is the way I think it works:

An ITIN is for earning royalties in the US as a non-US resident. Let’s say you were published in the US by Penguin Books, for example. Other companies are distributing the book to stores and websites, and Penguin are collecting the money because the book is their product, and you’re entitled to royalties from each sale. To get paid them, you need an ITIN. But with a self-published book, the product is yours. Amazon KDP, CreateSpace and Smashwords are just distributing it and then paying you; there’s no middle man, no entity in between who can claim it’s their product. The royalties are really just profits. Thus you are just doing business in the US. You’re just selling a product. And in order to get your 100% instead of seventy, you merely need an EIN.

So how do you get an EIN? You can apply online at the IRS website, although it’s a “live” application service and so can only be used during certain times of the day (specified on the site). You also apparently have the option of phoning your nearest US Embassy where you might end up with your EIN before you hang up the phone.

You may have to, ahem, pretend that at some stage in the future you might take on some staff…

(Well, when you start selling a gazillion e-books a second, you are going to need an assistant, right?)

What if you have an ITIN? Well, like me, you’ve just done some form filling and IRS-stressing you didn’t really have to, but hey, it’s done now. It’s not wrong to have an ITIN, it’s just you could have got an EIN instead. The people who know this seem to be freaking out all over the interweb, leaving excitable public service announcements on other people’s blogs to alert them, and while I love when useful information is shared, I don’t really see the need for a full-on freak out about this. Getting an ITIN is not difficult—what is difficult is trying to do it with the information the IRS provide, and you don’t have to because plenty of self-published authors have blogged about how they got theirs. (Including me.) Plus, whenever you get your number, be it an ITIN or EIN, you get refunded all your withholdings from the year to date, so waiting a few weeks isn’t going to make a difference unless it pushes you into a new calender year. My point is, calm down.

If you have an ITIN, you shouldn’t even be reading this because your tax situation is already sorted. (But of course I’m glad that you’re here!)

If you’re in the processing of applying for it, just wait. You’ll get all your money back anyway.

But if you haven’t started the process at all, get on the phone to your nearest US Embassy or follow the link to the online application, and then come back and tell me how you got on.

The ITIN, 30% Withholding, Tax Refund Saga: An Update

4 Jan

Back in November I shared with you the long and headache-inducing adventures that was applying for an Individual Tax Identification Number (ITIN), the magic digits that stop the likes of Createspace, Amazon KDP and Smashwords withholding 30% of everything you earn and passing it onto the United States’ Internal Revenue Service on your behalf. If you need a reminder, it took me eight months, three attempts and countless stress balls—and that was just to get the number. Once you have that, you have to send it to each of your self-publishing companies on a form called a W-8BEN.

As I said back then:

“If you submit your ITIN successfully and use the W-8BEN that has an affidavit on the end, you will be refunded all the money the company has unnecessarily withheld from you so far in the current calendar year. You can see why, despite starting the process in April, I was starting to get nervous as spring turned to summer and summer turned to autumn. Again, I used the instructions on Roz’s Nail Your Novel blog for filling out the form. Make sure you use the proper form – you want the one with the affidavit of unchanged status at the end, which you can find here. You don’t need to include anything with your letter, but you do need to put something in the “Reference” line of the W-8BEN form that will identify you to the company.”

I sent off a W-8BEN to Createspace, Amazon KDP and Smashwords back on November 4th.

On November 16th, I got an e-mail from KDP confirming that they’d received the form. Then on November 29th, RESULT! A cheque from KDP for every last cent they’ve withheld from me since January 1st 2011.

On December 5th, my monthly cheque from CreateSpace arrived—except with some extra. It was my payment for the month, along with all my withholdings from January 1st 2011. Again, RESULT!

So now, in 2011, I had received 100% of all my earnings from CreateSpace and Amazon KDP. But I still hadn’t heard a word from Smashwords. One day I noticed that on my account information page on Smashwords, there was a notice saying they had received my ITIN and my withholding rate was now set to 0%. Great, but what about my refund? I e-mailed them, and yesterday I got this back:

“We do not hold onto the tax withholdings, but send all the withholdings to the IRS when we pay authors.  This means that we collected and paid your withholdings when we sent your last payment. The IRS requires us to send them the withholdings within 10-15 days from the time we pay you.  Unfortunately, we don’t have the withholdings and you will need to reclaim them from the IRS.”

So… no refund from Smashwords. I’m sure what they’ve told me is true, but why is this different with them than it is with Createspace and Amazon KDP? I think my refund is only around $200—I don’t sell a lot on Smashwords, never have—but the fact that it’s a small amount actually makes it worse, because it would have to be a significant amount for me to even consider going through the additional hell of applying to the IRS* for a refund.

Createspace and KDP made it so easy; they gave me back the money straightaway.

So why is Smashwords different? Anyone know?

*I was considering using a service like TaxBack.com until I found out that in order for you to sit back and relax while they take care of everything, you have to sign a power of attorney form and change your address with the IRS. Your only other option is to fill out a bunch of stuff and get them to “prepare” it for you (check, presumably) for which you pay a fee of around a hundred dollars. Considering how priceless I consider an absence of stress to be, it’s just not worth it.

%d bloggers like this: