*STOP PRESS* The new second edition of How to Self-publish and Market a Children’s Book is available from Amazon from 21st May 2021, as both an eBook and print book, and in wider stores from early June 2021. Find out more about what’s inside here
Please note that I am not a tax adviser. If you are in any doubt at all please call the IRS direct using the number given or talk to a tax accountant.
If you are a non-US author your royalties from your US book sales will be subject to a 30% withholding tax until or unless you complete the necessary paperwork (or online interview in the case of Amazon) to claim full or part exemption. Do this as soon as you are ready to publish your first book.
The amount of exemption you can claim depends on the tax treaty your country has with the US. If you’re based in the UK the withholding rate is 0%, so you can claim full exemption. (In this case, you then declare the foreign income on your UK personal or company tax return and pay tax on it in the UK.)
- And check your country’s rate here – scroll down to Table 1 and within this section see the 2nd and 4th table and look in the far right-hand column – the withholding rate for royalties come under ‘Copyrights’ (‘Income category 12’.)
The key point to bear in mind is that 30% will be deducted if you don’t act.
Key steps to claim reduced or no US withholding tax
The process for how to claim was been simplified a couple of years ago – albeit the IRS has communicated this very badly, leaving many authors, distributors and bloggers confused! Even the IRS’s own office staff are often confused and unaware of some of these changes!
At-a-glance process
- When making a claim you no longer need to obtain a US tax ID (ITIN or EIN). Instead you can now supply your own country’s tax ID. And, as far as I can see, this applies whether you are self-publishing as an individual (which includes sole traders) or through a company – however see below that I recommend you double check this if you’re a company.
- To make your claim using Amazon, you complete an online tax interview with KDP – and just follow the online instructions – nice and simple. The questions that appear vary very slightly depending whether you’re applying as an individual or a company – and the final output form that you sign online has a different number for each scenario. Most people reading this will be applying as individuals (includes sole traders). But be sure to check and take a screenshot of what rate of withholding tax will be applied – see my note 24 March below for why.
- For other retailers and distributors, at the time of writing you need to download and complete form W8-BEN for individuals (includes sole traders) or form W8-BEN-E if you’re a company/entity. You send this completed form to the retailer/distributor – not the IRS –by post. I provide links to these forms below.
Below I set out the process in more detail. The first section on KDP covers both individuals (including sole traders) and companies. I’ve split out the later section on different retailers as you’ll need separate forms for these.
Here is a video I made that walks you through the online tax interview. (Made for Alliance of Independent Authors’ fringe event at the 2016 London Book Fair. For CreateSpace now read KDP)
24 March 2015 – mini update
There have been reports on the Alliance of Independent Authors’ FB page from some individual sole traders today saying they have received their tax statements from the IRS having used their NI /own tax numbers as directed by Amazon’s process, yet are still finding they have had US tax deducted. I suppose it’s possible that those statements relate to a previous tax/sales period – ie before they had completed the interview – but I can’t be sure. As I recommend in the sections that follow, when doing the tax interview online be sure to check what rate of withholding tax it says it will be taking before you submit your online form. And on the basis of others’ experience this week, be sure to download a copy of the completed form when it gives you the option at the end. And/or take a screenshot of it. So far those who had sent an EIN with the paper form seem to be okay. Watch this space and call the IRS or email Amazon if in doubt!
Tax process if you’re self-publishing with KDP
- Complete their online tax interview in your dashboard (you’ll come across it during set-up, in the sections that relate to royalties and payments).
- The questions are largely self-explanatory so I shan’t go through them all here – however I’ve picked out a couple of useful screenshots along with what to answer.
Where it asks about a Tax Identify Number (TIN)
See below for what to choose here
- If you’re a UK taxpayer and applying as an individual (includes sole traders), enter your National Insurance Number or Unique Taxpayer’s Reference (UTR – found on your tax paperwork)
- If you’re a UK taxpayer and applying as a company, enter your Corporation Tax reference number
- If you’re not based in the UK enter your relevant individual or company tax ID for your country.
- If you’ve already obtained an ITIN or EIN due to confusion with previous instructions you could opt to include that also – by selecting bullet point 3 seen in the screenshot above – but be aware that the IRS no longer gives a sole trader the option to enter an EIN in the screens that follow. So if you’re a sole trader and have an EIN and not an ITIN I’d be inclined to choose bullet 2 and stick with your country’s own tax ID. (Another option would be to go back and identify yourself as a corporation which then also gives you the EIN option – and I have heard of someone doing this – but I’d probably stick with the former suggestion if it were me.)
If you’re applying as an individual (includes sole traders) or company
- Answer ‘no’ to the question below – unless of course you have US employees or the other points it mentions are true for you!
-
Only appears for individuals – answer is ‘No’
If you’re applying as a company
- Answer ‘Yes’ to the question shown below – too complicated to explain why! Chances are an accountant will be doing this for you but if in doubt ask.
This option only appears if you’re a company – answer is normally ‘Yes’
The rest of the questions are self-explanatory as far as I can see.
Once they are all completed KDP will generate an online version of form W8-BEN (for individuals) or of form W8-BEN-E (for companies).
- Before submitting, take care to check that you have entered all of the information correctly – and that the correct withholding tax rate for your country is showing (if it’s not abort and start again!).
- Once you submit you’ll get an immediate message telling you what rate of withholding tax – if any – will be applied to your royalty income. For the UK this will show as zero.
What happens next?
- At the start of the interview it asks for your consent to be provided with an electronic version of tax reporting forms each year. (For non-US authors this will be a form 1042-S – a report of your royalties earned from US book sales – the income you need to declare on your own country’s tax return.)
- If you provided your consent they will presumably notify you when the form is ready for you to access online – if you didn’t provide consent, they will send you a hard copy in the post on or after 15th March each year.
- If you’re in the UK, declare this income on your tax return and keep the form for your records in case your tax office asks for it.
- If you’re outside the UK, follow the rules for the country where you live – reading around I gather that in some cases this may mean attaching it to your tax return as evidence of your foreign income.
Tax process with other distributors – for individuals (including sole traders)
It sounds as if other retailers such as Apple, Kobo etc might not be up to date with the fact that you no longer need to supply a US Tax ID – though I gather that Smashwords is now up to speed on this. Feel free to update us all in the comments below if you’ve been through this process recently and know differently. They will probably also still require you to send them a paper form W-8BEN in the post. Assuming this is the case proceed as follows:
- Download and complete form W-8BEN from the IRS website
- Leave question 5 blank where it asks for a US Tax ID* – see below for a suggested note to attach to explain this for any supplier who is not up to date with the new rules.
- At question 6 enter your country’s tax ID (if you’re in the UK this will be your National Insurance number or your Unique Taxpayer’s Reference – found on your tax paperwork).
- At question 10 enter the rate of withholding tax applicable for your country – for the UK this is Zero. If you’re in the UK enter ‘12’ where it says ‘Article number’ – otherwise check which article is relevant for your own country’s treaty with the USA using the links provided earlier. (Easier still, you could leave this blank – I was told to ignore this when completing this form a few years back. In fact, it could be ’12’ for everyone – certainly when playing around with Amazon’s online form it seemed to quote ‘Article 12’ in the final output form whichever country I had input…)
- Where it says ‘Explain the reasons the beneficial owner meets the terms of the treaty article’ I expect you could leave this blank too – I’ve not completed it before. (If you prefer you could say something like ‘Royalties from book sales in the USA’)
- Sign and date the form.
- Send it to the address provided by your retailer/distributor who pays you and has requested it.
* In an accompanying note you could point out that the reason you are not supplying an ITIN is that the rules have changed and explain that Amazon already uses foreign Tax IDs and quote them these instructions from the latest W8-BEN instructions (Feb 2014). “To claim certain treaty benefits, you must complete line 5 by submitting an SSN or ITIN, or line 6 by providing a foreign tax identification number (foreign TIN).”
Tax process with other distributors – if you self-publish as a company
Step 1 – get an EIN (Optional I believe…)
Below I set out how to get an EIN, but as far as I understand it, and based on Amazon’s online interviews, this is now optional. However I recommend you call the IRS on the number below to check this, or ask your accountant! You have nothing to lose by getting an EIN – and it’s quick, free and easy – and it could make life easier for you if dealing with retailers who aren’t up to speed on the new rules.
How to obtain an Employer’s Identification Number (EIN) from the IRS:
- Read the notes on page 2 of the form – these confirm which questions you can miss off since you are only applying to get this EIN for tax withholding purposes. Also see the later section ‘Tips for when completing form SS-4 and calling the IRS ‘
- Complete the form – you can fill the fields in online and then save and print the form.
- Next call the IRS’s dedicated line for businesses that are located outside of the US: 1-267-941-1099 (not toll free). You need to have your completed form SS-4 beside you as they will ask you about your entries. (see the ‘Tips’ section below for how to avoid being asked to fax the form.) NB Since I got my EIN it has become harder to get through and there can be long waiting times so if in the UK try calling at 11am our time – apparently the offices there open at 6am Eastern time and the first hour is the quietest.
- They then give you the number over the phone and say to expect it and relevant paperwork in the post in the next 2-3 weeks. The paperwork arrives as promised.
Step 2 – Download and complete form W8-BEN-E and send it to your retailer/distributor
Again, at the time of writing I believe this has to be done by snail mail with everyone apart from Amazon. Please leave an update in the comments section if this changes and I’ll update this section accordingly.
- Disclaimer – the instructions below are based on my reading of the form & helpnotes. I recommend you check with the IRS or a tax specialist that this is correct. Feel free to leave a comment if you know I have something wrong… 🙂
- In Part I at Questions 1 & 2 enter your company name and country of incorporation
- Ignore question 3
- Tick ‘Corporation’ at Question 4 (for info ‘Chapter 3 Status’ relates to withholding tax for royalties amongst other things)
- Ignore Question 5
- Enter your company’s address at question 6 (ignore 7 unless you have a separate mailing address)
- At Question 8 enter your EIN and/or at question 9b enter your own country’s tax ID (in the UK this will be your corporation tax number)
- Ignore Question 10.
- Ignore Part II
- In Part III at Question 14 tick a and b – and at 14’b’ enter the country where your company is based. Ignore 14c.
- At Question 15 enter the rate of withholding tax agreed for your country in its tax treaty with the USA (for the UK enter ‘zero’ or ‘0’). Specify the type of income as ‘Royalties’.
- At Question 15 where it says “Explain the reasons the beneficial owner meets the terms of the treaty article’, I am guessing you can leave this blank – looking back at my old forms I was told to leave this blank. Call the IRS to check if you want to be absolutely sure (If you don’t want to call or leave it blank I’m sure something along the lines of ‘UK based company earning book royalties that will be declared as foreign income in the UK’ would work!)
- Part IV – through to Part XXVIII– leave blank
- Sign and date etc Part XXIX
- Send this form to your distributors (Smashwords, Apple, etc etc) in line with their instructions that you find when setting up your account. I
- If you choose not to get an EIN and only to provide your company’s tax reference from your own country, I would recommend including a cover letter, again quoting what Amazon does and pointing out that the instructions to this form suggest that you don’t have to provide a US Tax ID.
Tips for when completing form SS-4 and calling the IRS – only applies if you’re self-publishing as a company
- On form SS-4, at question 9a tick ‘Other’ and enter ‘Limited Company (UK)’. The only other possible option at 9a would be to tick ‘corporation’ – which seems to refer to US incorporated companies. The woman at the IRS I spoke to agreed that my approach seemed the best answer.
- When you call, make it clear that you are the owner/director of the business. I say this because when I first called, the woman told me I would need to fax the form while I was on the phone to her (impossible as I only have one phone line…). At that point I had to come off the phone and had planned to call back on my mobile to enable me to fax whoever took the call (it’s a call centre type set-up), but then found it would cost me 72p per minute to do this! So I called from my landline again and the next woman I spoke to said she could do it over the phone without faxing her the form SS-4 because I was the owner of the business.
- Have the date of incorporation of your company to hand. Even though their page 2 instructions said I didn’t need to fill in that info they still asked me for this.
Renewing your tax information every three years – individuals/sole traders and companies
From what I can see there seems to be a requirement to reconfirm details by resubmitting the form every three years. The example the IRS gives is that a Form W-8BEN or W8BEN-E signed on September 30, 2014 remains valid through December 31, 2017.
I think Amazon may get around this using online communication by simply notifying you to check whether your details are up to date and then do nothing if they are (but I may be wrong). Certainly a recent email KDP sent asking me to check whether my tax details were still valid gave this instruction and I left well alone. However I’m not sure how it works with other distributors – the implication is that you’d need to fill in the form and send it all over again. I would suggest you call the IRS to check this if your three-year deadline is approaching. Again, if you know the answer, please leave a comment below.
If you’re a sole trader who previously submitted an EIN…
I have a feeling that where renewals could provide an issue is if you are a sole trader who previoulsy submitted an EIN having followed the IRS’s previous processes.
Logic would suggest that once your three years is up you need to re-complete the Amazon tax interview and/or send in an updated W-8BEN form by post, and provide your own country’s tax ID instead of the EIN.
However, what will happen if you don’t do this I am not sure!
I will try calling the IRS this week to ask – but won’t hold my breath as to whether they will be able to tell me. Internal communication about all of these processes seems to be sorely lacking based on previous experiences – with many IRS offices seeming to be unaware that sole traders and individuals can now provide their own country’s tax ID!
End of update – 22 March 2015. That’s it for now – I am sure I’ll need to make tweaks to this page over the coming days and weeks as/when further comments with updates or corrections come in. And again to remind you that I’m not a tax adviser. If it’s not covered above I probably don’t know the answer!
Getting help: US tax offices based in Europe and China
You can find contact details for IRS offices in the UK, France, Germany or China here. I’ve not yet tried this out, but, according to the IRS website, “The IRS offices listed can answer your federal income tax questions, help with account and refund problems, and assist with the preparation of current and prior year tax returns.”
You can read more about withholding tax on the IRS website here.
UK authors
If you’re a UK author and aren’t sure how to declare you income from books sales, check out my related post on paying UK Income Tax on book royalties
Remember any comments below that pre-date 22 March 2015 pertain to the old content from this page – so best ignore all but the most recent, some of which cover the new process.
Self-publishing adventures 
I’m filling in a W8BEN for Zazzle and struggling to get the correct phrase for the additional comments on Question 10. (my painting images are used, print on demand, so royalties) Right now, I have “copyright royalties from reproductions of original artworks” which has been rejected for amendment. What’s the correct phrase to use?!
Hi Andrea — I’ve just looked back at my form which is the W8BEN-E (for limited companies) and it only asks for additional info in section 11 and I haven’t added anything in that additional info section. (What I did add in the main body of the paragraph was that I’m claiming under *paragraph 12(1)* of the treaty and claiming *0.0%* rate and that the type of income is *Royalty*. So maybe just leave your comments section blank?
Sorry I can’t be of more help! Below is a copy from section 11 on my form (this was from a few years ago — I don’t know if the numbering of the paragraphs has changed.)
11
Special rates and conditions: (if applicable-see instructions): The beneficial owner is claiming the provisions of Article and paragraph
12(1) of the treaty identified on line 10a above to claim a 0.0% rate of withholding on (specify type of income): Royalty
Explain the additional conditions in the Article the beneficial owner meets to be eligible for the rate of withholding: Article and
paragraph 12(1)
Thanks. I did actually leave the lines blank originally, but it got returned saying I had to fill it in. I have Article 12 para 1 to claim 0% interest filled in, specified “royalties from reproduction of artwork” and then explain additional conditions to be eligible for 0% for which I’ve put “beneficial owner is a permanent resident of UK” This is all part of section 2 question 10 now. There is no section 11 for the W8-BEN.
In that case I’m baffled. I’d suggest trying google to see if you can find others in your boat and what they have done. OR why not just call the IRS helpline? Good luck with it and if you solve it do leave a note here for others’ benefit, in case they run into the same problem! Karen
Hi,
Are you 100% sure royalties are exempt for UK Limited Companies under US-UK treaty?
If you look at Article 12 of the UK-US Tax Treaty it says:
Royalties arising in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in that other State
Article 1 says:
Except as specifically provided herein, this Convention is applicable only to persons who are residents of one or both of the Contracting States.
I’m no accountant or lawyer but I’m struggling to see how Ltd companies can be exempt in this case…
Hi Ash — yes it’s correct. I’ve been doing this since 2011 as have 1000s of other authors before and after me – some as running their businesses as sole traders and some as ltd companies. The UK has a double taxation treaty with the US and the upshot is you only pay tax in one country. And when I first set this up I called the IRS and spoke to them to be absolutely sure I was getting it right. The same applies for sole traders though the form is slightly different. I have no base in the US and I think that is the key point. If in any doubt do speak to a tax advisor. But if you complete the KDP tax interview you will see that the outcome is you pay no tax in the US and instead pay it all in the UK. If you don’t complete the form, the US withholds 30% tax. Please note that I’m not a tax advisor so best to direct any additional questions to one! 🙂
Hi Karen,
Thank you for this blog and all the valuable information inside it. I’m from the UK and have a Limited Company. I have a few questions I was wondering if you can help me with:
1. I’ve followed through the tax interview process for KDP (as a UK ltd company) as shown in your video. I’ve put in my UTR number and selected “Yes” for the question “Do you derive the income for which you are claiming treaty benefits?”. Now It’s asking me to select an option from “Limitation of benefits” dropdown (Perhaps this is something new as I haven’t seen it in the video). There are several options: Government, Publicly traded corporation, Subsidiary of a publicly traded corporation, Tax exempt pension trust or pension fund, Other tax exempt organization, Company that meets the ownership and base erosion test, Company that meets the derivative benefits test, Company with an item of income that meets active trade or business test, and Favorable discretionary determination by the US competent authority received.
Do you know which one to select?
2. As a UK citizen I’m aware that there’s a 0% withholding rate due to UK/US tax treaty. I’m also aware that I’m/my company is required to pay tax here in the UK only (and not the US). However, I’m confused as to whether I still have to file a tax return with the IRS. Is this something that I’m required to do each year?
3. Is the 1042s form people receive just for information purposes?
4. Some people advice on setting up as an individual even if you have a limited company. Is this a good idea?
Apologies for such a long post 😊
Hi there — gosh — I’m not aware of that dropdown — it must be new… I’d almost guess it might be ‘Company that meet the derivative benefits test’ (as that mix of words rings a bell from the form) but I’m really not sure. (Hmm — actually if you look at the screenshots above there is one that sounds very similar to that so I bet it’s that one…but can’t say for certain!)
Why not try calling the US helpline for the IRS to see if they can help or try googling around to see if others have come up against this. As I have always had an EIN from years back I’ve no idea if that means I see a different dropdown but I suspect not. Otherwise you could try calling HMRC’s Corporation Tax helpline (try early in the day!) — they surely will know?
Sorry I can’t be of more help but do let me know what you find out.
In answer to your other question – you just get that US 1042s form for info and you don’t need to file a return with the IRS as that’s the whole point of the double tax treaty.
As to whether you do this as a ltd company or sole trader it’s up to you. I already had my ltd company and was a professional copywriter / consultant before I began writing children’s books, so it made sense to wrap in my fiction writing with it. As it happens, with the sales I now make it means it does make good sense – with low volume sales it’s probably questionable due to accountancy fees etc. Your accountant is probably the best person to get your answer from, as I assume you have the company already.
BTW you may find that someone else following this thread can answer your question above so look out for other comments. A few tax accountants do follow here I think.
With very best wishes and best of luck – and do let me know the outcome if you get an answer!
Karen
Karen and Clare thank you very much for your help and quick replies. I’m glad there’s no filing to do for the IRS. Would’ve been a nightmare! It’s tough enough to meet the deadlines and demands of a UK Limited Company. I selected “Company that meets the derivative benefits test” from the dropdown menu (as Clare suggested). Tax interview is now complete and withholding rate is 0%. 😁
Hi Amin ( and a wave to Karen), UK tax accountant and author here.
(1) The answer to that part of the KDP Tax Interview is “Company that meets the derivative benefits test”, (2) no you don’t have to file a tax return in the US, because as you have just stated on the form, your trade and income is domiciled in the UK not the US, and (3) the 1042S is purely for information and doesn’t commit you to any reporting in the US. And (4) – as Karen says, that’s up to you. There’s no right/wrong answer, it depends on your overall tax situation, what level of income you’re earning, what you want out of your financial status… all sorts of issues, not all of them quantitative ;). There’s a page on my website where I summarise some of the points people commonly consider when deciding whether to trade as a company or a sole trader https://quidsandquills.com/should-i-incorporate/. And no, I’m not trawling for clients LOL, but I offer a free query to any visitor, so I reckon this is covered by that :). Good luck with it all!
Thanks for letting us know, Elizabeth. Out of interest did you input all this info in the KDP online interview? (I wasn’t sure what you meant when you said you couldn’t access the W8-BEN-E form? From recollection doesn’t that just appear at the end of the interview which is kind of the form all along b/c you had selected to say you are a limited company and you then download it or something (on the basis that it’s the form you’ve just filled in?) Or did it just appear and you couldn’t click it or something? Would be good for clarity when I update the info for others? I’m wondering if the fact you used the UK CT tax UTR caused it to glitch this way, even if it turned out to be okay in the end…
Karen, the W8-BEN-E form popped up at the end like you said it would, but then when I clicked away from that screen and went back to the page with 3 parts (1) your info, 2) where to pay the money and 3) the tax interview), the button under view/ review tax interview just wasn’t active. Once fixed, it was, and I can now see the W8-BEN-E form and also click to edit if I should so wish. My suspicion is that they have to verify their end that the UK CT tax UTR existed/ was legit/ corresponded with the registered limited company. But it has saved me calling the US for an EIN. Although I appreciate I may still have to do this if and when I apply to other distributors. I’ll post you if and when I do. 🙂
Great – thanks for that 🙂
Thank you both for all your helpful advice!
Hi there Karen and Clare, Soooo, decided to use limited company already set up (thank you ref info on VAT on AMS), my freelance activities are already included and book pertains to that, so should be OK, but will double check with accountant. I completed tax info as a business, used the limited company’s UTR and ticked that I derived benefits and in the very last box, why I am able to claim treaty benefits, ticked the box ‘other’ (as none of the options applied). The box wouldn’t take free text, so couldn’t add a justification, like I pay UK corporation tax or similar, so I just crossed my fingers! I then called KDP’s helpline as I now couldn’t access the W8-BEN-E form. Someone in their tax department checked over my form (I was on hold for almost 30 mins, but had requested a call back from them, so at their expense) and said it was all OK and I can now view the form (seems they have to verify the tax interview information their end). So now I can now sit back and wait for the millions to roll in and be reported in the 1042-S form that the system tells me I will receive to declare in UK. 😉 Long and short: if registering as a limited company from the UK, seems the UTR for the limited company suffices in the TIN section without getting an EIN. I’ll re-post if anything comes up to contradict this.
Agree, with the above accountant’s comment. Sorry – I understood Elizabeth’s question re ‘business’ to be framed around Ltd Company and EINs of course. As I say – to solve the “is an EIN still needed if you’re a ltd company?” question it may be worth doing a dummy run to fill out the online tax form and adding a CT number where it asks for an EIN and seeing the message at the end about what rate of tax will be applied (which you can do before you submit it — and thus cancel the whole thing at that point if it shows that 30% will still be withheld). Calling the IRS is probably easy and quick though!
Hi Karen, that accountant is me, Clare London, I didn’t realise I was logged in with my other “hat” on LOLOL
Another query: as Clare London has commented in April 2020 suggesting you should go ahead and get a EIN number if you are a business by calling the US IRS office (I have seen this on other blogs), then I am assuming this is still the case? (That you need to get an EIN number if registering as a business.)
I don’t know is the answer! I’m guessing your Corporation Tax number would suffice in the same way that your NI numberer now works if you’re an individual but as I already have an EIN from years ago I still use it. You could try completing the Amazon online tax interview and entering your CT number I guess then see if at the end the form shows that no tax will be deducted. If that’s the case I think you should be okay. (I’m sorry but I now can’t recall where on the form it asked for the EIN and whether this would make sense? Why not call the IRS and ask if you need one? Or maybe call KDP Helpline and ask if they know?) Sorry I can’t be of more help but I’m guessing the IRS or KDP should have a definitive answer on this by now! Or ask another author who has only recently incorporated what they have done? Feel free to chip in, Clare, if you know more!
Elizabeth, you only need an EIN if you’re trading as a limited company at Amazon (and other distributors). Otherwise you can use your NI number for the “tax reference” when you set up your account at Kindle Direct Publishing (Karen, I don’t think you can use the Corporation Tax number, though I’ve never tried ^_~ ). The word “business” can be misleading – you’re in ‘business’ the minute you publish a book, but you then decide whether to operate that business as an individual (self-employment / sole trader / use your NI number at Amazon’s tax interview) or as a limited company (set up a company / legal commitment to annual returns and accounts / obtain an EIN for Amazon’s tax interview). The decision on what legal status you trade under is yours – you’ll want to consider the tax implications, the legal commitment, the admin work involved, your ‘face’ to the general public etc etc. I’ve got a brief summary on the overall principles here: quidsandquills.com/should-i-incorporate/
Hi there Karen and Clare, wow, I feel like you are providing light in the tunnel. I am debating whether to put my self-publishing endeavours through my husband’s existing limited company, which is necessarily VAT registered (but both hard and e-books are now zero rated), as I have outside employment too, or personally. Pros and cons?
It depends how much you pay in the way of expenses. For me the game changer in recent years has been UK Amazon Advertising costs which are subject to VAT and amount to quite a lot. I re-registered for VAT a couple of years ago to be able to claim back the VAT even though my turnover at that time was below the threshold (it’s now over it). It’s also useful for claiming back on any UK course costs etc Against this there is the pain of having to do the VAT return — including something called reverse charging for EC sales – even for zero rated B2B royalty income. The VAT man also wants you to include all world wide turnover that’s outside the scope of VAT in the return. I think the reverse charging thing will change when we leave the EU at the end of the year but don’t know what the implications of that are for returns — I take it one step at a time! I think it’s best you ask your husband’s accountant and let him know your likely sales and ad spend both here and overseas.
I agree with Karen, Elizabeth! mainly because there’s no “right” answer. You’d need to get an accountant to weigh up the different options and find which is best for you, depending on both your and your husband’s tax position. This is only my personal opinion (!) but I never recommend getting involved with VAT unless you HAVE to register, because it’s a very strict, complex, and administratively burdensome tax. Most authors rarely come up against it in their usual writing business (apart from Amazon, they tend to be individuals dealing with individuals). You should also consider what your husband’s company is set up to do, as per its articles of association – it’s not always appropriate or legal to bunch up several trades under one company name. You can, of course, combine your self-employed business with your employed income on an annual tax return, which is often the way to start. Good luck!
Thanks, Clare! Hope that helps, Kas.
Hi Karen and Clare, thank you so much for your responses! It’s certainly a relief to hear I can at least try claiming sum of the lost amount back. I will first work on sorting out 2018/2019 as you both suggested and then contact HMRC once I’ve got all the information organised for them, it shouldn’t be too difficult as I already have all the data I’ll need. Fingers crossed they are understanding of my mistake! I appreciate you both taking the time out of your busy day to help a complete stranger. At the time of setting everything up with Amazon I was very new to the business word and really struggled to get a handle on those financial forms/understanding self assessment which is probably how I ended up in this mess to begin with, having said that, if it wasn’t for this blog I probably wouldn’t have realised by mistake till much later! Thanks again to you both 🙂
This is a fantastic site! Thank you so much for sharing all of this. Sadly I discovered it a little too late. It seems that I have been paying tax twice for my amazon sales between the UK and US for the last 3 years. I thought by filling in the W-8BEN I was covered but after contacting Amazon they informed me I hadn’t claimed Tax Treaty on my form. I’ve since updated everything but just wondering if there is anything I can do to reclaim the lost amount? I tried speaking to an accountant online but he didn’t seem too familiar with this process.
Hi Kas — sorry to hear that. I don’t believe you can get anything back from the US (or, if you can, it could be a long and complicated process and would probably only apply for the last 12 months). However, I believe that if you contact HMRC you have the right to amend your Self Assessment tax return within 12 months of sending it in (go to GOV. UK and search for ‘amending a tax return’). On that basis, if you paid 30% tax in the US in the period of your last tax return you could show them evidence of this and they may exclude that income from your UK taxable income as you’ve already paid tax on it. (If you’re higher rate tax payer then you may just have 10% to pay etc). I have no idea if that will work but worth a try!
Hi Kas. Yes that will work! The tax you’ve had deducted at source by Amazon can be deducted from your total tax payable on the Self Assessment Return, thereby reducing your overall UK tax bill. At the moment, you can easily amend your 2018/2019 return for this online, though earlier years are closed. But you can write to HMRC about the earlier years, explain that you should have included the “tax deducted at source” and they may re-issue the assessments on those years and send you a refund of UK tax paid. But as Karen says, there’s little to no chance of getting the US tax back directly from the US. You would have to register into the US tax system, and I wouldn’t recommend that for anyone who doesn’t trade directly in the USA.
Hi Andrew, UK accountant with author clients here. The decision as to whether you publish as a sole trader or a limited company is a separate decision, and depends on your preferences and personal tax situation. There are legal ramifications, as you say, and you shouldn’t be operating as both at the same time. If you just use a trading name you are a sole trader, and an Individual in Amazon’s Tax Interview, but if you set up a limited company, you are a legal company and a Business. You are the publisher in either case, and the publisher is the Individual or the Business. The Tax form is actually much simpler than it looks, and you can easily claim the 0% retention. It really makes sense NOT to have US tax deducted, in the first place. After all, if you’re starting out in business, you may not actually have any tax at all to pay in the initial year(s) – but you’ll never get that tax deducted back from the US. Then if you’re an Individual you can use your NI number as your tax number in the interview, and if you’re a company you can obtain an EIN for the sake of a Transatlantic phone call. Both entitle you to the tax exemption. And my personal advice? Consider carefully before incorporating: it’s often better to start as a sole trader, and keep incorporation as an option for later. There’s a lot of extra paperwork and statutory responsibilities. Hope you don’t mind me dropping in, Karen 🙂
No problem — and I agree with all you say. Don’t incorporate unless there are good reasons to. As it happens, I already had a Ltd company for my business writing when I first self-published and thus including my fiction writing was simple. (Way back then it also meant I cold get my EIN over the phone whereas sole traders had to post passports and the like to the US! Of course everything has changed now.)
Hi Karen,
Excellent article! I have a few questions that if you could answer I would greatly appreciate your time doing so.
During the tax interview it requires the selection of “Individual” and “Business”. I guess my issue is, if one functions as an Ltd, they are a business, and by scouring the internet, many authors selecting as a business are required to send IRS tax return forms, as operating as a business is different than an individual.
I guess the workaround is to select “Individual” and function as an Ltd, but I am not sure of the legal ramifications of such a selection while operating differently.
In terms of publishing as a “business”, is this linked to the publisher? Are they one and the same? Or is it separate?
I am nearing publishing, and wondered whether to operate as an Ltd or Sole Proprietor. I still have no idea.
In all honesty, in some senses I feel it is just easier to take the 30% hit for peace of mind that the IRS won’t be ringing me. Looking online, those who did this process wrong ended up with excessive fines – bankruptcy inducing fines. I would rather take the 30% on the nose if I cannot figure out which selections are correct to ensure I don’t need to send yearly tax forms to the IRS.
Apparently things have updated and we need to enter a country specific EIN/ITIN? I am trying to complete the Tax interview and it is asking me for my very own specific number…
Hi Andrew — it’s a bit late so I’ll reply tomorrow! Karen
Hi Andrew – *so sorry* that I forgot to reply to you here the other day. We are in such strange times, and I’m a bit all over the place!
I would select Individual and go the self-employed sole trader route — you are still a business but it’s a far simpler set-up and you are deemed as an individual for these purposes. As a sole trader you can do your taxes yourself via the Self Employment pages of the Self Assessment Tax return.
Only think about incorporating if you’re making huge royalties I would say.
If you follow my video above for the tax interview you will find that it is very straightforward for sole traders — and you simply provide your NI number as your tax reference. You should not be taking the hit on the 30% tax — it’s really not necessary! Even if you’re only making a few sales to start with, your aim is for those to increase so get organised as you mean to continue.
For the record, even if you’re a ltd company you do not need to file any tax returns with the IRS. The whole point about double taxation treaties is that you only pay tax in your own country. But you need to complete the interview in order to make that fall into place.
I hope his makes sense? Leave me another comment is if it’s not clear. You don’t need to employ an accountant if going the sole trader/individual route.
As far as I understand you would have nothing to pay unless your own tax rate is more than 30% in which case I expect you would need to pay the difference . But please remember I am not a tax advisor! Best to check with a local accountant— they will know right away. (You would need to declare that income according to your country’s tax rules but at the same time indicate that 30% tax is already paid.)
If you don’t normally need to complete a ta return due to low income (ie if you don’t normally pay any tax) then you would be losing 30% of your royalty income.
I’d recommend asking a local accountant (where are you based by the way?).
Interesting reading. I don’t know how I got to this page but it’s really interesting. Let me see if I get this straight if Amazon withholds the 30% you don’t have to pay taxes to anyone or any country?And you don’t have to bother with filling out forms?
So sorry for my late reply. The last few comments didn’t get notified to me.
If you do nothing, you have already paid 30% tax to the USA. So if you would pay less tax in your country then it’s worth filling out the forms. Hope that helps!
But if I pay 30% I don’t have to deal with taxes all in any country? It is taken care of?
Hello Karen,
Thank you for your post! I am a non-US citizen and my country of residence does not have a tax treaty with the US. Can I obtain the EIN now to avoid 30% WHT when selling a book on Amazon?
Elsewhere it says that “The EIN appears to no longer be an option on Amazon Kindle for non-U.S. individuals or sole proprietors. The options available to you now are a U.S. TIN (i.e. social insurance number or ITIN) or a foreign (non U.S. income tax identification number).
What should I do now?
Thanks a lot!
Ha
Hello — if you are not a limited company then just use your tax ID from your country. If you watch my video I think it explain this 🙂 The EIN is only for companies — and even then it may not be needed any longer. So sorry for my late reply. The last few comments didn’t get notified to me! Karen
HI Karen, thanks so much for your response. They haven’t mentioned the form but it is a genuine traditional publisher and yes, they cover costs. I will have the contract checked anyways as always. Thank you so much for the time you took to respond. This is such a great post 🙂
HI Karen, I am UK based and it is with a traditional publishing house, not Amazon.
Hi Maria — If you’re based here and they are in the US I think it’s likely to be no different in terms of paperwork than it is for Amazon. You don’t register there for tax purposes because you live here 🙂 The whole point of the form is to prevent the IRS from deducting 30% taxes from your royalties. Instead you declare them on your UK tax return and pay tax on them at your UK rate.
Ultimately their accounts department should be able to confirm this to you (or a small business accountant here) — I’m not a tax adviser I’m afraid!
Out of interest, have they asked you to complete the W8-BEN form? Or do you only know about the form and tax stuff after reading my blog and they’ve not mentioned it yet? I am hoping it will be the former and not the latter!
The reason I ask is if you don’t have an agent — and I’m guessing you don’t as they should know all about this — I just want to be sure this is a genuine deal and they aren’t asking you to pay anything towards the production costs? If they are asking for any money don’t touch it and I’ll send you a link where you can check their credentials. Hopefully that isn’t the case but a lot of authors get scammed by companies pretending to be ‘publishers’ offering them a ‘contract’. If they are a genuine traditional publisher they will cover ALL costs including editing, printing and so on. Fingers crossed this is what you’re being offered. I would definitely get someone to check your contract before you sign though if you haven’t already and you don’t have an agent here in the UK. ALLi can check it if you’re a member, for example.
Hope this helps and apologies for sounding alarmist if this is a genuine deal — and well done if it is 🙂 Karen
Hi Karen,
Huge thanks for this guide. It is the best found all over the internet. Simple and clear. I am about to make a contract with a US publisher (I am sole trader) and from what I understand I will need to fill the W8-BEN form and return it to them. What is not clear to me is, will I need to do any further paperwork with IRS? Will I have to register as US resident for tax purposes since I have income generated in the US (albeit only from royalties)?
Hi Maria — where are you based? And is the contract with a traditional publishing house in the USA? Karen
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Hi Karen,
Thanks very much for your prompt and detailed response. The clarifications are certainly very useful. I’m only half way through your book, which still is packed with lots of new information – so, thanks for all the pointers. I will most certainly leave a review.
Thanks again
Best wishes
Percy
Dear Karen,
Thanks for your generosity in sharing all this information on your blog.
I also bought you latest book which is packed with so much useful information for self-publishing, which I simply would not have found otherwise. So… thank you! (I also enjoyed reading Eeek! which I bought some time ago and now sits in front of my computer for inspiration, in the hope that my book too would see the light of day! :))
Mine is a children’s chapter book, and I hope to get it published using KDP and Ingram as advised by you. I want to use a Pen name, which seems to add a further layer of complexity to the already slightly confusing process of self-publishing. I would be really grateful for any advise on the following:
I am in the UK and want to publish using a Pen name and as publisher (in case I wanted to publish other books – that’s the dream at least! :)). I hope you could kindly advise whether the following would be the most suitable way to go forward:
1. Register as a sole trader and ‘publisher’ using a company/trade name (such as ‘Well Said Press’ in your case) linked to my actual name for tax purposes. I’m employed and do not submit self-assessment forms.
Do I have to register the publisher name as a ‘trade mark’ as well?
2. Obtain an ISBN from Neilson. I believe I have to use the Company name as Publisher and my Pen name as author here? I’m slightly worried that my actual name wouldn’t appear anywhere on this – is that OK?
3. Upload to KDP and Ingram using my real name and company name for the account and pen name for author?
While writing the book was enjoyable, I find this whole process rather daunting :/.
Thanks very much, once again.
Best wishes
Percy
Hi Percy
I’m glad you’re finding the book useful 🙂 It was lots of work but I’m very pleased with the outcome.
Regarding pen names and Amazon, the articles I give links to below are very useful once you have set up your KDP Account (I have just found them via Google..).
Interestingly I only did this (set up a Pen name) for the first time myself when I brought out the non-fiction book because I didn’t want it listed under my usual name of Karen Inglis — so I put the author down as Karen P Inglis and then had to ‘claim’ the book via Author Central and link to my main account.
From recollection this is what you do at KDP Set up:
1/ At upload you give your own name for account set-up — ie the name to which bills will be issued. In this case it will be your first and last name and you will provide your bank details etc for that, be that your personal bank account or separate bank account you have chosen to set up for your Sole Trader business.** (see note below for more on that…)
2/ When you come to set up your book itself you will then put your Pen name as the author name and where it asks for the name of the publisher (or imprint name — I can’t remember how it words it) you can enter the name of your chosen imprint, whatever you decide on that.
3/ Once your book is published, follow the instructions in these articles to claim your author central profile and link your book to your account:
http://publishingwithkindle.com/working-with-amazon-author-pen-names/
http://publishingwithkindle.com/kindle-published-authors-claim-your-amazon-author-central-profile-url/
I can’t promise the above articles are up to date but from a quick look they seem to be…. if not you can google around or ask in the ALLi FB group if you are a member.
With regard to trade names and companies — you won’t be setting up a limited company. You are simply acting as a sole trader — I genuinely cannot remember if you need to tell your tax office the name of your imprint; I have feeling you don’t need to but you may need to enter it when completing your tax return later on if it asks for your trading name. And you certainly don’t want to be getting into the cost of registering your chosen name as a trademark! If you see page 118 in my book and follow the link to gov.uk you’ll find out more about setting up as a sole trader and there is a number you can call for more help 0300 200 3504 – just be prepared to wait to get through.
**As I write I cannot recall if you must set up a separate bank account for your sole trader business or whether it is optional – I expect it’s the latter but that the former makes more sense! This is the sort of question to ask either the self-employed helpline or a small business tax accountant. As I have a limited company everything was separate from the start so I can’t really compare my situation to yours.
Regards your question re names to use with Nielsen I’ve just doubled check with them (it’s a while since I did this!) and, as I suspected, it would be your own name for contact details and payment purposes and then they will ask for the publisher/imprint name to associate with that ISBN or block of ISBNs. You only give your Pen name when you upload a title. And if you have more than one Pen name that will work also — eg if you publish another book under another Pen name for some reason. The ISBN is tied to the imprint name not the author name when. The Nieslen help desk is very helpful so just give the a call on 01483712215 if you want reassurance!
I hope that helps. I would start by talking to HMRC’s self-employment helpline if you can bear to wait to get through. (You may also find they say you don’t need to register for self assessment until your income reaches a certain level…) Or find a friendly local small business accountant. I am not a tax adviser so please don’t rely on my info other than as a high level guide!
I hope this helps more than it hinders. Oh — it would be fantastic if you could take a moment to leave a review of my book on Amazon — every little helps, as we all know! With many thanks 🙂 Karen
PS you will also see that in my book I mention that Gov.uk has a link that allows you to check if someone has already trademarked a name
Hi Percy — one other thing. It looks as if you won’t need to register as self-employed for tax purposes until you earn more than £1,000 in a tax year — but be sure to keep records of expenses in the meantime. This is new for the 17-18 tax year… The details are on gov. uk but this article offers a good summary https://jf-financial.co.uk/2018/01/01/1000-tax-free-trading-allowance/
Hi, I’ve only just discovered that I’ve been paying the 30% rate for my US sales for the past 5 years. That’s a lot of tax I’ve paid out needlessly! I was wondering if you know of any way to claim a rebate from the US authorities?
Hi – wow — sorry to hear that. I have a feeling you *may* be able to claim for up to six months’ worth but I can’t be sure. And I’m afraid I don’t know the process. I’d start by writing to the IRS to ask, or by looking in CreateSpace or KDP forums to see if anyone has documented what they’ve done there. I’ve certainly seen the question asked but don’t recall seeing a definitive answer. You could also try emailing CreateSpace or KDP help to see if they happen to know I guess? (Or if you know someone who sells in the US who has an accountant the accountant may know…?) Sorry I can’t be of more help!
Just wanted to say thanks. Used your post for help when I originally sorted things in 3/4 years ago and just used it again to work out why amazon wouldn’t accept my EIN when they wanted an update (now used my NI number instead).
Glad it helped 🙂
Karen, I received the following from Amazon a few weeks ago telling me my tax form is expiring and will expire on 1 January. I didn’t think we had to do this, is it new? I’ve been ill for the past few weeks so have put off doing it.. This is what the message says:
Amazon is required to collect tax information for your account to comply with U.S. tax regulations. The U.S. tax form (IRS Form W-8) provided for your account will expire on Monday, January 1, 2018. Please take the tax interview as soon as possible to update your account. Learn more
Complete Tax Information
Just to let you know what happened. I renewed it on 26 and it was updated on the 27 – all very quick and easy to do. Happy New Year:) Carole
I’m so sorry I didn’t see your comment, Carole. My website seems to have stopped notifying me and I’ve been very busy. I hope you solved this problem. In short it just meant you needed to go back and to the same interview as before — it’s all online now and I cover how to do this in the video which is part of this blog post. I hope this helps but also that you found the answer before your deadline. Apologies again. Karen
Margaret — the Amazon / KDP interview will generate the W8 for for you online — my post at the top of this page covers this but I’m pasting the key points again to save you scrolling right back up! (I also made a YouTube video about the online interview which focuses on individuals, but also mentions applying as a company. In both cases the W8 form is generated on your screen and in the case of companies it’s called a W 8BEN-E.
Here is the YouTube video on the KDP interview — it’s worth watching it all the way through and even though it starts off talking about individuals I include screenshots about companies and EINs
Here is a copy of the blog post from much higher up the page:
[START OF EXCERPT] When making a claim you no longer need to obtain a US tax ID (ITIN or EIN). Instead you can now supply your own country’s tax ID. And, as far as I can see, this applies whether you are self-publishing as an individual (which includes sole traders) or through a company – however see below that I recommend you double check this if you’re a company.
To make your claim using Amazon, you complete an online tax interview with CreateSpace and/or KDP – and just follow the online instructions – nice and simple. The questions that appear vary very slightly depending whether you’re applying as an individual or a company – and the final output form that you sign online has a different number for each scenario. Most people reading this will be applying as individuals (includes sole traders). But be sure to check and take a screenshot of what rate of witholding tax will be applied – see my note 24 March below for why.
