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Tax issues for non-US eBook authors

** STOP PRESS **
Interviewee Ellen Dean kindly gave me the following link which makes interesting reading:
part 1: http://websitedesignschester.co.uk/authors-uk-us-tax.html
then part 2: http://websitedesignschester.co.uk/amazon-kdp-tax-interview-online.html

If you self-publish online with Amazon.com and you don’t live in the USA, the chances are you’ll need to prove that you are a taxpayer in your country. If you don’t within 3 months of your book going up / selling (Amazon pays royalties at the end of the month after 2 full months’ duration), they’ll likely withhold 30% so they pay the tax on your behalf (or rather, you do, you just don’t get given it).

Image via Wikipedia

Image via Wikipedia

http://www.theindieview.com/2010/09/03/foreign-authors-wishing-to-publish-on-amazon-read-this-itll-save-you-a-lot-of-time explains that you need a W8-BEN form (see right) and a TIN / ITIN (Tax Identification Number). To get an ITIN you need a Form W-7.

The Indie Review recalls the process as follows:

  1. Download forms W-7 and W8-BEN
  2. Fill in form W-7 (instructions are here).
  3. Take Form 7 and your passport along to an Authorized Agent, see below, or mail them to: Internal Revenue Service, Austin Service Center ITIN Operation P.O. Box 149342 Austin, TX 78714-934
  4. Wait for 4-6 weeks
  5. When you have received your ITIN number fill out form W8-BEN.
  6. Mail the forms to Amazon.
  7. You’re done – you just saved 30% of your income.

list of Acceptance Agents (the grand sum of five in the UK) and Authorized offices that can accept documents for ITIN are the IRS website.

As far as I am aware, that’s all relevant if you have a day job and are making extra money from your writing. If you are a sole trader (a full-time writer with no other main job) then you need an SS-4 (and the instructions for filling it out are here).

Before you start filling out the forms, I’d suggest printing off two copies and filling in your copy first as you’re bound to make some mistakes!

The one-page W-7 form is quite straightforward to complete (especially as the instructions are 9 pages!):

  • Reason for submitting: likely to be (a) Nonresident alien required to get ITIN to claim tax treaty benefit.
  • 1a: First, middle, surnames.
  • 1b: Name at birth (if different).
  • 2: Full postal address.
  • 3: Full postal address (if different to above).
  • 4: Date of birth (month-day-year) e.g. 12-01-1979 (I wish!), Country of birth (e.g. England).
  • 5: Check (I crossed) Male or Female boxes.
  • 6a: Country of citizenship (e.g. UK)
  • 6b: Foreign tax ID (e.g. National Insurance no.)
  • 6c: Type of US visa if any
  • 6d: Identification documentation (e.g. passport)
  • 6e: Have you previously received a TIN or EIN? (no, in my case so skipped 6f / 6g)
  • 6f: TIN or EIN reference no.
  • 6g: Name of college/university/company
  • then sign your life away!

The one-page W8-BEN form is quite straightforward to complete (especially as the instructions are 7 pages!):

  • 1. Full name.
  • 2. Country (in full, not UK).
  • 3. Type of beneficial owner (likely to be ‘Individual’)
  • 4. House number and street name (first line). Town, county, postcode (second line) then Country (in full, not UK).
  • 5. Mailing address (if different from above).
  • 6. US taxpayer identification number (if any)
  • 7. Foreign tax ID (e.g. National Insurance no.)
  • 8. Reference number (of your choosing if you want one)
  • 9. I certify that… and then check the boxes that apply. Only box (a) applied to me: The beneficial owner is a resident of (England) within the meaning of the income tax treaty between the United States and that country.
  • 10. Special rates and conditions (didn’t apply to me as not a researcher or student).
  • 11. Notional Principal Contracts (didn’t apply).
  • 12. Sign your life away.

Again the SS-4 is a one-page document, this time with an 8-page set of instructions (on the ‘Do I need an EIN?’ page (page 2 of the instructions) you are likely to be ‘a foreign person needing an EIN to comply with IRS withholding regulations):

  • 1. Full (real) name.
  • 2. Trade name of business (I put my pen name).
  • 3. Executor, administrator, trustee (I left this blank).
  • 4a. House number, street name.
  • 4b. Town name, postcode.
  • 5a.  House number, street name (if different to above).
  • 5b. Town name, postcode (if different to above).
  • 6. County and state (I put my county and country).
  • 7a. Full legal name.
  • 8a. Is this application for a limited liability company? (I crossed the ‘no’ box).
  • 9a. Type of entity (I crossed the ‘Sole proprietor’ box.
  • 10. Reason for applying (the first box ‘Started new business’ was the closest and I put ‘Freelance writer selling in the US).
  • 11. Date business started (I put the day after I left my day job).
  • 12. Closing month of accounting year (I thought the UK was March but the notes suggest it would be calendar year so I’ve put December and am hoping my tax office will steer me).
  • 13./14. Re. employees (not relevant)
  • 15. First date wages or annuities yet (left blank as I haven’t had any yet!).
  • 16. Check one box that best describes the principal activity of your business (shouldn’t that be principle?). I went for ‘other’ and put ‘writing / literature’.
  • 17. Enter principal line of merchandise sold… (I put ‘fiction writing: novels, short stories, eBooks etc’).
  • 18. Has the applicant entity shown on line 1 ever applied for and received an EIN? (I checked the ‘no’ box).
  • Then sign your life away.

Clear as the proverbial mud, isn’t it. If you’re based outside the U.S. and have been through this process (I’m going through it now but not out the other side yet – I’ll update this if I found anything to be wrong), I’d love you to write a guest blog post on this topic. I’ll then post it a.s.a.p to help those out there who are bound to be struggling through the process.

Also interesting reading: http://catherineryanhoward.com/2012/02/24/non-us-self-publisher-tax-issues-dont-need-to-be-taxing. Thanks to Alison Thompson for directing me to that link.

Smashwords’ section on this matter: http://www.smashwords.com/about/supportfaq#Royalties.

Update October 2013: I’ve finally got round to completing the online information (logging into my KDP account and clicking the link that asked for the missing tax information. I was presented with a W-8BEN which I completed. It came up with a message… Your information has been received and is awaiting validation. We will contact you if we require additional information …at the top of the form (so I took screen prints). Back in February this year, I’d filled in a W-8BEN and sent it to my tax office (with a W-7 and an SS-4), and they’d sent me back a letter to send off if necessary confirming I’m a UK tax payer. I put my HMRC ref (five digits, space, five digits) on the electronic W-8BEN form so I’ll see what happens.

 

10 responses to “Tax issues for non-US eBook authors

  1. joskehan

    January 22, 2013 at 11:08 am

    Is the tax file number given to one in Australia good enough proof perhaps?

     
    • morgenbailey

      June 11, 2013 at 8:48 am

      I don’t know, unfortunately, Jo, but I suspect you’ll still need to fill in a form or three. You’re probably best contacting your tax office. They should know.

       
  2. Lyn McCulloch

    January 22, 2013 at 11:34 am

    Good grief! I’m just about to put an ebook up on Amazon. It’s a 45,000 novella that used to be a serial in a magazine in a previous life. I don’t expect to earn millions, or thousands and will be lucky with a hundred. But presumably I still have to do all this or lose 30% of what I do make. Any idea what the position is if you’re full-time self employed in this country and the extra income from writing is just that – extra. Thanks for this, anyhow!

     
    • morgenbailey

      June 11, 2013 at 8:54 am

      I’d say your best bet is to complete all the forms (not that hard when you come to it) and send them off to our tax office (I dealt with HMRC, PAYE & Self-Assessment, PO Box 1970, Liverpool, L75 1WX) and see what they say. I did that and they sent me back a letter (I assume to send to Amazon confirming I’m a resident of the UK “within the meaning of Article 4 of the Double Taxation Convention between the UK and the US throughout the year 6 April 2012 to 5 April 2013).

       
  3. theinventor1

    June 10, 2013 at 7:15 pm

    Okay, Morgen – Let me get this straight… because I have ‘quit my day job’ and I’m no longer teaching, I don’t need a to fill in a W7 or W8-BEN? I just skip ahead to the SS-4?

    I’m looking at starting this next week….eek!

     
    • morgenbailey

      June 11, 2013 at 8:57 am

      Technically, theinventor1. I’ve still completed all the forms and sent them off to HMRC (PAYE & Self-Assessment, PO Box 1970, Liverpool, L75 1WX). They sent me back a letter (I assume to send to Amazon) confirming I’m a resident of the UK “within the meaning of Article 4 of the Double Taxation Convention between the UK and the US throughout the year 6 April 2012 to 5 April 2013″. I would say it’s better to do as much as you can to avoid any queries.

       
  4. theinventor1

    June 11, 2013 at 4:29 pm

    Thanks for the advice!

    Melissa Moores
    aka the inventor1

     
  5. Diane

    July 15, 2013 at 10:58 pm

    Hi Morgen, Thanks to Ellen for passing it on and to you for your ‘stop press’ link to my article, which I do hope is useful for your readers. 30% is worth saving :)

     

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