For other retailers and distributors, at the time of writing you need to download and complete form W8-BEN for individuals (includes sole traders) or form W8-BEN-E if you’re a company/entity. You send this completed form to the retailer/distributor – not the IRS –by post. I provide links to these forms below. [END OF EXCERPT]
Scroll back up to see the full detail.
Many thanks for your comments, Clare (and no problem about mentioning your service!). Margaret, it really sounds to me as if they have got the wrong end of the stick. If you have accidentally registered for US tax I’d probably try to call back to get that rectified. And in any event, I’m not certain you even need to use an EIN any more in the KDP tax interview – I think you could probably enter your Corporation Tax number (in the same way that individuals can now enter their personal Tax Reference or NI number), however I couldn’t get a straight answer on this from anyone. Why not call them back and say ‘I’ve been told that I’ve accidentally registered for US tax when I don’t need to’ or something. It sounds as if the person you spoke to had the wrong end of the stick or was simply misinformed? I would look at what Clare says above again and call them with that info.Good luck! K
Hi Everyone I have just gained my EIN number today – quite painless. However they informed me as a co director of a Ltd Company that I was in their terms a partnership. They told me I had to fill in a 1065 next year. However I downloaded it and it is the MOST complicated 5 page document wanting to know the answers to 22 questions to totally irrelevant questions. Anyone completed one of these? I am going to have to sell a huge number of little kids books to justify an accountant’s time to fill in what may be a zero declaration. Someone back along talked about the 1065 form but no-one replied! Thanks for this page it has been invaluable.
I’ve not had to complete one of these, Margaret – but then I’m a sole director (not that I remember being asked whether there was more than one director – but it was a long time ago!) . And I’m afraid I don’t know enough about US tax to answer your question! Do you need to run your writing through a company? Why not go the sole trader route and swap if you really think it’s worth it? I only used a company because it was set up already for my writing consultancy. Hopefully someone else who sees this will know more than me! K
Would have been simpler I am sure. But not a lot of people know that in order to sell eBooks to Europe you have to remit VAT in the country of the reader – not the UK. So in order to join MOSS ( to avoid 28 registrations and quarterly returns) you have to be VAT registered in the U.K. My reading scheme in 9 languages and not all of them are supported by Amazon. As ever you find a solution to one problem and crash into another one which is why I decided to publish on Amazon and iBooks latterly. Someone will have completed a 1065 by now I am sure, I have a year to find out so no rush. Thank you for all your help.
If you’re selling via a third party such as Amazon, iBooks etc I don’t think that VAT side of things is down to you – they handle it all and it’s part of their reporting. However from what you say I assume you’re selling directly from your site using an automated system? And if that’s what you’re doing then, yes, I think it gets complicated on the VAT side of things!
Hi Karen/Margaret..I’m a UK accountant who also did a lot of research into VATMOSS when it first came in. One of the main pieces of info I tell people applying for an EIN – if they’re a UK company, doesn’t matter how many directors – is that you need to stress to the IRS when you phone them that you are *not* applying to be registered for US tax, but that you want the EIN *only* for the purposes of tax exemption. Then it doesn’t matter what kind of organisation you are under their categories, and you shouldn’t have to report anything to the US at all. Might this be your situation?
Oh dear – I told them exactly what I wanted it for and they were quite clear. Guess I just need to fill in a blank form every year then. It was obvious I am British with a British address and a British Company. I told them it was just me and my partner and we had only just retired. Mrs Stevenson who also raced through a number of my zeros stated I needed to fill in the form and if I gave the actual date of corporation I would need to send forms in back to 2013. Gosh what a mess . Thanks for advice though.
It may be worth another Transatlantic call. I accidentally IRS-registered a company once – when I was only after an EIN for tax exemption – and when I received a huge batch of scary IRS forms in the post, I rang back, clarified it again,and (some weeks later) they sent me a confirmation that I didn’t need to complete IRS returns. It’s very easy to get an EIN, but I have found that the phone operators vary in how helpful and knowledgeable they are. The 1065 is relevant ONLY if you have US income, for trade situated in the US, and you’re wholly UK, as far as I understand. And a corporation, not a partnership. NOTE: if the IRS categorise you as “corporation” or “partnership”, on their system, they’re judging you as like those organisations in the US, not the UK. I’ve found it’s often better to classify a UK company as “other”. Otherwise “corporation” = “US corporation” automatically, and the tax system kicks into action.
I phoned them again and I need a W8- ( one of 59 varieties) then I am sorted. This is now the correct procedure. I will let you know from Death Row if it all goes pear-shaped!
Me again, on the VAT issue :). And yes, VATMOSS is horrible! As Karen says, if you sell entirely through an online distributor like Amazon, they handle the VAT issue directly, and you don’t need to register. But if you sell directly to an end customer yourself through an automated shopping cart, you need to register, whatever the size of your business. But you can register for VAT as a sole trader, you don;t have to be a limited company. And also, if you only sell a few items directly, you can maybe avoid VATMOSS if you change your process to a more manual one (e.g. if you send the ebook attached to an individual email), making it a 2-step process, (i) ordering and (ii) supply. Tricky and annoying I know, but it’s an option some small ebook presses have taken.Hope some of this info helps.Contact me at quidsandquills.com if you want to know more, I have a “One Free Query” email option,, I don;t want Karen to think I’m trying to pimp myself on her excellent blog :)..
Hi Karen,
thanks you for all the great info here.
I am preparing my first eBook and I want to avoid this US tax withholding. After reading that I can use my UK NI number to register for 0% I was very happy. I am a British ciziten although I haven’t lived in the UK for 15 years, I live in an EU country which has no tax agreement with the US. I have a UK bank account, with an accompanying Paypal account, but I don’t have a registered UK address. So, my question is when registering for 0% tax status with Amazan et al. do I need to provide a UK address along with my UK NI number?
Thanks for any help or advice. Martin.
Hi Martin
Honest answer is I don’t know but I suspect you should really register from the country where you pay tax. If you’re not resident here for tax then logic would suggest you need to follow the rules for the country where you are and if they have no tax treat with the US it’s likely you will have withholding tax deducted. As I type I can’t recall if you have to provide your U.K. address (certainly I did as a company) but if you do then I don’t see how it will work for you. If in doubt contact HMRC to ask! Best of luck. K
Dear Karen,
I’d like to start firstly by thanking you for all this time, it has taken you to help so many people, and hopefully help me too.
I have a small (only myself) Ltd based in the UK, which I have used to publish my first book. UK ltd is the equivalent (when for one employee) to be classified in the US as a Disregarded Entity.
I have both my UK’s UTR and US’ EIN. Once I have chosen to say that I am a Disregarded Entity and provided both UTRS, I come to the following option during the KDP tax interview:
CHAPTER 3 – INTERMEDIARY STATUS. Then I have the following options:
1.Nonqualified intermediary
2.Nonwithholding Foreign Grantor Trust
3.Nonwithholding Foreign Partnership
4.Nonwithholding Foreign Simple Trust
5.Qualified Intermediary
6.Territory Financial Institution
7.U.S. Branch
8.Withholding Foreign Partnership
9.Withholding Foreign Trust
This is when my nightmare begins. If you could help with it, I will be more than grateful, but obliged to you. if you could refer me to someone I am willing to pay for consultancy to anyone, only to get this arranged.
I very positively look forward to hearing from you
Kindest regards,
George
Hi George — I’m really sorry that I missed your comment in June but I’m replying anyway. I am struggling to remember this question in the KDP interview which makes me think you must have ticked the wrong option somewhere? From recollection, you simply self-identify as a foreign Corporation and then when they ask for your foreign tax ID enter your EIN if you have that and if you don’t have one then your CT number. It may be that by entering two Tax IDs it is confusing matters? I don’t remember anything about disregarded entities or any of these options you’ve posted above. This video link may be of help — it’s mainly aimed at individuals but I do talk about companies at around 10 minutes in. Sorry I can’t be of more help! https://www.youtube.com/watch?v=p9SlScQc7wI And for the late reply.
As a UK Amazon Kindle book author, I have a question for you: when I first started selling my books on Amazon just over 3 years ago, American tax was regularly deducted from my earnings, as at that time I was unaware that I could apply to be exempt from this as a UK based author. What I’d like to know is, can I go back as far as 3 years to claim back this couple of hundred tax amount they took? If so, is there a particular form I have to download for this?
Hi Alan — apologies for the delayed reply, I’ve been at schools all week as part of World Book Day celebrations so just catching up. I think it is possible to go back and claim some of the royalties but I’m not sure how far back, nor of the process – but 12 months may be the cut off time (or I may have imagined that!). Given that it’s a couple of hundred dollars it sounds worth doing though. I think your best bet would be to call the IRS using the number in my blog post and ask what you need to do. (Call early in their day to save hanging on — I think it’s around 11am UK time but see the post above…) Sorry I can’t be of more help and best of luck! Karen
Hi Karen,
Thanks for the amazing article! I have been a KDP publisher since 2012 and have only just completed the Tax Interview today after seeing your post. This changed my US tax withholdings from 30% to 0% as I entered in my NI number. I was wondering if there was a way to claim the previous years tax withholdings back.
Thanks
Mustafa
Hi Mustafa — I’m not sure if there’s a deadline. Why not email CreateSpace and ask them or try googling it? I think I heard that it’s more trouble than it’s worth – but it will depend how much you’re owed!
Karen.
A big thanks you for putting all this great information together. I have a quick tax question. I have published a book via CreateSpace and completed the relevant registration forms so that no US tax is withheld. Most of my books have sold on Amazon.com in US dollars (but are paid via bank transfer in GBP). I know that the royalties will have to go on my self assessment return. Do I have to list these US royalties separately as foreign income? Or do I just add the amount in GBP to my overall total for the year? I know that you’re not an accountant but any advice would be appreciated. Many thanks in advance.
Chris
Hi Chris – I checked with my accountant and here’s what he said (I couldn’t remember as I run my books through my company at the moment…)
If no tax has been deducted I wouldn’t bother with foreign income pages, simply include it with self employed income.
He also says: (but this isn’t relevant to you as no tax was deducted)
[Basically If you have foreign self employed income you include it all within the self employed pages and then detail the amount subjected to foreign tax and the amount of tax deducted so that the appropriate relief can be given for that tax if applicable.
It does have to be included as UK residents are taxed on worldwide income.]
Many thanks for your quick reply. That’s just what I needed to know. Your blog has been a great help once again. Cheers.
Many thanks – glad to have been of help 🙂
Great information. I have a stupid question though. I’m in the UK and the wage from my day job puts me into the 40% tax bracket. Would it make sense to me to let Amazon take the 30% out of royalties and tell HMRC in this country that I’ve already paid tax on the royalties? Or will this be frowned upon? Maybe tax treaties are meant to work both directions (so UK HMRC doesn’t lose out on tax from UK authors?)
Hi Anthony (hijacking Karen’s post again *g*). Not a stupid Q at all, but no, you still have to declare your royalties to HMRC as UK income for a UK resident and – unfortunately – have them taxed at 40%. But you can then deduct the withheld tax from your tax bill. The pre-deducted tax is like an instalment already paid, rather than a full tax liability. Make sense? (well, my explanation, not necessarily the Uk tax laws! *g*).
Hi Karen, I have submitted my Uk Tax Identification number but after I had received tax information saying they had withheld a rather large amount of money. How can I get that release to me or will they automatically release it now I have updated my Tax ID number?.
Hi Mark — I’m not sure though I have seen this discussed. I’ve just asked a couple of people who may know and will leave a message later. I think there’s a deadline btw. In the meantime I would suggest googling the Kindle forums etc or even trying to call the IRS helpline. K
Mark, I’m a UK accountant and have looked into this in the past, for my clients. I’m looking for the legislation reference to back it up, and I’ll post it here when I find it, but I believe you can’t get the actual withheld money back without filing a US tax return.
*Please check with a US accountant if you need to make sure!*
I’ve also been told by US publishers in the past that once they’ve paid that withheld tax to the IRS, they can’t get it back for you. So if they *did* offer to repay you, it’d be from their own funds – though presumably they could sort that out in their annual tax return overall? but I confess I don’t know enough about how it works with the IRS. Suffice to say, the US publishers I’ve talked to say they can’t do it, period.
For background: Most UK authors obtain an ITIN and/or submit to places like Amazon with their UK tax number on the understanding that it’s ONLY so they can benefit from the tax treaty and therefore have no tax deducted in the first place. i.e. it doesn’t enter you for any other US tax status, NOR do you have to make USA federal tax returns like all US citizens. However, the other side of that coin means you’re not really IN the US tax system and therefore can’t use their system to reclaim any pre-deducted tax.
Your only other option is to deduct it from your UK tax bill at the end of the tax year, when you report to HMRC. You can deduct any US deducted tax – in the same way you deduct any PAYE suffered at your job – from the amount that you owe i.e. they recognise that you’ve already paid towards your royalty income, albeit in another country.
Tricky, but I think that’s true. I’m very happy to have it confirmed or challenged by anyone who’s actually tried to get the money back! 🙂
And having read through again – Nola (above, Aug 26 2015) confirms you’d need an ITIN to reclaim tax in cash terms.
Hi again Mark and also thanks to Clare for your input. Very sorry for my delayed feedback but we were away for a few days and up to my eyes before that. Below is the reply I got from someone called Chrissie at the Alliance of Independent Authors – I’m not sure if this chimes with Clare’s advice but I think the bottom line is to call the IRS on the number below as they sound very helpful, even if the process will take time! Do let us know how you got on in case and I’ll add tips for anyone else. Karen
I went to the US Embassy in London to do mine, but their IRS Dept has now closed. Now you can do it all online via their website or phone. If you have paid tax you should be sent a 1042 S form which sets out the company that the tax was withheld through and the tax year the money was withheld in. I would suggest contacting the IRS, normally you would complete a 1040NR (US Nonresident Alien income Tax return form, and a W-8BEN (Certificate of foreign status of beneficial owner for US Tax withholding and reporting – individual form), these form declare your status as a UK citizen exempt form paying tax. But if you call the IRS they will talk you through all the necessary steps to claiming your refunds. They are extremely helpful and pleasant to deal with on the phone. The link is https://www.irs.gov/individuals/international-taxpayers/u-s-citizens-and-resident-aliens-abroad [now corrected] Just so that you are aware, any tax deducted at source from international citizens (non-US) is now held in withholding for money laundering and fraud checks. The withholding checks take 12-18months and once they are done, you then receive the money in USD (with added interest) via cheque to your home address. Bear in mind the checks start at the close of the US financial year end. So for instance my 2015 withheld won’t be returned to me until l2017. It is a bit of a pain, BUT, as far as I’m concerned, as a UK citizen I am exempt from paying US tax, so the money is mine and I would like it back and will do what I can to see it returned. Contact details for philidelphia office IRS is 001 267 941-1000 – the office is open Monday through Friday from 6:00 a.m. to 11:00 p.m. EST. I hope this goes some way to helping. Let me know if you have any questions.
Oops – that link above didn’t fully go in — here it is again >> https://www.irs.gov/individuals/international-taxpayers/u-s-citizens-and-resident-aliens-abroad
That’s really useful, thanks!
Hi Karen, just wanted to say a massive thank you for this article. Trying to research this was proving a massive headache until I found it. Five minutes later and the form is complete 🙂 Cheers, Craig.
Thanks for the information and tips shared! I found it really informative and helpful. Getting an EIN is important for business owners and anyone who want to apply for it can directly apply on the IRS website. Otherwise, contacting the real experts will be more helpful to complete the process in a short time.
I had published a book in USA. I had asking 15%-Royalty tax and 15%-Withholding tax on royalty inncome.
Let me know whether it is correct.
Hello Dr Patel – what country are you based in? That will determine what the withholding tax should be. Karen
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Thank you for putting it all so clearly. (I do hope the publlishers commission you to rewrite their taxation-for-foreigners documents and procedures!)
Ha ha! Thanks 🙂
Hi Karen
I’m so pleased to see that the whole process has been made a bit easier than it was. I don’t really earn enough yet to be paying tax here in the UK, however will probably need to pay NI contributions now that my National INsurance number has been sent to the Tax people to say I’m a self-employed author.
Once this has all been Ok’d by the US and verified can you apply to have the money that has been withheld in US, (your royalties) returned to you in a cheque or bak transfer? And if so, when and how far back can you claim?
Many thanks
I am a new writer who is about to publish an ebook on Amazon. I’m from a country without a tax treaty with the US. Does it still make sense for me to apply for an EIN given that even if I do so I will be taxed at the non-treaty rate which is also 30%?
Given that both with or without an EIN, my tax rate is still 30%. Therefore, I am thinking the only reason for me to apply for an EIN is to fulfill some tax requirement and avoid IRS penalizing me in the future.
Short version: Does it make sense for a writer/publisher from a country without a tax treaty with the US to apply for an EIN?
Hi Chris
Off the top of my head I would say there is no point as the only reason to apply is to get the tax back. However why not google the question and include your country’s name and see if anyone else has asked this? You may see answers/questions from people in other sorts of business where this has been answered. And/or ask a friendly local accountant! Or you could call your own tax office (equivalent of the IRS) in your country and ask them? Hope this helps!
Karen
I just thought I would add a comment regarding iBooks. They seem to be caught in a half-way house between the old EIN system and the new foreign TIN system. Getting an EIN from the IRS was straightforward but verifying that via iBooks was taking a long time – iBooks kept responding to say I was not on the system yet I had called the IRS who located me straight away and read back all my details. I finally received my postal copy of my EIN today and the only change I made was to write my name in caps and put no space between my postcode. This time I got a different ‘Can’t be Verified’ message but – lo and behold – a W-8BEN-E was generated. I filled that in with my EIN, only to find out that there was a mismatch between the entity type I gave iBooks (sole trader) and the one that applied to me on the W-8BEN-E (disregarded entity). By changing both to disregarded entity the form went through. Now my contract is currently being ‘processed’ so I may not be out of the woods yet, but things seem to be moving.
By the way, I arrived here because iBooks was also telling me to enter the type of income I was receiving even though I had left line 15 blank. Fortunately, this post was a lifesaver as it pointed out I needed to type in Article 12 and 0% and tick Royalties.
So a million thanks for that 🙂
Thanks for the info/feedback, Neil — this EIN thing seems to be a never-ending saga! Glad this post help you nevertheless! Karen
Hi Karen,
I agree with everyone here – you’ve provided invaluable help with your post, tax is always such a tricky issue! Thank you!
I have just completed my W8-BEN-E for my UK limited company. I have a beautiful green box of success showing in the CreateSpace Tax & Business Information section, and everything looks great. My question is simply: is that it? Have I succeeded, or is there an email confirmation or something? If I have filled in something wrong, could I still be deprived of my beautiful green box, or is that 0% now guaranteed? It’s been a long journey to get here, I feel I need a more concrete confirmation before I can celebrate! We deserve at least an email from CreateSpace congratulating us for the American hoops we’ve been jumping through!
Thanks again for your invaluable help,
Jack
Hey! Thank you so much for writing this blog! It’s helped a lot!
I hope you don’t mind me asking these questions but I am slightly confused. Do you need to apply for the W-8BEN if you’re going to use your national insurance number on Amazon? Do you need both?
Thanks
Holly 🙂
Hi Holly – when you complete the online tax interview with Amazon (CreateSpace or KDP) it generates an electronic W-8BEN for you on the screen and you check it and then submit that electronically by following the instructions. Take at look at my notes above again… It’s not that you need to ‘apply’ for a W-8BEN, it’s rather that Amazon must supply a copy of this to the IRS. And these days it’s easier because it creates the form for you to sign electronically online and then uses that form whereas before you had to download the W-8BEN and complete and send it to Amazon. I am not sure how other distributors – eg Apple iBooks / Smashwords etc are handling this though – with them you may need to physically download the W-8BEN and post it to them. However I’m assuming that you’re with CreateSpace and/or KDP…. Hope this helps and if you read above again it should be clear (I hope!). Take yourself through the screens and it will be obvious and have my screenshots to hand. Good luck!
PS Remember to check at the top of the W-8BEN that’s generated that it says you will be paying 0% withholding tax. If it says anything above zero go back and check you’ve completed the form correctly. 🙂
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Nola Bogie (I COPIED AND ADDED IMPORTANT INFORMATION TO KEEP IT ALL IN ONE POST..EXAMPLE THE COST OF THE ACCEPTANCE AGENT IS $600 TO APPLY FOR ITIN)
August 26, 2015 at 5:33 pm
You are both welcome, Karen and Clare.
It was such a nightmare for me since 2007…such an unnecessarily complex procedure, that I want to share advice.
Learn from other people’s mistakes/experiences,
none of us lives long enough to make them all ourselves.
Please be wise. File the W8BEN with each American Publisher, and confirm they have set your withholding according to your Country’s Treaty.
DO NOT PUBLISH before that…or you will find yourself with no option, and in my area the only
IRS AUTHORIZED ACCEPTANCE AGENTS CHARGE $600 TO AUTHORIZE YOUR DOCUMENTS AND SUBMIT TO IRS TO THEN APPLY FOR ITIN.
IRS AND YOUR CITY’S “IRS ACCEPTANCE AGENTS”
If you publish and receive Royalties BEFORE THE W8BEN HAS BEEN CONFIRMED, YOU MUST THEN APPLY FOR ITIN…AND WAIT FOR TAX SEASON AND SUBMIT AN INCOME TAX FORM TO GET BACK YOUR 30% WITHHELD ROYALTIES…EVEN IF YOUR TREATY LIKE CANADA WAS SET AT ZERO PERCENT WITHHOLDING.
All American Publishers, by law, must withhold your 30 % Royalties, and submit to the IRS. The only way you can get it back, was to apply for an American ITIN…
You need to go into the IRS WEBSITE AND LOOK FOR “ACCEPTANCE AGENTS”. These are the only IRS authorized people to accept and submit your .Passport, driver’s license, birth certificate, form W7. On the website, I looked for 2 in my area. I HAD EVERYTHING DONE..AND READY. DUPLICATES. ALL HE HAD TO DO WAS AUTHORIZE AND SUBMIT.
HE CHARGED $600. AND I GATHERED MY DOCUMENTS AND LEFT.
You cannot mail your ITIN application, nor can you use a notary public…any more.
You still must submit the form W8BEN with each of your chosen American Publishers.
then…as many authors in Linkedin have described so many confusing delays…and even repeat rejections…the next step would be to wait for tax season…and submit your INCOME TAX TO THE IRS USING THEIR ITIN…AND APPLY TO GET BACK THE WITHHELD 30%.
Thanks to the IRS themselves, we now have a simpler option.
SIMPLY SUBMIT THE W8BEN BEFORE PUBLISHING, AND WAIT FOR CONFIRMATION YOU ARE SET AT YOUR COUNTRY’S RATE. DON’T PUBLISH BEFORE THIS, when even the IRS has finally simplified it and made it totally avoidable.
Clare, in each Smashwords account at the bottom is Support and that is e-mail contact. If still unsure, E-mail them. My PAYEE PAGE has a huge pink sign.
“Your W-8BEN tax form was received on 2015-01-21, and your withholding is currently set at 0%.
If your tax information has changed, please fill out the form below AND send us an updated Form W-8.”
I contacted Smashwords in January using “support” at bottom of every Smashword page. I sent e-mail. They gave me the precise address to MAIL my paper form W8BEN. The moment it arrived, they changed my withholding to zero, and the sign confirmed it. At that time, they had not yet updated the website to permit you to fill out on line. Now that I am in, I cannot see if you can do that yet.
Amazon (KDP and Createspace) you fill out on line, and print a copy.
Thank you, Nola!
You are both welcome, Karen and Clare.
It was such a nightmare for me since 2007…such an unnecessarily complex procedure, that I want to share advice.
Learn from other people’s mistakes/experiences,
none of us lives long enough to make them all ourselves.
Please be wise. File the W8BEN with each American Publisher, and confirm they have set your withholding according to your Country’s Treaty. Do not publish before that…or you will find yourself with no option. All American Publishers, by law, must withhold your 30 % Royalties, and submit to the IRS. The only way you can get it back, was to apply for an American ITIN…(Passport, driver’s license, birth certificate, form W7, and form W8BEN with each of your chosen American Publishers.)
then…as many authors in Linkedin have described so many confusing delays…and even repeat rejections…the next step would be to wait for tax season…and submit your INCOME TAX TO THE IRS USING THEIR ITIN…AND APPLY TO GET BACK THE WITHHELD 30%.
Thanks to the IRS themselves, we now have a simpler option.
SIMPLY SUBMIT THE W8BEN BEFORE PUBLISHING, AND WAIT FOR CONFIRMATION YOU ARE SET AT YOUR COUNTRY’S RATE. DON’T PUBLISH BEFORE THIS, when even the IRS has finally simplified it and made it totally avoidable.
Nola, many thanks for this, sorry I missed it first time among the comments!
Clare, I posted back in January 2015 and recently. Smashwords was accepting the W8BEN in January and where it asks for US Individual Tax identification Number..(ITIN) leave it empty. The next one asks for FOREIGN IND TAX IDENT NUMBER…PUT YOUR SOCIAL INSURANCE (or whatever number you use in your country to file income tax) in that box.They actually put a huge coloured bar across your account confirming your Tax withholding is set at your country’s Treaty rate. (Canada is zero %)
Hi Karen. Thanks so much for all this info – and for keeping it up to date for all these years :). I’m an accountant and helping UK authors through my site Quids and Quills. We’re all managing perfectly with the W8-BEN until it comes to Smashwords, who are still asking one of my clients for an ITIN. I notice in the main post you say you believe Smashwords are now up to speed with the change to using a local tax ID. Do you know where I can find any evidence or support for this? I’m happy to write to them about it, but if you know of any precedent that they’ll accept a NI number, I’d be thrilled to know it! Thanks so much, again. Clare.
Hi Clare — please see Nola Bogie’s comments below…. Thank you Nola; I knew the answer was somewhere in here… !
Thank you so much. This is clear and extremely helpful information!
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Karen
Thanks for your blog. We have been trying to find the publication from the IRS that changes the requirement for having a SSN or ITIN in order to honor treaty benefits by providing your own Foreign Tax number. I see several companies have updated their tax information to show this change, but just as many companies are not showing the change. Can you direct us to the IRS publication so that we can review and have support for the change?
Many many thanks,
DWarlick
Hi Tiffany, Back at New Years, 2015 I posted lengthy comments on this website explaining great new changes with W8BEN and American publishers with details about the form W8BEN.
It worked instantly with Smashwords,
Amazon CreateSpace (on-line and print a copy for your records..signing on-line),
Amazon Kindle Direct Publishing (on-line)
I am Canadian and do not have the American ITIN Individual Tax Identification Number with their IRS. WE HONESTLY JUST USE OUR COUNTRY’S TAX NUMBER AND DO NOT NEED THE COMPLEXITIES OF APPLYING FOR THE AMERICAN ITIN. I contacted Smashwords in January 2. They were just in the process of making the changes. At that time, contact was by e-mail and their department confirmed they were accepting the form by mail (they gave me a precise department to send it. They were just in the process of settin up the website to complete the W8BEN on line.
I mailed the form…left the American ITIN line blank, and only used my Canadian Social Insurance Number. IT WAS ACCEPTED IMMEDIATELY. MY SMASHWORDS PAYEE PAGE CHANGED IMMEDIATELY WITH A HUGE ORANGE BAR ACROSS THE TOP STATING THAT MY WITHHOLDING OF ROYALTIES HAD BEEN REDUCED TO ZERO PERCENT ACCORDING TO THE TREATY WITH CANADA. DONE…NO TROUBLE AT ALL. JUST DON’T PUBLISH WITH ANY AMERICAN PUBLISHER BEFORE YOU COMPLETE THIS FORM AND CONFIRM THEY HAVE SET YOUR RATE ACCORDING TO YOUR COUNTRY’S AGREEMENT. IF YOU RECEIVE ROYALTIES BEFORE THIS IS DONE, BY LAW, THAT PUBLISHER MUST WITHHOLD THE 30% ROYALTIES AND FORWARD THE TO THE IRS….AND YOU WANT TO AVOID THIS WHEN THE TREATY ACTUALLY EXEMPTS YOU.
Thanks for this confirmation Nola – I thought we had covered this already but didn’t have time to look up the thread. Tiffany if you are still having problems send Smashwords an email and explain that other authors are now supplying their own country’s tax ID.
Thanks Karen. I had already emailed Smashwords about the issue and I’m just waiting for a response from them.
Hi Nola, thanks for replying to my comment.
I thought I could use my UK tax number or social security number (it’s not called that in UK). But when I tried using it on the online form on Smashwords it kept coming up as invalid – but I have used to on Createspace and Kindle with no problems.
I have emailed Smashwords about the issue and I’m just waiting to hear back from them.
I don’t want the hassle of having to apply for an ITIN number if I don’t need one.
Hi again Karen, I used my National Insurance Number for tax on Amazon which worked, but for some reason it won’t accept it on Smashwords. Do I need an ITIN number?
Hi Tiffany — you shouldn’t do. They should know about the changes so I suggest that you email them to explain and ask how to proceed? I’m afraid that I don’t use Smashwords so I’ve not come up against this. But at least one person I’ve seen comment about this has said that Smashwords was behind on its understanding of the rules — I’d be surprised if they don’t know about this by now! Good luck and do let us know how you get on when they reply. Karen
Tiffany – please see Nola’s reply below…
Hi thanks for this article extremely helpful – I’m sure that I’ve missed it somewhere but on the W8 form
Part 1 Q7 Reference Numbers – as a freelance self-employed person so I need to input anything and if so from your experience do you know what I should be inputting
Hi Lucy – I’m pretty sure you can leave this blank. The instructions suggest that it’s optional for your own internal reference — it’s a while since I’ve looked at this in detail but I think that I’d have suggested an entry here if I thought it needed something. (As ever I’m not an accountant or adviser, so don’t rely wholly on my advice!)
Thnx so much love ur blog btw
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Thank you so much for your updated post on US Tax for UK based authors. My mind was slightly boggled but after reading your article it all made perfect sense and I completed the process in 15 minutes! Really grateful to you for passing on the information.
Glad it was useful, Joanna!
Thank you so much for this! Seeing their was no option to register as a UK limited company I asked Kindle support what I should so. They told me I need to consult a tax advisor. I think I was just unlucky and got someone inexperienced. So you have saved me a lot of time, and some money. Thank you. Caroline
Hi Karen
Just wanted you to know that I found your help on this thorny issue invaluable, and I’m very grateful that you were there (albeit virtually) when I needed you. The screenshots are a massive help, and a reassurance when the real on-screen forms actually match them. Like anyone of mere flesh and blood I was expecting the worst from tackling this horrible thing but read through your advice two or three times before dipping my toe in the water, with the result that when I gritted my teeth and got down to it – even though I was quaking in my Crocs throughout the process – it all went smoothly and that beautiful ‘0.0% tax’ statement came up on my screen. You’re a star!
Thanks, Kevin – glad it all worked. I’ve not had to use this newer process myself so I’m glad to hear it does what it says on the tin so to soeak! Karen
Thanks, Karen. This information is much appreciated. I too have recently received paper documents showing my 2014 tax-withholding and agree with Alison above i.e. probably relates to sales prior to me supplying my NI Number via the tax interview. I am currently updating my e-book, ‘Kindle Direct Publishing for Absolute Beginners’ and will be including a link to this very comprehensive blog post in the short section I do on tax. Many thanks once again!
Thanks for the info, Sally
I’m a writer currently based in the UK and received 2014 tax form from the IRS, which said I was liable for the 30% withholding tax. But when I checked the Amazon form I filled in it said I was liable for 0%. So here’s my take on what happened. Unlike most other tax regimes the US tax year runs from 1st January to 31st January. My Amazon online tax form with my UK tax reference number (not NI number) was filled in on 24th December. Therefore I’m paying 30% withholding tax on income earned up until the 24th December.
I’ve had to pay withholding tax in two other other countries as an expat and they made the adjustment so that I got my money back the following tax year. I don’t know whether the US applies a similar policy but I’m going to wait and see as I’m not owed very much.
Thanks for the info, Alison – this will be useful for others in the same boat. Fingers crossed your later sales don’t have tax withheld! Karen
Hi Alison,
Did you have to file a tax return to get your money back?
Before this new way to use my country’s TRN instead a US ITIN, 30% worth of taxes was being deducted from my royalties every month, because I didn’t have an ITIN and I had been applying over and over for to the IRS and kept getting rejected with no reason whatsoever.
I lost over $1000 in tax deduction one month, sometimes 400-600. It was a pain! Now that I’m able to lower my tax charges from 30% to 10%, how do I get back my money? If I need to file a tax return, do I need an ITIN to do so?
Thanks for this info; very, very useful.
Hi Karen,
thank goodness there are people like you who curate all this info, thank you so much for putting in the time so that frustrated self-pubbed authors have someone to talk to!
I wonder if you’d had experience with my situation?: I am a British writer based in the UK. I self-pubbed in Oct 2013 and have today received two hard copies of 1042-S, one from Amazon Aus and one from On-demand (Createspace presumably) They have a withholding tax rate of 0%, which is correct because I did the whole W8 BEN thing at the time. So my question is what do I do with these forms, and do I still have to file a US tax return?
Many thanks in advance for your help
Cathy Bramley
Hi Cathy – many thanks for the kind words. See my post above – later section about what happens next…. You just keep this as a backup record. But you must make sure you declare that income on your tax return. You don’t need to complete a US tax return – that’s what the treaty if there to avoid the need for. (Remember I’m not a tax adviser – but these are the rules as I understand and implement them.)
K
Hi Karen
My thanks for this too, it’s so generous of you to share your knowledge.
I wonder if I might get your opinion on the statement that’s on the back of form 1042-S, which I’ve recently received like so many others. I understood, as you’ve already said, that we do not have to file US tax returns – as you say, that’s why the treaty is there – to avoid the need for that.
But, on reading the back of the 1042-S form it states, “every nonresident alien individual, nonresident alien fiduciary, and foreign corporation with United States income, including income that is effectively connected with the conduct of a trade or business in the United States, must file a United States income tax return.”
It goes on say which forms need to be obtained and used. It makes no sense to have to file an IRS tax return because of the treaty and this seems to me confusing and contradictory, but I just wondered whether you had read this and what you made of it?
Thanks so much
Sonya McGilchrist
Apologies for the delayed reply, Sonya. I think the short answer is that you aren’t a nonresident alien individual – I’m pretty sure this referring to people who are living in the US but don’t have a green card etc . If you’re British and a UK taxpayer you don’t need to file a US tax return! Hope that helps – though I can’t claim to be a tax adviser I don’t know of any UK authors who are filing tax returns 🙂
Hi all !
I don’t have a tax ID right now, would my social security number do the trick on the W8-BEN form ?
cause if i understood correctly, as a sole trader, i cannot put the EIN on the new version of the W8-BEN, right ?
thanks all, they really do everything they can to keep those 30% hehe
Hi Alexandre – where are you based?
France.
Hi Alexandre – if your social security number is linked to your tax then I assume you can use it – but I’d maybe check with your local tax office?
Hi again Alexandre – just seen that my second reply to you didn’t ‘reply’ so not sure if you will see it so posting it here too:
…read my updated page today – if you’re only using Amazon (CS and/or KDP) you do this all online anyway… You only need to print off and complete the W8-BEN form if you are using other distributors…
And read my updated page today – if you’re only using Amazon (CS and/or KDP) you do this all online anyway… You only need to print off and complete the W8-BEN form if you are using other distributors…
Thank you very much for taking the time to answer me !
I’m not sure if my local tax office can help much, i have the feeling that the whole thing is pretty random anyway.
And i do have to send the form, i can’t do it online, i just don’t know what to try first… should I try with an EIN alone, with my social security number alone, with both together, should I go straight for an ITIN, I am pretty lost 😀
But thanks for all the advices !!
Hi Karen,
I’m planning to self-publish this year.
This site is a super resource. Thanks ever so much for putting this together.
I was planning to contact the IRS in the next day or so, but it sounds like I might not need to so I’ll hold fire. I very much look forward to your latest update when you can find the time for it.
Sean
Hi Sean – I’ll be updating it at the weekend. But in short if you’re a sole trader you can use your own country’s tax ID when completing the Amazon online interview – no need to apply for and supply any ITIN…
Hi Karyn, Thanks for the update! Just to double check, as a sole trader in the UK, you’d fill out W8BEN (not W8BEN-E). Is it correct?
Tiffany, you said you are a non-taxpayer. I began working at 16, and was assigned a tax number that has followed me my whole life. I know you mentioned disability, and i don’t know what you call your individual tax numbers. Whatever number you ever used to file income tax is the one you put in #6.
Please…not being personal. Have you worked and ever filed income tax, or have you always been on disability? That is how you will know which number to use. It is only yours.
We, as non Americans, should not even need to apply for the American ITIN. In Canada’s Treaty it says all tax is paid in my own country, Canada.
The reason people needed the American IRS ITIN was because…if the publisher(s) withheld your 30 % and sent it to the IRS (by law), then the only way a non-American could get it back would be to apply for the American ITIN…which would then let them file an American income tax …and ask for their money back (that our Treaty guaranteed they should never have taken…in the first place.
So…make sure you file the W8BEN, and make sure you are set at zero (or whatever your treaty says)…before you publish.
No, I’ve never been able to work due to disability, Nola. And I will file the W8BEN thanks.
Dear Tiffany (and to those not in employment in any form due to disability and or claiming UK Employment Support Allowance (ESA) benefit due to a disability) I like you am disabled and claiming UK benefits and live in the UK. When I read your post above where you write that you will register as self employed i think that this could be a mistake and “could effect your claim to benefit,” for the mere fact that under the rules of claiming, you cannot be stating that you are ’employed’ in any way: whether self-employed or otherwise, because the basis upon which you are claiming for disability benefit within itself means that you cannot be both working (and being self-employed means a form of work) and claiming benefits — albeit due to a disability — it is sure to mess up your ‘claim’ to be entitled to such a benefit like ESA. Now don’t get me wrong, I am not tax expert and the rules are very complex but the mere fact that if you was to register as self-employed this is sure to go against your claim for ESA one day. Now there is a way around this. first the law (I do know in the UK when it comes to ‘declaring’) says that you can receive an income and only need to declare it if it is over a certain about. Also i believe that not all income needs to warrant setting up a business or registering as self-employed in order to get some form or tax number etc, so as to submit tax returns. you are disabled, you are receiving benefits, probably ESA and DLA. you are a writer. there is nothing stopping you (or anyone in the same boat) from writing or being a writer! now you can write and you want to publish, i.e. you want the world to read what you have written. no rules broken there. but now you want to claim royalties, i.e. rewards, income from publishing, and there would have been expenses you would have had to pay out in order to get any one book or whatever published, but have to be careful (as i wrote im no tax expert) there must be another kind of “form” you can get from tax office HMRC best speak to them on phone or email better, as email then you have proof of what you asked for and their reply for future reference. since i do not believe that the only route to keep account of such royalty incomes is to merely register as self-employed. As i wrote this could be seen by the ESA officials as a fact that you are ‘capable’ of working because you are self-employed, thus not entitled to ESA and or DLA! hope you do not think im going on too much here, but i like you am in the same boat and i’d rather check this out with the tax office before declaring any self-employed status, don’t want to put my foot in it, if you see my point. ANY REPLIES ON THIS ISSUE WELCOME PLEASE.
Done a bit of research digging and found this link: https://www.whatdotheyknow.com/request/144467/response/358414/attach/6/4e.ESA2.pdf.pdf had a brief read and it appears that 1. as a writer, this involves research and a lot of writing time, it could be classed as a form of work thereby effecting ones claim to ESA! ALSO, when it comes to royalties under your or your partners name (if you have one), the first £20 income is not counted but funds received beyond this WILL effect one ESA in that (a) ESA amount to be paid will go down and may disappear altogether depending on how much you receive each week on royalties and (b) if the ESA office of the DWP consider that your writing work is work and therefore you cannot be claiming ESA for being disabled. And yes therefore you would need to make a tax assessment but I believe under class 4 not class 2, but im not sure one would have to ask the tax office. Now a way around this problem might be to hand your writings over to a family member who works to put on Amazon and the like for publication with royalties under their own name, but even if they give you the money, legally you would still need to declare the income, BUT would then not have to violate the ESA rules in that you are saying that you are working (or rather they would assess that you are working). I do not know it is a tricky one…and a horrible situation because if you want to try and make money from your writings but do not want to give up your benefits until you know you could live off of your royalties then you really are in a dilemma because to even publish your works under your Amazon account (even if each work had a pen name) you are opening yourself up to scrutiny, as clearly you can read in the link I posted here. and I mean there are just too many hurdles to get over even the fact that we don’t even know if any publishing site really provide the true sales reports in terms of royalties, we could be being ripped off and there is no way to check. If you rely on benefits then whatever you do, don’t lose them before you know 100% you can get a lot more per week from the results of your writings. I DO NOT KNOW OF, AND CANNOT THINK OF ANY WAY AROUND THIS PROBLEM AT THE MOMENT… if anybody does please write.
Apologies for delayed posting of replies on this thread – I’ve been away and just back….
Hi Steven,
Thanks for your comment.
I haven’t declared myself self employed yet as I’ve yet to receive any royalties and I’m looking into how it might affect my benefits.
I know that it won’t affect my DLA as people can claim that regardless of whether they are employed or not as DLA is not classed as income.
How it’s going to affect my ESA I don’t know yet but I do know people can still claim ESA or job seekers if they are self employed along with working tax credits.
I definitely going to look into this further but a friend of mine who is also a disabled author said I wouldn’t have to declare my royalties until they were in excess of £2,400.
Let me know how you get on.
Any thought’s on Stephen’s comment, Karen?
Hi Tiffany – not long returned from holiday so not firing on all cylinders due to time lapse, but I can’t claim to be an expert on the effect of self-employment status on ESA/DLA etc — I think your best bet would be to ask DWP direct on this? I’m so sorry I can’t be of more help but this really is a topic for specialists… K
I know that. But still not sure if I need an ITIN or not as I don’t have any kind of UK or foreign tax number as not sure if my National Insurance number will be enough.
Hi Tiffany
Yes, your National Insurance number will be accepted. I used it on the form and it is a tax reference number in the UK, which H M Revenue & Customs could use to identify you.
Heather
Hi Heather,
Will my national insurance number still work if I’m a non-taxpayer?
Hi Tiffany,
(Sorry, I can’t reply under your post below, which is why I’m replying here!)
Your national insurance number will still identify you to the UK Revenue & Customs. It stays with you for life.
You may be a non-taxpayer at the moment, but if your income (from royalties and taxable benefits and any other sources of income) is enough to take you over your Personal Allowance, then you will need to declare the income and pay any tax due. You may find that you are obliged to declare royalty income anyway, but you should check this out for yourself.
Taxable/non-taxable benefits – https://www.gov.uk/income-tax/taxfree-and-taxable-state-benefits
You should also be keeping track of any expenses to deduct against any income, just in case your royalties are high enough that you pay income tax!
Hope this helps
Heather
Hi Heather,
I couldn’t reply to your post below either.
Great, thanks for your help! I’ll use my National Insurance number then.
Yes, I know I have to declare income and will have to declare myself as self employed eventually.
Thanks again!
Tiffany, The IRS form called the W8BEN is the only legal power to change your 30% Withholding of Royalties down to the level your country’s Treaty guarantees. (Canada is zero %..complete exemption)
Tiffany, with each American “Publisher” (or whatever they call themselves) you choose, you must file a W8BEN.
Tiffany, i just got the email that said you were UK. Not sure if I misunderstood, or if you did.
You wrote you are a non-taxpayer and don’t have a foreign ITIN.
In the IRS Instructions (http://www.irs.gov/pub/irs-pdf/iw8ben.pdf) I remember a part for LINE 6 that said if you do not have a Foreign tax number, put your Birth Date
“Line 6. If you are providing this Form W-8BEN to document yourself with respect to a financial account that you hold at a U.S. office of a financial institution, provide the tax identifying number (TIN) issued to you by your jurisdiction of tax residence unless: You have not been issued a TIN, or The jurisdiction does not issue TINs.
I THINK THIS PART ANSWERS.
If you have not provided your jurisdiction of residence
TIN on line 6, provide your date of birth in line 8.
Tiffany, like you I am not American. I am Canadian. I have researched this every-changing 30% nightmare since 2007. (In Jan.2015 I successfully signed with 4 companies (3 American and Kobo.) All 3 American companies changed me from 30 % to 0 %. in one day. I had heard from other authors that things had become simpler.I got PDFs of both the IRS W8BEN and the actual IRS INSTRUCTIONS.#5 ASKS FOR AMERICAN ITIN (Individual Tax Identification Number.) If you don’t have one, leave empty. #6 clearly says AND ? OR FOREIGN ITIN.(in Canada, that is the Social Insurance Number.
SMASHWORDS
This was totally new for SMASHWORDS, BUT THE ACTUAL HEAD OF THEIR TAX DEPARTMENT returned answer to my e-mail I had sent on New Years evening On their website, you fill out address, etc. YOU CALL YOURSELF (INDIVIDUAL/SOLE PROPRIETOR)
You give your PayPal email (they only pay non-Americans by PayPal, not cheque.)
At that time, even their website still had the old routine, but she confirmed just give them my Soc. Insurance #. They had not yet even set up their website with the changed W8BEN form and instructions, so she said download the PdF from the IRS, and simply complete it, put my email in question #7 that they use to pay my PayPal, leave #5 empty, and put Soc. Insur. # in #6 as the Foreign ITIN (the number I use to file Canadian income tax with our Revenue Canada) She gave me the exact address to mail it with the words Tax Compliance. My Payee page changed the minute the mail arrived, with orange sign saying 0% withholding of Royalties.
CREATESPACE AND KINDLE DIRECT PUBLISHING
(on-line identical W8BEN forms) Electronically and changed to 0 within a day)
With both Amazon companies (CreateSpace and Kindle Direct Publishing) I contacted by phone.
This was so new for them in January that the first 2 people did not know, so I politely hung up, but tried again. The third person asked permission to either put me on hold for a long time to check, or to take my number and call me back He checked and verified…
Even the IRS INSTRUCTIONS says yes, leave #5 empty (if you don’t have American ITIN)
AND / OR #6put Foreign ITIN. Their forms were both on line. Both identical. I completed them, and filed electronically (never done this before) and then printed out a copy for my records.
Within the day, the moment they verified that my name and address matched the Canadian Social Insurance Number, they accepted the W8BEN and changed me to 0 %. I phoned, and asked where this showed on their 2 websites, and neither knew where (because they cannot see our actual accounts, but could see 0% in their side. They sent me an e-mail confirming that I was 0%
For all 3 companies, this was new, and some of the workers did not yet know until they checked.
Hi Karen, thanks for replying to my comment. I’m an non-taxpayer as I’m on disability benefits. So I’ll try entering my National Insurance number. Do I still need to submit the W8Ben form then? Thanks.
Tiffany – the short answer is I don’t know and I’ve not had time to check this but it’s on my to-do list. I will update here as soon as I get a moment. But if you are just trying to deal with CreateSpace and KDP I think it’s just a case of doing the online interview now. Just to clarify though – I’m not a tax adviser! But one thing I will say is that if you start to get income from selling your books you need to register as self-employed – see my separate post about this.
Hi Karen, thanks fro replying to my comment. Okay, I’ll wait until you clarify it before I try entering my National Insurance number. My book is being published on 28th March.
Thanks for your help. I’m very confused over the tax and Createspace keep sending me conflicting information.
Yes I am going to eventually declare myself as self employed once I start earning royalties. Plus I’m in the process of setting up my own freelance business so I will have to do that anyway.
Tiffany – just re-read that you are a non-taxpayer – in that case I’d enter your National Insurance number for now. But if you start to get income from your book sales you’ll need to contact HMRC to let them know that – but I’d worry about that as/when you start selling!
Just updated that to say NI or UTR number – latter might be better if you have it as pertains specifically to income tax…
Tiffany – Nola is right and CS seems to be contradicting itself or not understanding the IRS updated rules. Someone else who works in tax in the UK contacted me separately at the weekend to say she’d looked at this in some detail and you can indeed enter your UK tax number instead of an ITIN – this could be your National Insurance number or you UTR (unique taxpayer’s reference). I have added an update in green text up near the top of this blog in three places. To save you looking for it I’m pasting it here:
Yet another update 13 March 2015 – see below it looks as if KDP (and I assume CS?) will accept UK Tax IDs irrespective of my conversation with the IRS here in the UK 🙂
I’ve had an email from someone pointing out that you can use your UK tax ID – She referenced this paragraph in the KDP instructions. https://kdp.amazon.com/help?topicId=A1CTSIBPDAAJ0M As she say: “The crucial sentence is in the fourth paragraph – If you do not possess a U.S. TIN, you may enter the income tax identification number issued to you by the tax authority in your country of residence. It also refers you to the tax treaties document and on page 40 (before the treaties) it makes mention of the need for/against a TIN, whether US or foreign. It’s a bit woolly and confusing, but it’s there.”
(KI talking again here…) I have no idea whether other platforms such as Apple and Kobo will accept UK tax IDs but if they will then it sounds as if it will make everyone’s life a lot simpler! Anyone who has used UK tax IDs successfuly elsewhere please do let us know!
So I would enter your National Insurance or Unique Taxpayer’s Reference number (UTR) and see what happens… You will find your UTR on your payslips etc and other info sent by HMRC…
Hi Karen, how do I obtain a ITIN number for American tax?
Hi Tiffany – where are you based?
Hi Karen, I’m based in the UK and Createspace told me to avoid the 30% withholding tax I should get an ITIN number. I don’t have a foreign tax number as I’m a non-taxpayer.
Tiffany, look above for Nola Bogie (detail of what changed at New Years)
If you are NOT American, you DO NOT APPLY FOR ITIN. You submit the W8BEN to each American publisher you chose.
Amazon Kindle Direct and Createspace are on-line, easy to fill in electronically and print a copy (They put you at 0 % ..or whatever your country treaty is within a day, if they confirm your Personal number you use to file income tax in your own country.
IRS Instructions Clearly instructions say…#5 enter the ITIN (meaning the American one through IRS). I don’t have it and PUBLISHER TOLD ME leave EMPTY.
# 6 INSTRUCTIONS CLEARLY SAYS…AND / OR FOREIGN iTIN..(INDIVIDUAL TAX IDENTIFICATION NUMBER)…in Canada that is our Social Insurance Number.
YOU DO NOT NEED TO APPLY FOR AMERICAN ITIN. THE PUBLISHER WILL NOT WITHHOLD THE MONEY AND SEND IT TO THE IRS…DEPENDING ON THE AMOUNT IN YOUR TREATY.
Hi Nola,
Thanks for replying to my question.
I’m not American, I live in the UK. But Cratespace told me that to avoid the withholding tax I had to obtain an ITIN number. I don’t have a foreign tax or UK tax number as I’m a non-taxpayer.
When I was filling in my Amazon KDP and CreateSpace forms in Jan 2015, they kept failing when I tried to enter my EIN (obtained in 2014 and successfully used in 2014).I believe that if you’re an individual UK taxpayer all you need to do now is give your UTR on the online tax declaration – you don’t appear to need an EIN any more. Trying to enter both an EIN and a UTR will fail.
Thanks for this Marc – I’ve recently had an email from someone confirming that it worked for her too and she referenced this paragraph in the KDP instructions. https://kdp.amazon.com/help?topicId=A1CTSIBPDAAJ0M As she say: “The crucial sentence is in the fourth paragraph – If you do not possess a U.S. TIN, you may enter the income tax identification number issued to you by the tax authority in your country of residence. It also refers you to the tax treaties document and on page 40 (before the treaties) it makes mention of the need for/against a TIN, whether US or foreign. It’s a bit woolly and confusing, but it’s there.”
I have no idea whether other platforms such as Apple and Kobo will accept UK tax IDs but if they will then it sounds as if it will make everyone’s life a lot simpler! Anyone who has used UK tax IDs successful elsewhere please do let us know!
Hi Marc,
Do you need to enter your UTR? I thought as a UK taxpayer you’d have to enter your NI (national insurance) number?
Re my post above on March 5th, I wrote to Bookbaby for their advice. Their response is posted below.
Our retailers (Amazon, etc.) do not withhold taxes from any BookBaby distributed ebook sales prior to reporting them to us. They may withhold taxes for sellers whose country has nexus with them. However, if we distribute your ebook to an eBookstore we are the titular seller, and we are in the United States. This means that your ebook sales will not be subject to additional withholding prior to sales being reported to us.
Because you are essentially selling your ebooks on consignment through us we do not require any tax or employment documents. We neither withhold from nor report your earnings to any agency of any government. You are responsible for reporting your income in accordance with any tax regulation to which you are subject, and we encourage you to consult a local tax professional for assistance in determining how much and how to file your taxes.
Who needs the W9BEN or W8BEN-E?
Example: Smashwords has a huge distribution list, (you submit only one W8BEN, or W8BEN-E to Smashwords and it covers the entire network that they distribute your books to.
You give one to each US company (many clearly say they are not publishers) that serves as the primary contact (but you do not need to track down each individual company in THEIR list.
Hi Karen
Just for clarification.. (as previously mentioned) I have a company and therefore managed (through your invaluable help) to get my EIN, which I have given to Amazon twice now, once for ebooks and the other just recently for the about-to-go-online Audiobook through ACX/Amazon/Apple. But.. do I also need to personally hunt down Apple/B&N/Nook/Gardners and all the other platforms I have the ebook out on and submit my EIN to them all? (Even as I write this, it feels a silly question). Do you have any short circuit hacks for any of these companies in terms of procedure? My book originally went out via Bookbaby, so accordingly is on e-Sentral/Gardners/Kindle/iBook/Scribd/ Flipkart/Oyster/Ciando/Nook/Kobo/Kopia/Baker and Taylor.. it is also on Ingram Spark a PoD and soon ACX.. do I need to do these too, do you know? Thankng you again for your invaluable thread!
Thank you for this great website, Karen! This is probably an easy and silly question for you, but how could one be filling out W8 as an “individual”? In other words, how do you pay tax as an “individual” in the UK? I’m a consultant, living in the UK and I will do some consulting work for a company in the US. I asked the IRS in London which form to fill out (W8BEN or W8BENE) but the person couldn’t really answer the question. When I told him that I’m a consultant, he told me to fill out W8BEN (not W8BENE). But then, how do I pay tax in the UK? Thank you for your help in advance!
Hi Sarah – I’m not sure I understand your question as I’m afraid this blog post really focuses on tax for book royalties – rather than for cross border consultancy. If you are British or are resident in the UK for tax purposes and want to know how to declare you income from US earnings I’d recommend you call the the HM Revenue & Customs self-employed helpline here in the UK (if you google it, you will easily find it…). They will be able to tell you. The W8BEN form (for the context of my post here) is completed in order to stop the US deducting US tax at source from book royalties (and presumably other earnings….). But I can’t really advise beyond what’s in this blog I’m afraid! In case it helps, also look at the other blog post here on tax for UK authors (see the top menu to link to it…) Best of luck, and sorry to to have been of more help. Karen
(The reason I suggest checking out the other post is it also explains how to register to pay income tax in the UK from self-employed earnings, which I think it what your question relates to…)
Hi Karen, Sorry for an ambiguous question, and thank you for suggestions. As I’m a freelance consultant, I feel that we are in a similar situation. I tried to find more info on W8BEN/W8BENE for a resident in the UK for tax purposes elsewhere, but this site was most relevant to me and the best available. So thank you again!
Please let me (hopefully) clarify my question. I understand that as a freelancer, we register as a sole trader (or Limited Company, but I’m a sole trader). As a sole trader, do I complete W8BEN or W8BENE? I told the IRS person in London that I’m a freelance consultant, then he told me to complete W8BEN. But when I mentioned that I’m a sole trader, he got completely confused. (He didn’t know what a sole trader was, and frankly he didn’t seem to know anything about W8 forms. I had to even correct him one time by reading a paragraph in the instruction).
It seems that there are some changes in those forms recently (January 1, 2015 – ), so if anyone here has completed one of those forms as a sole trader in the UK lately, I’d greatly appreciate to get an advice! Thank you again in advance!
Kelly, THE IMPORTANT THING WITH AMERICAN PUBLISHERS IS TO BE SURE THE W8BEN IS ACCEPTED AND THAT YOUR TAX RATE IS EITHER REDUCED OR AT ZERO BEFORE YOU PUBLISH. (With Smashwords, they have a section where you can “DEFER” payment…so even if you earn Royalties…you don’t receive anything until the 0% is accepted and printed across the top of your PAYEE PAGE in orange.
I am Canadian, and knew how complex the 30% withholding was. I deliberately would not publish with an American printer/publisher until I had submitted the W8BEN and they had confirmed my withholding was then at 0% (Canada). Since New Years, I have new contracts with Kindle Direct Publishing (KDP) and Createspace.
With Smashwords (their website was not up to date yet but I contacted support…and they emailed me confirmation from their tax section of Smashwords. You check one box which says (Individual/Sole Proprietor) W8BEN, it goes with the IRS Instructions. Clearly instructions say…#5 enter the ITIN (meaning the American one through IRS). I don’t have it and was told leave EMPTY. # 6 INSTRUCTIONS CLEARLY SAYS…AND /OR FOREIGN iTIN..(INDIVIDUAL TAX IDENTIFICATION NUMBER)…in Canada that is our Social Insurance Number.Their website was not up to date yet…but they gave me the exact address..for tax compliance, and with my authentic signature and date. I mailed it, and the moment they got it, my Smashwords had a huge orange box saying Canada Treaty Royalty Withholding is now set at 0%. I never applied for ITIN. I will never have Royalties withheld..so I won’t be dealing with IRS to get them back.
KDP and CREATESPACE: Last week, i went on line and asked 2 more American companies. This is so new, first contact did not know about the change. Second call..He checked and verified..you are right. IRS instructions now says…enter American ITIN…AND / OR FOREIGN Individual Tax Identification Number…ITINI
I completed their form on line…as an individual with electronic signature and printed it out. Next day, I phoned and they confirmed by phone and email that I am now 0%.
Identical situation with CreateSpace and also identical on-line form. Now set at 0%.
That means they will not be withholding any Royalties…and I will not be filing an American income tax to try to recover my 30 % (because we already pay the tax in Canada).
Hi Karen, great post, I followed it all through got my ITIN and inputted into the companies selling my book and ebook. The only thing is I now have a problem with Createspace their response when I asked about when I would receive my tax back was this:
“Thanks for contacting us today regarding the taxes withholding. I will be glad to assist.
Amazon and CreateSpace do not issue refunds for tax withholding.
However, you may be eligible for a full or partial refund from the United States Internal Revenue Service (IRS). Each March, you will be issued the Form 1042S. This is an informational statement of the U.S. source income you received from Amazon and CreateSpace during the prior tax year, and any U.S. taxes that were withheld. Please consult a tax adviser about how to use this information on your tax return or claim of refund, or check the IRS website:
http://www.irs.gov
I hope I’ve been able to clarify this issue for you. We appreciate your business and I wish you the best of success with your book project!
Best regards,
Sophie
CreateSpace Member Services”
I was fully under the impression it would take place from their end I would not have to again go through the whole process of contacting IRS etc etc… so i’m not sure if CreateSpace have made a mistake or not as I often get wrong communication from them.
Best article on the WWW on the matter. It has saved me huge amount of energy and time. Got the EIN in 20min filled the W and off we go. I am applying for royalties as a filmmaker and the process is the same as for writers. Thanks again for this.
Sophie, Yes, reducing or exempting from 30 % Royalty withholding is easy now.
Thank you IRS. All EACH AMERICAN PUBLISHER NEEDS IS
MAILED PAPER SIGNED AND DATED COPY of your W8BEN
AND YOUR COUNTRY’S ITIN (INDIVIDUAL TAX IDENTIFICATION NUMBER) Canada’s is called Social Insurance Number and our Treaty is 0% Royalty withholding
ACTUAL INSTRUCTIONS FOR IRS W8BEN
W8BEN# 5 asks for your American ITIN…leave it empty.
W8BEN #6 asks for your FOREIGN ITIN…FILL THIS IN. IT IS ALL YOU NEED.
ITIN Whatever your country calls the number you use to file your income tax.
W8BEN FORM FEB 2014 http://www.irs.gov/pub/irs-pdf/fw8ben.pdf
W8BEN IRS INSTRUCTIONS http://www.irs.gov/pub/irs-pdf/iw8ben.pdf
Contact each American Publisher that you wish to use. Each needs a paper copy of W8BEN.
Get the exact wording for their envelope and address.
Complete the PDF of the W8BEN on computer. Use Save As…to your desktop (or special file).
Rename it……..
I saved a W8BEN F2014 MASTER BLANK so I can simply open the one I completed as a Master, and change #7 and #10 to match the different publisher.
# 7 is your account with that publisher and your related e-mail
# 10 You need to check your COUNTRY’S TREATY NUMBER AND WORDING.
My example for Canada
I am a Canadian Citizen and resident, and Beneficial owner of copyright royalties for literary and artistic works arising from an American publisher, (HERE NAME IT).
Canada’s Article, XII, Royalties states that these Royalties beneficially owned by a resident of the other Contracting State shall be taxable only in that other Contracting State.
For each publisher…rename it, and save it in a collection of W8BEN
(F2014 is the date of the IRS W8BEN version so you know if you are using the right form)
Your name W8BEN F2014 publisher…and date mailed
Example for my Smashwords.
NOLAW8BEN F2014 SMSHWDS JAN6 2015.
Print 2 copies…one to mail, one for your files.
Sign name and date.
Mail hard copy, signed and dated.
BE WISE AND GET THIS FORM ACCEPTED BEFORE YOU PUBLISH.
AT NEW YEARS, SMASHWORDS CONFIRMED THEY FOLLOW THIS, ALTHOUGH THEY DO NOT HAVE IT WRITTEN IN WEBSITE YET. CONTACT SUPPORT BY EMAIL AND THEY WILL CONFIRM. (SEE MY BOTTOM LETTER)
On Smashwords Payee page…they have one box you click which says both…
Individual/Sole Proprietor …….you do not need EIN or American ITIN. (Individual Tax Identification Number)…you use your own. (But the website won’t let you enter it yet, because it is not updated…leave it empty. If not American…your Payment of Royalties can only be by PayPal…and all they need is your email. Phone your PAYPAL to make sure. While on the phone, explain you will be receiving Royalty payments from an American publisher and your want to be sure the payments are accepted in your email. Ask PayPal to email you. Click their link in the email to verify your email and then anyone can pay you just through knowing your email.
Smashwords has a section where you can defer payment until the form is approved.
By law, every American Publisher MUST WITHHOLD 30% OF ALL AUTHOR ROYALTIES, and submit them to the IRS. (That was why you needed their ITIN to file and get the $$ back).
The reason we have Treaties is because the non-American authors pay the tax in their own country.
(I mention this because on Linkedin some American authors wrote..why should we have to pay tax…and you are exempt?)
I am Canadian…and went with Smashwords.
I contacted Smashwords on New Years (Support..by email). They answered that their website was not yet reflecting this, gave me an exact Address for Smashwords to send a PAPER/HARD COPY with authentic signature.
I mailed Jan 6.
Jan 21, nothing had happened so I emailed Support. He said send him a PDF copy and he would immediately contact the tax section, and they would locate my original signed copy. I sent the PDF, and asked how will I know? Where do I look. An hour later he answered. Said..go to top of Payee page. He sent me a SCREEN SHOT which showed a huge orange box that said..W8BEN RECEIVED. CHANGED ROYALTY WITHHOLDING TO ZERO % ACCORDING TO CANADIAN TREATY.
What is funny…I had my Payee tab open, and when I looked up, there was a huge orange box saying 0%…W8BEN received January 21. DONE! DINE!!
GOD BLESS THE NEW IRS PROCEDURE. SIMPLICITY IS ELEGANCE! WONDERFUL
THIS IS A COPY OF THE EMAIL FROM TAX DEPARTMENT SMASHWORDS WITH THE EXACT ADDRESS AND SECTION.
“Hi, Nola.
Thanks for your email. The Canadian SIN can be accepted on the new tax forms if you are an individual. However, we don’t yet have fields to collect the information on the payee setup page.
Please send in your signed hard copy W-8BEN, and we will pay you at the appropriate tax treaty rate (0% for Canada).
Postal mail us a printed, signed copy of your W-8BEN/W-8BEN-E Form to:
Smashwords, Inc.
Attn: Tax Compliance Dept.
15951 Los Gatos Blvd., Suite 16
Los Gatos, CA 95032 USA “
Thanks for you detailed reply, Nola. I’m still waiting for someone in the UK to call the IRS here to hear from the horse’s mouth that they can use their UK NI number for the ITIN! Certainly when I called to check re the EIN they said they didn’t want UK tax numbers on the form for those! But for ITINs perhaps it’s different… Karen
Hi, I’ve heard that you can now use your NI number on the 2014 W-8BEN form instead of an ITIN… Do you know anything about this? It says in the instructions: If you are claiming treaty benefits, you are generally required to provide an ITIN if you do not provide a tax identifying number issued to you by your jurisdiction of tax residence on line 6.’ To me, that reads as, as long as your provide your national insurance number from your country of residence, you don’t have to procure an ITIN — true or false?
Thanks!
Sophie
Hi Sophie – I’m not sure. I have an EIN not an ITIN. But a conversation I had with the IRS office here in London a while back indicated that the tax IDs they need are US ones, not UK ones… However that conversation was in relation to information needed for CreateSpace’s online questionnaire and for EINs, not the W-8BEN form and ITINs. I would recommend calling the IRS office in London to ask them specifically. And if you get through could you please come back and leave a comment here for everyone’s benefit? Many thanks 🙂 [Part of me wonders if what you are reading is addressed to US citzens rather than foreign nationals…but without downloading and going through the form I can’t be sure!] Please do leave another comment if you find out more!
Hi Sophie – see Nola’s comment below mine (it may not show on this thread for your specific comment). As I have an EIN I can’t be sure of the process but Nola seems to suggest you could use your UK NI. I would still recommend calling the IRS here in London to double check though – there has bee *so* much confusion about all of this! As I say it would be great if you could leave a note to confirm what they said. Thanks, Nola, for your comments. Karen
PS: I’ve heard nothing from Createspace or Smashwords.
Hi Karen. I recently received an email from KDP saying I needed to update my US tax information. All I had to do was complete the tax information interview online. I found a green tick and “tax information complete” on the box beside a cllickable box for the tax interview. Rather foolishly, I clicked on the interview and went through the questions. I entered the same information as far as I could remember it from when I received my EIN back in 2013, but my inputs were rejected by IRS. I tried a second time, a third time, a fourth time, trying slightly different inputs each time. My address was slightly wrong the first time, my name in the signature, entered by my Mac was nothing like my name, the second time – fixed that. I tried with and without my Irish tax number (I’m in Ireland). On every attempt, I clicked “individual” and entered my EIN in the ITIN box. I’m still not validated by the IRS, and running out of ideas. I was going to ring the UK IRS number today, but they’re not open on Fridays…
Hi there – really sorry to hear about this. I know I have a request in my inbox to update my tax info for KDP somewhere. But also read that someone said if it’s showing as complete to leave it well alone – so I will do that. If you read up the thread further (I now can’t quite remember) I think there is some kind of workaround. I think you need to say you are a company and not an individual even though technically you are an individual. Why don’t you try that? (I think that works for the online interview for CS…) From what I understand these records are really only for Amazon’s back end rather than for the IRS and it’s Amazon’s error not to be providing the correct option for sole trader businesses on their form. Another thought is I’m sure that Debbie Young from ALLi recently did the KDP form and it all went smoothly – why not ask her how she did it? Really sorry I can’t be of more help. What I am pretty sure of after my conversation with the IRS here in London re the CS online form a while back is that they will say this form is nothing to do with them – it’s KDP. They have issued you the EIN already based on what you told them so that is really all that they worry about. Best of luck! K
I sorted this out by choosing ‘corporation’ and putting in my EIN. The positive response I received was so fast I reckon this was an entirely Amazon (KDP). JJ
Result 🙂 Glad you got it sorted!
Things …are right back where they started…and I am again waiting for a clarification from Smashwords.
And adding to the nightmare…I just now got a second conflicting response from Smashwords. The first person said..yes, things are in transition…and all you need is the W8BEN, and where it asks for the ITIN (Individual Tax Identification Number)…use your Social Insurance Number which you use in your country to file Income Tax. He said they were in transition and the computer system was just getting set up…and to mail a paper copy (gave a specific address)
Whew..I was soooo relieved…and then
OH…NO..I just got a conflicting email from Smashwords….
right after I completed the W8BEN…(and the Instructions do actually say use the number you use to file income tax in your country)
She says…I need to apply for the ITIN…and provides links and details.
So I have now sent yet another asking them once again to double double check.
This is frankly …insane. Should be as simple as…Filling out the W8BEN with your indivdual tax form…and they should never have been able to take the 30 % in the first place, if we have a Treaty saying …Zero%.
Karen, (I thought the nightmare was over, when all we now need is W8BEN, and Social Insurance Number. I completed the PDF of the W8BEN on my computer, saved it with the name Smashwords and then printed a copy.(I know it needs an authentic signature and have the precise address to mail it. Has anyone else noticed what happened with mine. I printed empty original which was clear, good black, legible. I then completed the form, typing on screen…and printed.
Dear Heavens, what next. The black is still perfectly clear, but everything I typed on screen is blurry and mixtures of both blue and red. Anyone else notice this? Or am I specially chosen?
I have sent a message to Smashwords, because I don’t know if you hand print…someone said you must use blue ink..(don’t know if that is true), but how on earth would you fit the same required information in such TINY print?
I thought the nightmare was over…and keep wondering why any of us have to go through this, in the first place…since Canada has a Treaty of full exemption from the 30% withholding. And again I ask….the original procedure kept changing…no longer accepting a notary public or lawyer to authenticate…and the two “authorized” Acceptance Agents from the IRS website must be used…and charge anywhere from $300. to $600 to submit.
Thank you so much for the updates about the 2014 form changes! This answers all my questions. Phew! I would hug you if you were in front of me right now. I have been stressing about this and had no luck getting through to the IRS over the festive period.
Glad it helped!
Hiya,
Of all the posts on self-publishing that I’ve read (and there are way too many of them), this is one of the best. Informative and concise about a mirky issue, your help is really appreciated and I’m now releasing ebooks ahead of schedule having sorted the tax mess out, so thanks!!! 🙂
Thanks, Peter – glad it was useful 🙂
Hi Karen
I bailed on the W* BEN E and used the old one. Sorry I can’t shed any more light on that strangest of beasts…
Hi Andrew – I’m so sorry for the delayed reply. You don’t need to fax them the form SS-4 anywhere as far as I know. It’s a long time since I did this but from recollection it’s just a reference from to help you give the IRS the right info when you call them. But my blog post describes the process above in any event. With regards to the new W8 BEN E form, if you look at the comments I wrote in coloured text above it says that someone was recently told they could keep using the old form until Christmas as the IRS found the new form so confusing. I know I looked at the new form briefly to try to understand it and was utterly confused! But of course I’ve not needed to complete it. I would suggest you try calling the IRS in London if you’re based here and ask them direct whether you can use the old form. If they say you need to complete the new one then I’d ask them what you need to fill in where! If you do make the call and find the answer please do leave a comment here. I’m sorry I can’t be of more help. But I’m going on what previous commenters have said since the new form… Good luck and, again, so sorry I can’t be of more help…! Karen
Hi Karen
Coming here via the ALLi FB page, as you suggested. Thank you for your invaluable help and advice. I am about to launch my debut self-pub through Bookbaby on all platforms in a couple of weeks. I called the US with SS-4 ready to go, as a UK-based limited company. Within minutes, I had my EIN, calling as I did just after 11am, there was no wait-time at all to speak of and all went tickety-boo.
Do I actually need to fax the form to them, or do they have all they need, having spoken on the phone?
Secondly, I had a look at the new W8 BEN E form and it looks terrifying. I have Absolutely no idea how to fill it in.. FFI, NFFE, GIIN etc… Do you have a piece on what to tick? I looked through this thread but could find no link.. am not even sure whether I need to be doing this form or the old W8 BEN; have they cleared up the issues their end yet?
Thanks
Andrew
Hi Andrew – just checking my page here and see that I replied to you below but not inside this thread – I do hope you saw the reply! Apologies for the mix-up…
Great article. I’ve literally just got off the phone and have my EIN number now. Called at 12pm UK time (7am Eastern US time) and got straight through. 10 minute conversation and confirmed the information on the SS-4 form I’d completed (my answer for 9a – Other – Self-employed Sole Trader UK). She warned me to give it 2 weeks before contacting Amazon (Kindle KDP) with the information as it takes that long for the information to go into the database. Hopefully I’ll receive the confirmation letter from the IRS in the same time frame.
hi,
After I get an EIN number, do I have to send annual tax reports or anyting else to IRS?
Not if you don’t pay US tax!
Hi Karen,
Great post! I have a question for UK based people. Can you use your UK National Insurance number instead of an ITIN or EIN?
The reason I ask is because the W8-BEN instructions are as follows:
To claim certain treaty benefits, you must complete line 5 by submitting an SSN or ITIN, or line 6 by providing a foreign tax identification number (foreign TIN).
I’ve spotted a few sites online (mostly about trading shares from the UK) and they all indicate you should use your National Insurance number and leave the ITIN part blank e.g.:
https://help.stockbrokers.barclays.co.uk/help/portfolio/w8_BEN_How2
This would be great it it’s true. Have you or anyone else tried it?
Cheers,
Mark.
Mark – I’ve not heard this before. Which version of the W8-BEN form are you referring to. Can you confirm what date it shows… As you will have seen from recent discussions on here, there has been a lot of confusion since the launch of the new one….
I picked the info off the February 2014 form at the following URL:
Click to access iw8ben.pdf
Page 6 is the part which mentions using a foreign TIN on line 6 instead of needing an American ITIN for line 5.
It may just be an exemption for purchasing US stocks and shares from the UK but it would be good to know if self-publishers could use it too.
Thanks,
Mark.
I’ve gone through the form as suggested & it has worked. I’m not entirely convinced the IRS will appreciate getting the EIN in that format (XXX-XX-XXXX rather than XX-XXXXXXX), but we’ll see! I’ll let you know if any problems come up further down the line.
Hi Karen
I wonder if you or anyone else can help… earlier in the year I got my EIN from the IRS and told them I was a self employed sole trader – no problems there, they were great and all worked fine. I then gave the EIN to CreateSpace via their online form and all appeared to be fine. But now, 9 months later, they have emailed saying I need to fill out their on line form again as there is a mismatch and treaty benefits will not be enacted. But when I try to fill in the form, if I select ‘individual’ as the beneficial owner (rather than corporation etc), then when I get to the point of adding my TIN, it says it must be in the format of a SSN or ITIN. When I enter an EIN, it tells me that the format is wrong. Has anyone encountered this? CreateSpace say to call the IRS but the IRS say it is CreateSpace’s form and can’t help. I really don’t think I should change my beneficial status to ‘corporation’ (which I think will give me the option of entering an EIN as my TIN) as I am not a corporation in tax terms. Any thoughts? Many thanks
Caroline
Hi Caroline – I’m beyond this stage of course and the online form didn’t exist before. Are the options on the online form only for ‘corporation’ or is there any other wording there? eg that says something more vague, like ‘business’? I have a contact who may know the answer but not sure…
Caroline – I’m raising this through the Alliance of Independent Authors to see if we can get CS to talk with the IRS as there’s been so much confusion about this of late. I feel a bit helpless as I’ve not had to use the online form but it sounds as if CS is basing it on the new changes that the IRS introduced earlier this year, which their internal teams are struggling with. See earlier posts on this. Are you a member of ALLi btw? If not check out the link on my site above – it’s worth joining! As/when I hear anything I’ll leave a post here but please do the same if you find anything out by any other means! Karen
There are indeed a lot of complaints about this on the Createspace forums. There doesn’t seem to be a definitive answer on this. I have to admit, I ticked ‘corporation’ on the form, just to allow me to fill out my EIN. I figured that the IRS knows the status of my business & they are ultimately the ones processing the withholding tax claims. It’s not ideal, but I couldn’t see any other way around it.
Thanks for letting us know, Lorna – it’s bonkers they haven’t sorted this out yet. Karen
Hi Caroline – I’ve just had some feedback via other members of the Alliance of Independent Authors as follows:
I entered my EIN number after another request last week and it was accepted on my second attempt. The first time I filled in the form, I was told that the system did’n’t recognise it, so I contacted customer support and they told me that the online form DOES accept EINs. I tried again and it was accepted. (This lady confirmed that she had selected ‘Individual’ under the given options.)
We then had a follow-up response from someone else that said this:
The answer is easy once you know: there is no option of an EIN but there is for a TIN. If you look closely at the form under the TIN box it shows a sample of the format. Just enter your EIN number into the TIN box in the format shown and hey presto. Also if you printed a copy of your completed form which you should of done for your records, get it out and complete this years form in exactly the same way otherwise the IRS will reject you submission. Hope this helps…
(I’m not sure what he means about ‘this year’s form’ which seems to imply annual completion of the form – I’m unaware that is necessary, and have only ever completed one form for each my distributors way back . But I may have misread what he means. I’ll leave a clarification note later…)
Hello Karen, your blog has been a lifeline to me in the past few days. I’m a soon-to-be-self-published author who is an American citizen but has lived in the UK for the past decade. I assume I was right to fill out my W9 form online with CreateSpace…but am so confused as to what taxes I’ll end up paying – will I have to pay British taxes too because I live here? Nightmare!
“Hello Karen, your blog has been a lifeline to me in the past few days. I’m a soon-to-be-self-published author who is an American citizen but has lived in the UK for the past decade. I assume I was right to fill out my W9 form online with CreateSpace…but am so confused as to what taxes I’ll end up paying – will I have to pay British taxes too because I live here? Nightmare!”
Hey. In theory, you have to pay the American taxes. You can look more closely here about the free fillable w9 form (how to fill it, why it is needed).
Here’s the official information about the form from the IRS:
The Form W-8BEN-E reflects changes made by the Foreign Account Tax Compliance Act
(FATCA) and is for use by beneficial owners that are entities. Entities also may use the
Form W-8BEN (revision date February 2006) through December 31, 2014.
For purposes of chapter 3 of the Internal Revenue Code, a Form W-8BEN (revision date
February 2006) provided to a withholding agent by an entity before January 1, 2015 will
remain valid until the form’s validity expires under Treasury Regulations section 1.1441-1(e)
(4)(ii).
For purposes of chapter 4 of the Internal Revenue Code, a Form W-8BEN (revision date
February 2006) provided to a withholding agent by an entity before January 1, 2015 is and
will remain valid to the extent permitted in Treasury Regulations section 1.1471-3(d)(1)
(describing the allowance for use of a “pre-FATCA Form W-8”). See also Treasury
Regulations section 1.1471-2T(a)(4)(ii) (describing a transitional exception to withholding for
certain payments made with respect to a preexisting obligation).
A withholding agent may request that you provide a Form W-8BEN (revision date February
2006) before January 1, 2015. The Form W-8BEN (revision date February 2006) can be
found on irs.gov in the Forms and Publications section, under the “Prior Year Forms” tab, by
searching the cumulative list of forms posted there for the term “Form W-8”. It does not
reflect the changes made by FATCA.
I can’t tell you how long I’ve been putting off doing this & it was so easy! Once I’d got the SS-4 form completed, I used skype to save myself an expensive phone call & it was done in 5 minutes! And, just so you know, the IRS says you can continue to use the W8-BEN form for ‘entities’ until the end of 2014. They obviously still don’t know what they’re doing with the new form!
Hi Lorna – thanks very much for the feedback. I’ll update this page with that info tomorrow! And I’m glad you managed to get your EIN so easily! Karen
Lorna – did they say that you can still use the old form as a sole trader too? (ie not just for limited companies?)
managed to get my taxes to 10% from 30% 🙂 theres no longer a need to print and ship this w8ben form fortunately
http://regevelya.com/royalty-withholding-tax/
Karen – you’re absolutely right. Thanks for clarifying.
That link I included shows a whole bunch of different types of TIN.
EIN and ITIN are just two of them.
There are more!
Emma,
I’m in the UK, and publishing on Kindle/Amazon.
I believe an EIN is just one of several forms of ‘ITIN’.
You might want to look at this on the IRS website, where they list the various types of ‘ITIN’
http://www.irs.gov/Individuals/International-Taxpayers/Taxpayer-Identification-Numbers-(TIN)
Having got my EIN, in the same way that you did, I then completed my tax details on the Amazon site (their online version of W8-whatever) and when asked for my TIN I gave it my EIN and was happily accepted.
I hope that helps.
Just a quick note – Sam I think in your second sentence above you mean that an EIN is just one form of ‘TIN’ (not ‘ITIN’)…. and that sounds right to me…
I recently register as self employed in the UK for my writing endeavours. As advised, I have just recently obtained my EIN–very quickly running through everything on the phone to a very nice woman in America. The problem I have now is the new W8-BEN. There is nowhere on this form to put your EIN. It asks for a ITIN. This surely defeats the object of getting the EIN, you still need the ITIN!
Has anyone completed and had the new W8-BEN accepted? If so, what did you put in this box? Your EIN?
Also, as I have an EIN can you confirm whether I should be competing the W8-BEN, or the W8-BEN-E ?
I am publishing through an American publishing company who pay me royalties, and they say I have no need to do anything as I will be paid as a subcontractor and can be paid up to $600 before tax. But what happens after this?
Any advise would be greatly appreciated.
Emma
Hi Emma – when you say you are publishing through an American publishing company is that a traditional publishing deal you have – or have you paid them to help you self publish? I’m just trying to fathom the relationship just in case it helps any tax experts reading here and to help me understand your situation a bit more clearly.
That apart it sounds to me as if you are trying to complete the *new* W8-BEN form which is only for individuals. Those with an EIN are now *supposed* to complete the new much more complicated W8-BEN-E form. *HOWEVER*, please read the helpful comment dated May 9th above from Cazbah who says that she was so confused by the W8-BEN-E form that she ended up calling back to the IRS who told her to seek out the *old* (Feb 2006) W8-BEN form and complete that for now with her EIN as the IRS had not yet been trained in how people should complete the new W8-BEN-E form. The old W8-BEN form (which was aimed at both individuals and businesses) has a clear place to add the EIN.
I’m afraid I don’t yet know whether the IRS now has received training on how the the new W8-BEN-E form should be completed. If they have they would be able to tell you how to do it I think. According to Cazbah they thought that would happen in July, but I don’t know when exactly. It may be worth calling them back to ask.
If you find out please do leave a note, otherwise I’d be grateful if someone could leave a note here if they know. Sorry I can’t be of more help on this occasion…
The American company is a traditional publishing company. They are still quite new so don’t offer advances at this stage. I will be paid on sales of my book that they are currently editing with me. They design my cover, and also sort out formatting to kindle/e-book, ISBN number, and distribution of my book. I haven’t paid them anything–they have a query and submission process.
Seems that I should venture in the way of the old W8-BEN, and see what happens–or face the dreaded new W8-BEN-E form which, after having a quick peek, looks a complete nightmare!
I shall let you know how I get on and pop back to comment on my findings 🙂
Emma
Good luck – and yes, do let us know how you get on. I’m relieved to hear that you’re not paying someone to publish your book for you. While there are reputable services out there, there are also some sharks so one has to take care. The Alliance of Independent Authors, of which I’m a member, has a Watchdog area that has identified services ripping authors off. But yours doesn’t sound like one of those… Best of luck with your book sales 🙂
Hi Karen,
Thanks for the article, it has really helped me out. One thing I am still unsure of is how to claim back any taxes which have already been taken. I am U.K. based and the taxes are from U.S sales of my Kindle books.
Any advice would be most appreciated.
Thanks Karen – just to clarify, the online version of the W8(? – sorry, can’t remember the exact number assigned to this form) didn’t appear until I’d answered a bunch of questions. The question ‘Do you have a TIN?’ appeared at the 70% mark (there’s a progress bar across the top of the window containing the various tax-related questions.)
They ask you to ‘sign’ the form which of course just means typing your name into the appropriate box.
Thanks, Sam!
Thanks for putting this together, Karen – very helpful.
Just to offer my own recent experience, in case it encourages anyone else thinking of getting an EIN.
I’m in the UK (self employed) and was planning to publish my first book with Kindle.
I rang the IRS on 001-267-941-1099 at 11am (6am their time – wow, they open their offices super-early) and was almost immediately talking to a very helpful woman who, once I’d explained the reason for calling, said sure, no problem – she was familiar with my request and dealt with similar on a regular basis.
I’d previously downloaded the SS-4 and filled it in, ready to give her details.
Question 7b – EIN
Question 9a we agreed on ‘self employed sole trader UK’;
Question 10 – compliance with IRS withholding regulations
I doubt I was on the phone for more than fifteen minutes, and the woman couldn’t have been more helpful. Knew exactly what she was doing. At the end, she read me out my EIN and took care to make sure I’d written it down correctly and explained that I should expect postal confirmation within two weeks.
Two and a half weeks later I received confirmation in the post (looked like the letter was posted in UK, so maybe they have an agency or someone at the embassy who sends them out to save on postage).
Yesterday, I finally got around to filling in my tax details at Amazon for the Kindle publishing program. As part of that I quoted my EIN. There’s an on-screen form (W8?) which Amazon fill in as you go, and you confirm all the details at the end. I then got an onscreen confirmation that my withholding rate would be 0%.
(Be aware that Amazon will ask if you have a TIN = tax identification number. That can take a variety of forms, including an EIN. So yes, if you’re trying to give them an EIN, you DO have a TIN.)
Good Luck All
Thanks, Sam for adding this really useful extra detail. And I’m glad you found the post useful. That on-screen form with Amazon didn’t exist when I did all of this so it’s good to know exactly how it works. I’ll flag your comment higher up in the post for people to look out for re TIN. Karen
Thank you for all the information you have posted on your site, I think it is one of the best if you’re a UK indie author. I have got an EIN but haven’t filled out the W8-BEN form yet and I know that I will have to get around to it. At the moment, I am stuck on how to get ISBN’s there is one question that has me stumped and I have asked on a couple of forums but no-one really could help me.
Anyway, I just wanted to thank you.
Hi Catherine – I’m glad you’ve found the info useful. Re ISBNs, if you’re in the UK and have an ISBN question why not just call Nielsen – they are very helpful. Or leave a comment/question under my section on ISBNs and I’ll see if I or anyone else can answer it.
Thank you for replying Karen but I am absolutely terrified in using the phone. When I was researching in my EIN all I saw was that you should call but I took the chance and I filled in the form and posted it off. I can’t remember the postage but I did get my EIN in the post around five weeks later. So, if there are people like me out there that fear using the phone then if your from the UK you can get one by posting the SS-4 form to IRS in the US.
I will go and ask my ISBN question in that section, thank you directing me there. 🙂
Thank you for all of this very useful information. Instructions have now been uploaded for the most recent version of the W8 form, however, the numbers use bear no resemblence to the question numbers on the form, so I am getting my old-style forms in pretty quick. I also had a go at the on-line submission on KDP, but this does not allow you to complete the form in full. You still have to print and submit it. I can confirm, however, that Amazon still feature the 2006 version of the form on their system.
I wanted to share my recent experience with form W-8BEN-E for others to draw on, as there’s important information that you need if you’re a foreign author who is using a company to receive US book-related income between now and July, and it’s not been made public on any IRS site. Headline advice: for now, you need to download the old 2006 version of the original W-8BEN form and complete that. Here is the link: http://www.sup.org/authors/docs/W8BEN.pdf
Background: I first got my EIN, as you’ve detailed so helpfully above, by calling +1 267 941 1099. I called when they opened, at 7am ET (12pm in the UK), and that process was completed from start to finish in 10 minutes. Then I tried to get advice on how to complete the new W-8BEN-E form, as I’m using my company to receive US royalties under the US-UK withholding tax treaty. BUT it turns out that the form isn’t ready for use. It’s dated Feb 2014, and every website (and the new W-8BEN form) says you must complete W-8BEN-E if you’re a company rather than an individual. But the IRS haven’t yet published instructions for filling it W-8BEN-E – that’s scheduled for July. Instructions are needed, as it’s eight times as long and much more complicated that the old W-8BEN form. And nobody at the IRS feels qualified to advise on how to complete it, as they too are missing the instructions. I called the IRS several times, was on hold and transferred repeatedly from team to team. I spent hours googling, trying to find someone who’d navigated this before. I failed. I made several attempts at filling out the new form, trying to learn what I needed to decide which boxes to tick (e.g. deciding whether my company is an active or passive NFFE).
But then, after being on hold for a very long time on my last IRS call, I finally spoke to someone who told me that I should fill out the *old* W-8BEN form. It says clearly at the top of the *new* Feb 2014 W-8BEN that you shouldn’t fill it out if you’re a company rather than an individual, and that you must use W-8BEN-E instead. But he said that they’d ‘put the cart before the horse’ in releasing the new forms without instructions, and were leaving people like us in a very difficult limbo as a result. So he told me to somehow get hold of the old (2006) version of the old W-8BEN form online and complete that. I have done this, and am sending it off to my US publisher with fingers crossed.
For what it’s worth, on this 2006 W-8BEN form, it’s straightforward to complete questions 1-5; your EIN goes in Q6; you don’t need to include your VAT number in Q7, it’s optional apparently; no reference number needed in Q8. For Q9, you tick a/b/c; leave d and e blank. Q10, the relevant Article number is “12” (for the UK at least). US-UK withholding tax rate is 0%. Your type of income is “royalties”. You meet the terms of the treaty article because “beneficial owner is a non-US entity, registered in [the UK]”. You don’t tick Q11 (unless some of your income is coming from financial swap products – probably unlikely).
It was intensely frustrating to have to work all of this out in such a piecemeal manner, on the phone from the UK. Luckily I have a Skype account and keep some credit on it for calling people abroad that are not on Skype, and the whole thing cost me just pennies in phone charges. (A great deal more in terms of the opportunity cost of my time, but still!) So perhaps that’s a useful tip for people who need to call the IRS from abroad – it’s easy to set up a Skype account and set up Skype credit, and it gives you *almost* free international phone calls, as long as you have a wifi signal. And generally I hope my investigations will save another author from spending so much time on this.
Thanks Cazbah!
I half-suspected this was the case, especially when there was no accompanying instruction pdf to go with W8-Ben-E.
Hi Cazbah
Thanks *so much* for posting this – I will update the article higher up this weekend to tell people to read this comment. I’ve done qute a lot of work in the UK for government departments and have often seen how they can get things wrong, so this doesn’t entirely surprise me!
Karen
As an amazon author, what do i put for Part 1 – Q3 of the W-8BEN form: ‘Type of Beneficial Owner’?
Hi Anita – as I am a limited company I ticked corporation. I assume you are a self-employed sole trader? If that is the case then I’m not entirely sure but I’m guessing you could tick ‘Individual’ and then add in brackets (self-employed sole trader) to be on the safe side. If anyone who has submitted the form as a self-employed sole trader can answer this please chip in. Another thought is to call the IRS helpline and ask them? Please can you leave the answer here if you do this to help others? – thanks!I will email one contact now in case he knows… it’s probably a fault of the form.
Hi Anita – I believe that’s a question about the way that you’re choosing to treat the income from book sales, and is separate from the question of how you want to publish the book, in your case through Amazon. If you’ve formed a UK limited company to process the revenues from your book’s sales (as described by Karen elsewhere on her website), you’d tick ‘corporation’. If you’ve not formed a limited company but are instead treating the book revenues as freelance/self-employment earnings, and have registered as a sole trader with HMRC to receive that income, it’s a bit blurry on whether your situation is classed as ‘individual’ or ‘corporation’ in the US categorization. My take is that because you are paying personal income tax, rather than corporation tax, and because corporation in the US implies a legal entity separate from the people who work there – true of limited companies, not true of sole traderships – I’d lean towards choosing ‘individual’ in this case. Hope that’s helpful – maybe others have solid info on that?
Hi again Anita – I agree with Cazbah that being an Amazon author isn’t relevant – it’s how you are choosing to declare that income. On that basis do take a look at my related article for UK authors on paying income tax on book royalties and registering as self-employed – to be using an EIN I believe you’d need to be registered as self-employed.
Hi Anita/all – a friend who is a tax expert has confirmed that you need to tick the box that says ‘Individual’ if you are have obtained your EIN as a self-employed sole trader.
Here is what he said:
“When completing the form W-8BEN the beneficial owner is the person entitled to the income, so in the case of a sole trader this will be an individual. At question 1 you write your own name and at question 3 you tick ‘Individual’
If you trade through a limited company, the company is a ‘person’ and is entitled to the income in its own right so you write the company’s name at question 1 and tick ‘Corporation’ at question 3.”
If it were me I’d still add in brackets, “(UK self-employed sole trader)” above the word ‘individual’ in small letters – just to be on the safe side! (To prevent anyone coming back to say I should be applying for an ITIN!)
NB this relates to the old form – not the new one. Though I imagine there will be a similar question/option on that…
I hope this helps.
Hi,
Excellent advice – thanks for taking the time to share this.
Just one question: for a typical UK Private Limited Company, what box(es) on the W8-Ben-E form, part 5 should I tick?
Cheers,
Gordon
Hi Karen.
Thanks for your reply. Having dug a little deeper, I think you can publish and then get an EIN afterwards. However, I’ll wait to see if anyone else can shed more light on this. In the meantime, an email to Amazon is probably the best idea …
Have a good weekend.
All the best,
David
Hi David – that’s certainly how I did it in the ‘olden days’…!
Hi All
I know this is slightly off topic as most of the discussion here is around EIN’s but I though a quick update might be helpful to those going down the ITIN route.
My original ITIN application, posted mid Jan to the US with my passport, was rejected as the ‘supporting documentation’ wasn’t acceptable. I spoke with the IRS (always helpful and patient I have to say) and was advised that the letter from Amazon was the issue i.e. it was the facsimile signature version downloaded from Amazon’s site and not wet signed; it would appear the W-7 was correctly completed. My passport and rejection letter arrived almost exactly 6 weeks after sending it as the IRS said it would in their help documentation.
I emailed Amazon and they helpfully sent me a wet signed letter – this took a little while as the original letter didn’t arrive. Credit where it’s due, Amazon were very helpful and responded to all my e mails. My only concern now is that my passport and W-7 letter are in my full name and my Amazon account is just Phil Cox….we’ll see.
The IRS asked me to complete a fresh W-7 and send my passport along with the wet signed Amazon letter – essentially I was making a brand new application. I provided a covering letter with the case reference number of the rejected application. All things being equal, I will post it tomorrow using the International Tracked and Signed for service (roughly £7.50 last time)….now the waiting begins!
The post from David Powning on 24th April struck a chord with me, I was also unsure of when to take the ‘tax interview’ so I thought I would get the ITIN sorted first before trying to hit the publish button.
Hope this is helpful and not too long winded!
Best wishes
Phil
Thanks for the update, Phil. You’ll be able to publish a book on this at this rate! We look forward to the next instalment! 🙂
Hello Karen,
Sorry to bother you. I’m almost ready to self-publish my first novel, and have been looking into what a UK author has to do with regard to any possible income from the US. Some of the advice I’ve read seems to conflict, which has thrown me a bit, so I thought I’d drop you a line if that’s okay.
My main concern is that a lot of authors appear to be saying that you can publish via Amazon etc and do the required form-filling afterwards, whereas on the Amazon website it says that you cannot publish with them until you have done ‘the interview’ to clarify your status with the IRS. I’m therefore a bit confused as to what I have to do before I can publish.
I’ve been registered as self-employed for nine years, and I was under the impression that I could go ahead with the book, then get an EIN and fill in the W-8BEN afterwards to prevent/claim back the 30% tax being withheld. I’ll be publishing under my own name as a sole trader, not a company, as I’ve always done with my other freelance work.
Any advice gratefully received!
All the best,
David
Hi David – the ‘interview’ wasn’t around when I got my EIN. I’ve not yet had time to look at the process but will try to do so over the weekend. In the meantime, if anyone reading here knows the answer from more recent experience please leave a note. OR, David – see Phil Cox’s note below – why not email Amazon and ask the question specifically; they seem to be very good at replying. Do let us know but I’ll take a look myself over the weekend. Karen
Just wanted to say thanks very much for putting this article together. It is hugely helpful, thanks Karen.
Happy to have helped, Adam 🙂
Thank you for the information on obtaining an EIN number….helped me hugely. I called the number with my form prepared and got the number straight away. Until I saw your information I was going around in circles thinking I needed to acquire an ITIN number. Many many thanks for putting this information online
Glad it helped, Natalie… K
Hi Jane – (nice to meet you the other day/evening at LBF!) Having just checked back on my form (and I see what you mean – they have now updated it and created a revised version) there is section on it that talks about Special rates and conditions and I assume this is what you are talking about. Here I think the info you need is Article 12 and you are claiming 0% withholding for (type of income) Book Royalties…. However I didn’t complete either of these sections for some reasons as I think I was told by the lady I spoke to on the phone that it wouldn’t be necessary – although a sample faxed to me by the US embassy after the event did show them completed… so I assume the article number must be correct. (You could always Google it to check..)
Are you able to scan/ copy / photograph and email me a copy of the sample form sent to you by Amazon as it would be helpful for me to see when updating this page regards the new form…… you’ll find my email address under the contact page…
I hope this works and I look forward to hearing…
K
Hi Karen,
A great resource. I previously applied to Amazon and had my request turned down with no explaination. Yesterday I phoned the US Tax office. There was a long wait but I got my EIBN number with no problem. I am finding the completion of the W-BEN form more problematic. I must admit to finding the completion notes extremely confusing! At my request, Amazon have sent me a sample completed form but it is an old version (the latest is Feb 2014 and the questions are different.) However, from the sample Amazon form it seems that all I now need is the Article number of the UK treaty and the percentage rate of witholding I am claiming. I can’t seem to locate this information anywhere on the IRS website, so have asked Amazon the specific question. Meanwhile, any ideas anyone?
Jane
Ah, no – how frustrating for you, Phil! (Did they really not specify what the issue was with the supporting documentation?) Please keep us updated. Once you have nailed the process I suggest we construct an idiot’s guide to getting an ITIN based on your experience as a sub-page 🙂 Top marks for perseverance in the meantime! Karen
Good evening all….the saga continues.
Received my passport and ITIN rejection letter back today – 6 weeks and 1 days after posting the application from the UK, quite impressed with the turnaround. The reason for rejection was down to the supporting documentation. As my passport is in date it could only have been the letter I downloaded from Amazon that is causing the problem. The letter confirms that I will be in receipt of royalties from Amazon and is specifically worded. However, it’s a generic letter so my Kindle reference number and name had to be completed by hand and the signature at the bottom of the letter is obviously a facsimile.
I called the IRS and they confirmed this although it appeared they only had the reason for rejection on their system and not specifics. Again they were most helpful and the process lasted 23 minutes. Given the new development I have e mailed Amazon this evening and await a response! Will keep you posted.
Best wishes
Phil
Hi All
Having embarked on the ITIN route, thought a quick update might be interesting. I posted my passport from the UK on 14th January; the envelope was signed for in Austin, Texas on 22nd January. I have heard nothing to date however the 6 week window for processing is due to end 25th February so there is still time.
Just to reiterate the background to my comments on this thread, all of the income generated by sales of my book will go to a charity so I am keen to make every penny count. I cannot create a business around this project so the EIN route is not applicable. In terms of losing my passport, the worst that can happen is I have to apply for another one! Further updates as they happen.
Best wishes
Phil
Thanks for the update, Phil – looking forward to the next instalment!
UPDATE:
I goy my EIN painlessly after taking your advice. Thank you very much Karen. And it didn’t take very long either, 10 minutes.
To save all the hassle of trying to get an ITIN, could you just submit the W7-Ben form and accept the 30% taken out of your royalty? As I’m about to self-publish my first book I’m more concerned with getting anyone to buy it in the UK.
Also handing over my passport is a no-no.
Hi Kevin
You could just accept the tax cut and do nothing as far as I know – but if things take off there are deadlines for claiming it back later on I believe. Getting an EIN as a sole trader is so simple I’d equally ask why not do that – though you may think that registering as self-employed is too much hassle…as it does mean you’d need to complete a tax return each year… etc (see my other tax post for UK authors on this)
I suppose I didn’t identify with being an EIN as an independent author with no business name. Could I still go for an EIN?
I am trying to decide what to do…I am an American expat living in UK. Am going to self publish a book this spring via Kindle/Amazon and POD. I have a dormant wee publishing company in the USA I planned to use as the “publisher” and to use my American bank account as the place for sales funds to go with Amazon. I file a tax return in the USA and also in the UK but my part time PAYE job is in the UK where I live. My reason for using the American company to self publish is it is already set up, more an emotional choice than anything else. Is there anyone else in this situation here who is working/living in UK but planning to publish “in USA” (it’s all virtual w/ ebooks anyway)? I am wondering if there is any benefit to doing it either way, that is, should I instead publish “in the UK”? Completely confused on this. If I publish in USA and deal w/ the taxes there, do I need to also report any book sales income in the UK? I suppose only if somone on here is in a similar cross-pond situation can they offer advice or what they are doing…I can’t really afford to hire an accountant to advise me unfortunately. Most interesting and helpful blog by the way!
Hi Michelle – I can certainly point you in the right direction to read up on this as a starting point as I commissioned a lot of plain English guidance for HMRC on tax a few years ago (I should add that I am *not* a tax expert, but have written a lot on it – the guidance I oversaw that the links below go to was checked & signed off by HMRC subject matter experts. I can’t guarantee it’s still up to date as a lot of info was moved across to gov.uk recently but Id be surprised if it wasn’t..).
Here is a link on paying tax on foreign income if you are resident in the UK for tax purposes but domiciled abroad – which I am guessing applies to you? I think you need to choose how your overseas income is taxed – on the arising or remittance basis… but I imagine you must know about this already for your other income? Those terms are explained in the info here http://bit.ly/1b8HOHm and here http://www.hmrc.gov.uk/international/res-dom.htm – There is also info about double taxation agreements here (which explains how to ensure you don’t pay tax in both countries) : http://www.hmrc.gov.uk/international/dta-claim.htm
I think it’s a wider question of how you choose to be taxed generally on your US income. To be honest it feels like a question for a tax lawyer! What HMRC may be able to do is simply tell you how to declare you tax if you decide to take royalties in the US instead of here… ?
Great information – just got my EIN on the phone in 5 minutes…
(001 267 941 1009)
Congrats 🙂
I called the number on the General Instructions sheet that comes with form W-7, from the UK 00-1-267-941-1000. I am not sure where this is but assume it was the Texas office of the IRS. I waited for about 20 minutes before the call was answered but the person on the other end appeared to have good knowledge of the ITIN procedure. I get the impression that she could have transferred the call to an ‘expert’ if required. My telephone package at home is such that the call was free from my land line, a cheap option would be Skype but you have to buy a minimum of £10 credit which equates to 9 hours of call time to the USA!
The bottom line is that I posted my passport and forms off today to
Internal Revenue Service
Austin Service Center
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342
using International Signed for from the post office. The envelope weighed 54 grams and the cost was £7.78 providing a signature on delivery, tracking and £500 of compensation – more than enough to get a new passport if it all goes wrong.
General Instructions
Click to access iw7.pdf
Form W-7
Click to access fw7.pdf
Fingers crossed!
Best wishes
Phil
Thanks, Phil – that’s really useful for anyone here in the UK going for an ITIN to know. As you say earlier, because all of your proceeds from the book sale are going to charity it doesn’t make any sense to count yourself as a sole trader for the purposes of the book sales.
Hi Karen, thought I would share this following a phone call with the IRS this evening. It’s worth saying they were really helpful and patient considering the daft questions I was asking.
I am applying for an ITIN and sending my passport to the IRS office in Texas with form W-7 and the Amazon letter confirming I will be receiving royalties as a non-US citizen. My concern was getting my passport back but the IRS do return original documents via mail at no cost. They were happy to check other details on the form to make sure I had completed it correctly. Overall, a pleasant experience that provided the comfort I needed re the return of my passport.
I know this is not strictly linked to the subject of your thread but hope it might help others.
Best wishes
Phil
That is really useful to know, Phil. For others’ benefit, which office did you call? (Which phone number?) and was it hard to get through? Karen
No problem, appreciate your posts. Best wishes, Phil
Thanks for the reply Karen. I guess my situation is a little different in that all of the income from sales goes to a charity so I don’t think a sole trader would be appropriate. Given that I won’t be travelling anywhere in the short term I figured I could take the risk on the old passport! Best wishes, Phil
Ah – that makes sense, Phil! Do check out what those other blogs say – I’m pretty sure a certified copy of your driving license will suffice… Sorry I can’t be of more help on the detail for ITINs. K
No Phil I haven’t – I have an EIN. Also I personally wouldn’t dream of sending my Passport to the US! I’d suggest you read the blog post I link to above – and all the comments below it if this is the route you are taking: I think they may accept a driving license now or something. (And if sending passports I expect they would use Diplomatic Bags between the US embassy and the US etc but what do I know!) But why not apply for an EIN as a sole trader (read the detail above about what this means and my related post on Tax on royalties if you’re a UK author. If your sales are small you can claim the exception to paying NI etc.) Another blog to look at if you think you will go the ITIN route is Catherine Howard’s one here >> http://catherineryanhoward.com/2012/02/24/non-us-self-publisher-tax-issues-dont-need-to-be-taxing She has more on ITINs than I do. Good luck! Karen
Hi Karen
Great post, thank you. I am struggling with one very simple thing around applying for an ITIN, it concerns getting my passport back from Texas. From what I have read, I cannot see that the IRS will not post my passport back to the UK, if fact, it clearly says that it will return it the address on the form but I can’t quite believe they will foot the bill for the international postage?
I was wondering if you had any experience of this? Apart from that, everything else seems staright forward, just time-consuming!
Many thanks
Phil
Hi, Karen. I just wanted to say thank you for this post. I phoned the IRS yesterday (missed the part about calling at 11AM, but nevermind!) and after a long wait on hold had my EIN after a ten minute discussion with a very helpful advisor. This post has been a godsend and I am deeply grateful to you. Thanks again 🙂
Hi Jacob – glad it worked! Happy New Year! Karen
My pleasure. I hope it helped.
Thanks a lot for your explanations. It’s been very useful to me.
Hi Karen, thank you very much for taking the time to post all of this information. I rang this morning and obtained my EIN just as you described. Best regards. Michael
Glad it worked 🙂 I think calling early in their day helps too.
Just followed this guide for an EIN…. was done in 20 minutes. Painless. HMRC could learn a lot.
P.S Thank you so much for the guide, you’re a star!
My pleasure, Pete! Really glad it worked. BTW if you have friends with iPads and little ones please do share the link to my app! It’s early marketing days and every little helps! 🙂 Otherwise the books are great as Christmas gifts for slightly older children. I don’t normally promote my books in my posts here but seeing as it’s Black Friday…. why not? 😉
Thanks Karen – thanks to your instructions that was a breeze.
They did ask incorporation date and an early call (11 am UK time) went straight through.
Great – glad it worked for you 🙂
Hi Karen,
I just wanted to thank you for this brilliant page of advice. It’s people like you, sharing things like this, that make me love the power of the internet!
I’m a UK artist but selling work via Saatchi Online in the US, and their instructions were not helpful at all. Not sure why they can’t make it clear that if you’re a Sole Trader in the UK you require an EIN not an ITIN.
Thanks to you I just called the IRS and am now in possession of my EIN!
Best wishes,
Sarah-Jane Muskett
http://www.sarahjanemuskett.co.uk
Really glad to be of help, Sarah! Best of luck with your sales! Karen
Congrats, Celia! Glad to be of help 🙂
Thank you so much! Really appreciate this helpful information. Thanks to you – just got my EIN number!
Hi there – I may publish a book on self-publishing at some stage. (In fact I recently turned down a commission from a major UK publishing house to do just that :-).) Sorry I thought you were based in the UK but it sounds as if not. For info I use CreateSpace in the USA and Lightening Source UK here in the UK – and my books have the same ISBN for both. In addition I use my limited company’s EIN for both. However Lightening Source UK would also have accepted me as a sole trader (with an EIN) if that had been my business set. I double checked that with them at one point because something I had read made me believe that you had to be a limited company to use them.
Hi Karen,
Thank you very much. Your comments are very helpful.
I have a limited company, and I plan to get an EIN number for that company (not as a sole trader). The question is if I use that EIN number, can I use my personal account to transfer money from Createspace? Or must I provide the company account, which creates extra troubles for me?
Regards,
Hi – I think you need to use your company account as the payment will be made out in their name (it will match the company name on the IRS tax forms you completed I am pretty sure?) It is all done electronically so there is no hassle. To be honest I’m unsure why you would want to register as a business and then get the royalties paid elsewhere! But you could get them paid to your personal account if you have registered as a sole trader rather than a limited company. If a sole trader you would need to notify HMRC – see my other tax post about this. Good luck!
Thank you Karen; it seems that you are becoming an expert. May be you publish an ebook on this subject one day . 🙂
You are right that if I use my personal name, things would be much easier. However, in addition to CreateSpace, I plan to use LightningSource.com, which has some advantages, with same the ISBN, EIN, etc. So I thought LS may require “a company” as a must, and I wrote them to make things clear.
A very helpful “Sales Representative” replied:
“I can confirm that to setup a US Lightning Source account, you cannot use an EIN if you are a sole proprietorship – a US social security number is required. So if you have an EIN for a corporation, you would need to use that.”
(PS: If you are in UK, you can directly use LS UK)
Regards,
One piece of advice: it’s worth calling early in the morning US time! They open at 6am, which is 11am UK time. Calling later in the day can take a very long time indeed: I spent three sessions of over 1 hour each trying to get through. When I called at 11, it took 2 minutes. Apparently, they get only a couple of calls between 6 and 7.
Thanks for the tip – I’ve been meaning to update the blog and will do so. I had heard that calling at 12 was good but perhaps it’s 11? (Though maybe that will change where our clocks change!)
Blog updated 🙂
Just found this—and saved myself a lot of headache and time wasted. Thank you very much indeed!
Hi Karen,
Thanks for the ‘Luck’, your time and the information. I will check out with the Indian authors as per your advice.
Warm Regards.
Having read your excellent article on the key steps to claim reduced or no US tax withholding, it seems that getting an EIN is far easier than an ITIN. I have recently registered with HMRC as a self-employed sole-trader. Could I apply for an EIN number rather than ITIN? (Although I’m slightly alarmed at the thought of having to phone a call centre in America…)
Hi Jill
Yes – follow the steps above – and call them at around midday our time as that is 7am their time when they open and you may have to hold for less time.
Good luck!
Karen
Hi Karen,
I have a couple of follow-up questions regarding this. I am due to visit the USA in December – would it be cheaper/easier to call them from there? (Could be, though, that hotel rates are no cheaper than a call from the UK…?!) Also, looking at your excellent instructions above, I wondered if the part where you say ” When you call, make it clear that you are the owner/director of the business” could lead me into difficulties, since I am a sole-trader (not a director of a Limited Company) seeking an EIN not an ITIN.
Best regards, Jill
By the way you can create a link to any of your website on “Karen Inglis” at the top right side of the page – ‘practical tips from Karen Inglis’
Hope, my suggestion was useful.
Warm Regards.
Ah – thanks! I’ll check out how to do that!
Hi Karen,
I am from India, I would require my passport within 60 days from the day I write to you. If I send my passport to American Embassy for ITIN it will be returned within 60 days. However, there can be uncalled-for delays.
So how do I go about towards completing the taxi information requirement at KDP?
I appreciate you willingness to guide people through your website and I hope it would be helpful to many like myself.
Hi Jai
I can only speak for the process here in the UK I’m afraid when it comes to getting an ITIN – and you will see that I’m not very familiar with that side of things as I have an EIN!
In terms of any waiting period, you can still publish through KDP before you get a tax number but they will deduct any withholding tax due on US sales you make until you send it to them.
Here in the UK I think it’s simpler to register as self-employed for any writing purposes and then apply by phone to the USA for an EIN, which is much quicker. It may be worth checking whether there is an equivalent tax status for writers in India – ie where you count it as a business activity.
I hope this helps.
Karen
Hi Karen,
Thanks for the reply, there is no equivalent of EIN in India as per my search on the internet. We have PAN (permanent account number) but that doesn’t fit the bill for IRS.
Anyway I have submitted my piece of work to KDP, when I will have my passport available for more than 60 days, I will apply for ITIN.
Hi Jai
You don’t have to give the IRS any tax number from your country. But you do have to confirm that you are operating as a sole trader business or company. If you are saying there is no tax status for sole trader businesses (as opposed to individuals) in India then I guess the ITIN is your only route. Why not check with some other Indian authors though? Good luck! Karen
Thank you for this advice, I’ll look into it and find out what is going on.
Best regards,
Joy
As far as I know, you don’t have to have sent in the tax form in order to publish – it’s just that if you don’t send it you will find that they do deduct tax. (Some authors choose not to bother and just take the tax cut…). The moment of truth will be when you get your first sales report. If you see that they have taken off tax then it means they have not received your form – at which point I would contact them. But fingers crossed they will have it by now… Best wishes. Karen
Thanks for all your help. In the end because I could not get anyone to respond to my questions, I simply tried to upload my 2 draft books in Kindle to ‘Publish’ -and it worked. There were no problems and all I had to do was tick a few boxed and set the price.
So I guess my tax information is now on record, as previously when I tried this tactic it did not work. -Gosh one would actually hope for some kind of response from Amazon to say the book could now be uploaded, but then maybe because it is a do-it-yourself site, this includes checking up yourself to see if your tax status has been cleared.
Best wishes,
Joy
Hi Joy
Why not contact customer services at Amazon via CreateSpace or KDP (depending on whether you are selling in print and/or ebook) using the Contact us’ buttons within the dashboard and ask if they can see whether the tax status has changed?
I don’t exactly recall whether I received a letter or not – but from a quick look in my file I can’t see one. I think it was more a matter of finding that my royalties did not have tax deducted from them once I started making sales. (I got my EIN right at the start – therefore wasn’t due a refund because I had not yet made any sales.) You could also ask on the CreateSpace or KDP forums how long it took. If you’ve not made any sales yet it may be that the only way you will find out (unless you contact them as I have suggested) is when you see your first sales report and whether tax has been deducted or not.
Good luck either way. If anyone else reading this knows whether they send an acknowledgement please do leave a note.
K
I live in South Africa and I’ve filled in and posted the tax form to Amazon, but its been almost 3 weeks now and I’ve heard nothing from them. What do you suggest I do now?
Joy
Glad it worked 🙂
Hi Karen,
many thanks for your tip, you were right! I actually got through just after midday – very quickly!
Unfortunately after 25 minutes on the phone (I was out and about and called from my mobile, they experienced difficulties with their system) I got cut off!
But called back again earlier on, after 25 minutes waiting it took me less than 10 minutes to get my EIN. At last. : )
Many thanks again!
Best wishes
Sandra
(Auturgy Investigations)
Hello Karen,
What a great and informative post. When I was in publishing stages I was very confused to begin with and about to go the the AE in London to get help with an ITIN when I came across your article.
I am still employed but also a sole trader (started my business) and it seems I can spare myself the hassle to go to the AE. (Getting through by phone, if only for advice, is almost impossible.)
I am calling the IRS international to get an EIN instead! Which is fantastic.
I am new to all this, my eBook has just been published via booktango. I can’t tell you how grateful I am for you help, your article is written so well, believe me, I am not good when it comes to tax forms. You helped me understand it a lot better!
Many thanks again,
My best wishes,
Sandra Seidel
(“Missing you: finding your lost one in the U.K”)
Hi Sandra
I’m glad it helped. Good luck getting your EIN! I read a tip the other day that they open at 7am EST, so the best time to phone from the UK is at just after midday. That way you’ll have a shorter wait on the line (as more people have found out about the phone method I think the wait can be longer if you call later in the day…)
Best wishes,
Karen
Thank you for this, very helpful! Living in Germany I’m going to have to fight with the tax forms they need in Texas soon, too. =)
Hi Joy
There are two links higher up the page to a blank certificate – see the sixth bullet point under each of the main sections. The link text says “Download and complete form W8-BEN (PDF)” The form is dated 2006 but it’s still up to date (or at least it was when I last checked a couple of months ago….ie it’s the right one.
Good luck with the rest of it! I’m afraid I can’t help with the question of bank numbers!
Karen
Hi, I am presently trying to load my first book on to Kindle. Everything went just fine until I tried to complete the banking details. I live in South Africa and our banks us a SWIFT code of 11 letters, so the system rejected this and said I could only enter numbers. Then I found that I needed to complete a W-BBEN certificate, but I can only download the ‘example copy’ and not a blank copy to fill in. Amazon are sending me in cirles over this and I’m not getting anywhere.
Is there any way that you can help me with this please?
Presently I’d rather pay a higher witholding tax rate than deal with the South African Revenue Service, which is corrupt to the core. -We recently had a huge debacle when we tried to get a tax clearance, even though they owed us money. Between us my husband and I spent days standing in queues there, simply being pushed from pillar to post. This is why we would prefer to keep away from any dealings with SA Gov. Dept. and rather pay the higher witholding rate to the US.
This is probably hard to understand, but believe me it is easer this way.
I loaded a novel onto Kobo recently using the SA SWIFT code from my bank and had no trouble at all, but I’d also like to load some Kindle Single stories onto Kindle, so this is why I’m trying to get through the Amazon paper trail.
Please if you know how i CAN OBTAIN A BLANK W-BBEN CERTIFICATE, please advise me.
Thank you,
Joy Bassetti Kruger
(My Kobo novel is called – Get Behind Me Shadow).
Using the helpful info here, I rang the IRS just now and got an EIN for my UK sole trader in only a few minutes. (That’s not counting a number of we’re-too-busy-goodbye automated messages, then more than a half-hour wait once I managed to get into the queue – but by the standards of large government agencies that’s wonderfully efficient.) Many thanks!
Glad it worked for you, Rolf! The queuing is a bother but one worth putting up with I guess…! It wasn’t so long when I did mine as I think far fewer people knew about this method! Karen
Hi Darren – really sorry I missed replying to this…. On my form I ticked ‘corporation’ and then ‘a’ (and inserted ‘United Kingdom’ in the gap), b and c –
HOWEVER, after I had sent mine off, the US Embassy (which was replying to a query I had sent them by fax) did fax me back a dummy filled out where they had ticked ‘corporation’ and then just ticked ‘a’ and ‘b’ – and not ‘c’. However I only received that after submitting mine with all three ticked. So I think you could probably do either!
Hello Kareninglis, I live in Dominican Republic and I almost sure that there is no tax teatry between my country and USA. What happen in that case? Thanks a lot in avance.
Hi,
I’m pretty sure that if there is no tax treaty then the USA will deduct 30% witholding tax which you won’t be able to reclaim. But the quickest way to check is for you to call the tax office (or the American embassy) in your country – or ask an accountant if you know one! Sorry I can’t be of more help, but do check as I may have this wrong.
CreateSpace has sent me an email where they say:
«You will have to be complete the W-7 and file a W-8 BEN with us in order to avoid the international tax on your royalties.»
So it seems the form W-8 BEN is the key and it guarantees no taxes on my royalties, independent if there is a tax treaty or not…
Thanks for your help.
Sorry – that reply got cut off – I was going to say that you don’t supply your tax code to the IRS, just the name of your business – and if they are same I wondered if in practice it would make any material difference from the IRS’s perspective – b/c the form they send at the end of the tax year simply confirms that no tax was deducted from your business. But Darren it sounds as if you need to re-apply. To be honest I don’t think KDP will be able to advise you – they will only refer you to the IRS. You may have luck calling the US embassy number here in the UK – cheaper than calling the USA? Good luck!
Thanks Karen. Re-applying sounds the easiest way to go.
Hi Karen,
I’ve reapplied and got my EIN number – phew.
My next point of confusion is the W-8BEN form. I now have a limited company in the UK but I’m not sure if I should be ticking corporation or individual in Pt1 #3.
I’m unsure of the definitions of the terms in this case.
In part II #9 you suggest ticking a b and c in a comment earlier, is this still the case?
Thanks,
Darren
Hi – sorry to butt in here, but I would have thought that as a limited company you will have a different tax code than if you are a sole trader. Won’t that make a difference? I could be completely wrong, but I think the method of taxation is quite different. In which case, I would think you would have to reapply. But it is just a guess – don’t take my word for it.
Rachel
Thanks, Rachel
Absolutely right that in the uk you will have a different tax code. Buy I’ve not seen this quoted on the
Sent from my iPhone
Thanks Karen and Rachel,
The new trading name is very different to mine. It looks like I might need to reapply, but I’ll contact Amazon kdp and see if they have any ideas, then I’ll see what the IRS have to say,
Thanks Again,
Darren
Hi Darren – hmm – not sure to be honest. My instinct is if the payments you get from royalties are going to be made out to a different name than before then you will need to. But if your company name is basically the same as your sole trader name (or your company is ‘trading as’ in the same name as before minus the word Limited) then it’s probably not worth the hassle of re-applying as the IRS will send the same confirmation details once a year about tax not having been deducted as before…? I suppose you could try calling the IRS number to ask them – they may be able to change to the company name? (Though I understand there’s quite a long waiting time these days…) In short not sure! Sorry I can’t be of more help! You could also try calling the US embassy helpline here in the uk….
Hi Karen,
Thank you so much for the advice. I found the process applying as a sole trader really straightforward – but only because I followed your advice step by step – it was excellent.
I do have a question now though.
I’ve just incorporated my business, do I need to reapply for a new EIN and send off a new W8-BEN form or should I just be contacting someone to just change my details?
Thanks again,
Darren
(Lancaster, UK)
Hi Eva – congratulations on getting your EIN! I remember the feeling of achievement when I got mine! No you don’t need to wait for any paperwork before sending off your EIN. However one thing to be aware of when you complete the W8-BEN, if you have applied as a sole trader (not a company) only tick boxes 9a and 9b at Part II. Someone in the Alliance of Independent Authors reported this week that Amazon rejected their W8-BEN because they had accidentally also ticked box 9c when they are not a company. When I look back at my W8-BEN I see that I did tick box 9c, but I applied as a limited company. However (not wishing to confuse matters….) some time later I received a reply to an earlier query I had sent the US Embassy here in the UK about form filling and they sent me back a mock filled-in W8-BEN on which they had shown me entered as a corporation but had still not ticked 9c in part II. However I think that was a mistake on their part – I’ve just done a quick Google and all the advice I have found suggests that if you are a company you should tick box 9c, which is what I did. ( If you are applying as a company you might want to find out the firm answer to this question before you post your form… perhaps by calling the US embassy here if you can get through. I will try to do so myself next week and will update this blog, but not sure how easy it will be to get through….!) If you are in the UK then at question 10 you can enter “12” next to Article and “0” in the next space which refers to the withholding rate of tax. Next to ‘type of income’ you can enter ‘Royalties’. All of this info is on the sample sent to me by the US Embassy. I left question 10 blank but have seen advice elsewhere that suggests that you can enter next to q 10 (Explain the reasons…) as follows: “Beneficial Owner is a resident of the United Kingdom.” (NB don’t abbreviate to UK.) Hope this helps..
Thank you for such a comprehensive (and swift) reply. Much appreciated. I’ll complete section 10 as you suggest. I am a sole trader, so I presume I just tick (a) and (b) – the examples on the Amazon help page is a tad confusing!
I would never have gone the easy EIN route if it hadn’t been for your fabulous advice – so thanks again.
Hi Karen
Just got off the phone to the nice lady at the IRS. Thanks so much for explaining how to get an EIN. Quick question: do I have to wait for the paperwork to arrive from the IRS before I complete and post my W8-BEN to Amazon? As I’ve already got my EIN, I’m thinking I could send it off straightaway. What did you do? (if you can remember – must have been a while ago now!)
Thanks again
Eva
Hi Karen, quick question, regarding whether it is better for me to get an EIN or an ITIN. I own my own company too. I spoke to my accountant yesterday and he said have Amazon put the money in my personal account and then declare it on a self assessment at the end of the year (reason being I am contracting at the moment, if I get a permanent job then I’d probably close the company).
I wonder then whether I should apply for an EIN or an ITIN?
On the SS4 application for an EIN it says ‘For use by… certain individuals’, I take it that would include company directors. Ultimately the US IRS or Amazon don’t care whether it goes into my business account or my personal account, they just need a number and don’t care how I declare it back in the UK.
Getting an EIN seems a lot more straight forward than an ITIN, I just want to get on and put my book up and not wait eight weeks for all this…
Any advice greatly appreciated.
Thanks
Farhan
(London)
Hi Farhan
I am not a tax adviser but as far as I understand it if you have a book that you have written that will generate royalties for you (hopefully!) (alongside your paid permanent job should you get that) then you are technically self-employed as an author/publisher for that royalties element of your work and so would / could still use an EIN – and would need to register as self employed with HMRC. (You can be employed and self-employed at the same time). Take a look at my related post on declaring tax on UK royalty income if you are a UK author – there’s a link to it at the end of my article here or you will see it in the main navigation area. Your accountant will know all of this though!) I can’t say whether it’s is more cost effective to run your book through a limited company or via self-employment though! Your accountant would need to talk you through that! Either way EIN feels the right choice I would say 🙂
Karen, I have a publisher for an app on Apple’s App Store. This was brilliant advice for me and I struggled to find such a simple yet thorough explanation. The publisher insisted I needed an ITIN but, operating as a limited company, I actually needed the EIN and got it within 30 minutes. I just wanted to say thanks for the article.
Happy to be of service 🙂 Anything to make tax less taxing!!
I’m just on the verge of self-publishing my first book (though I’ve been a writer for a while). Though the process looks ever more and more daunting as I go into it in more detail, I’m also finding that there’s a real sense of community out there, with people like yourself who offer help and guidance to poor, clueless newcomers like myself.
Thank you!
No problem, Paul. And do check out the Alliance of Independent Authors – see the link at the top of the page. They didn’t exist when I started my journey but are well worth joining for the community and have a great closed FB page where authors chat through issues they are having. Karen
Thanks Karen, I’ll give them a look! Sorry I’m a little late, still getting used to the way the ‘comments’ function works on here.
What about individuals. I am not a business owner but want to publish ebooks on Amazon under my own name. Will I need to apply for an EIN?
Hi Raj, Sorry I have taken so long to reply on this. In theory if you are publishing to earn a profit then I think that under HMRC tax rules you are effectively setting up a sole trader (self-employed) and should register with them as that. You can do that by phone. But it does mean that you have to complete a tax return each year and pay Class 2 National Insurance (and Class 4 NI if your profits exceed a certain amount). Why not call the HMRC self employed helpline and ask them at what point you would need to register? To my mind it would only make sense to do this once you know you are making an income – so if you don’t have a tax number to start with it may not matter…. I’m a member of the Alliance of Independent Authors, as you will see from the links at the top of this page. One of the authors there made this comment recently on our closed Facebook page (and this seems to back up what I have just said – so just ‘pick your moment seems’ the best advice!):
I hope this helps and apologies again for the late reply,
Karen
Karen, thank you so much for this. I’ve been looking for the last couple of hours for clear information about getting a US tax ID etc (having read your blog, I need a EIN). I feel so relieved to have found what I was looking for here. Thanks also to Karl for the contact info – very useful.
I first applied for my ITIN in December 2010, and after 4 months it was rejected with no reason given. I applied again and had the same result. In January 2012 I sent my passport special delivery to the American Embassy in London who then sent a letter back saying they have authenticated it and passed it to the IRS is Texas, and that I’d have to wait 12 weeks for the ITIN, this was 23rd May. It’s now 13th October, and nearly two years after originally sending everything off, I’m still waiting for the ITIN. I’ve phoned the AE in London a few times and have been put on hold for well over an hour each time, nobody even comes to the phone to say anything, no mention of where I am in the massive cue.
I cannot see a way of emailing either the IRS in America or the Embassy in London, writing doesn’t get a reply in five months, and phoning them is useless as I’m not a business, so an EIN isn’t the correct thing to ask for.
Any advice?
Dan
Hi Dan – your experience sounds awful. I’m afraid I can’t advise as I went the EIN route. I read the other day that they are now changing the system and sending off passports to the States – which I find incredible. Is that what has happened in your case? I think if I were you I’d go to the US Embassy in person if necessary if they had my passport for so long (but check days/times and get there ridiculously early!). If they don’t have your passport now or if you get it back and still no ITIN one thought is if you register as self-employed and then apply for an EIN – I suggest this as have heard that EINs are also available for sole traders and it’s something I’ve been meaning to check out. Your note here has reminded me on this. I will call the US IRS this week and ask specifically about this as it was my impression from their forms that you needed to be a limited company, but that may not be right. The only thing about registering as self-employed here in the UK is that you will then need to pay Class 2 National Insurance and complete a Self Assessment tax return each year – which may be more hassle than it’s worth. I guess it depends what level of royalties you are getting. I’ll post an update on the sole trader thing in the next week or so but if anyone reading is a sole trader and knows the answer, please speak up. K
Brilliant advice, Karen, many thanks.
I am handling this process for my husband, a self-employed writer. Went through hours of being on hold to US Embassy and the US helpline whilst pursuing the ITIN route. Finally got through to the US Embassy in London on Monday (after it rang and rang and rang…) and was given very specific instructions on how to apply for the ITIN. Husband has dual citizenship, so we could easily send his spare passport, but I was also enquiring on behalf of an artist with only one passport, and the Embassy informed me that as long as the passport is an official copy with an APOSTILLE (e.g., not an ordinary notarised copy), it would be accepted by the IRS.
After all this malarkey, we have discovered the EIN route, and will put it to the test tomorrow, when my husband can call the number as soon as the line opens. If that works, we’ll be overjoyed, because it should mean he gets paid by the publisher much sooner than we thought (about 3 months sooner). And the artist will save the time and money involved in getting an apostille.
Thanks again!
Lisa
Good luck with it, Lisa. And remember if your husband goes the Sole Trader route to register as self-employed with HMRC. There’s more info on that in my other post https://kareninglis.wordpress.com/paying-uk-income-tax-on-book-royalties-uk-authors (“Paying UK Income Tax on book royalties – UK authors”)
Glad it helped, Karl! K
Hi Karl – no you don’t. I had this confirmed to me on the phone when I asked at the time I got my EIN and have just seen my ‘note to self’ that confirms this in the relevant file. Subsequently – around the end of the tax year (US or UK, I can’t remember which…) – I received a one-page form/notification from the IRS which confirmed my US tax details but said that no tax return was expected. (I just tried to hunt that out to see if there was/is a form number, but can’t lay my hands on it at the moment! My filing system is clearly not as efficient as I had thought it was!)
If you use the telephone route to get your EIN suggest you ask for your peace of mind. I had read somewhere – or had seen someone ask about it – which is why I asked.
I hope this helps, but worth checking direct too! Karen
Thanks for the reply. I got my EIN by phone to the US yesterday. I was going to head, on foot, for the US embassy in London but rang the IRS office there and all i got was recorded messages. A waste of time. I glad I got your webpage.
Your advice on filling in the SS-4 form beforehand was a good idea, as the guy on the phone was looking at the boxes yesterday and I could follow it as I wrote out the form beforehand. I nearly made a mistake on Option 10 of the SS-4. It should just this – “Compliance with IRS withholding regulations”. I first ticked the option – “Starting a new Business” which NOT correct.
The W8-BEN form advice is a great help too.
For a UK Limited Company you need an EIN.
To get a EIN number from the IRS in the USA Phone: 001267 9411099 or 001267 99411329.
Hope this helps other too.
That may be correct for an individual but if you hold a Partnership in your country then you will need to complete Form 1065. So in some situations, yes you will need to file a US return.
Thanks for that extra info Paula – I’ve not had anyone posting here who is in a Partnership but that’s interesting to know. I wonder why they would single out UK partnerships like that – seems odd!
Karen,
Will you have to file a return to the US IRS? Even if it’s a no tax requirement thay may still want one?
Thanks. Karl.
Glad to be of help, Cathy. I love your hub page by the way (not that I’m sure what a hub page is!) Karen
I am soon publishing my first poetry collection and I had no clue about how to do this. Happily, you have explained it all wonderfully. Glad I am a member of Linked In as I saw this link to this excellent feature about Tax on US Royalties. Many thanks again.
Hi Elle – I am afraid that I don’t know the answer to this…! But if you call the US Embassy in Spain and ask to speak to a tax adviser they may be able to tell you? (Or I assume that any Spanish accountant would know?). Or if you are using a publisher could they find out for you? Sorry I can’t be of more help…. I did just have a quick look at the tax treaty tables but couldn’t really follow what they were telling me!
Good luck!
Karen
Hi Karen,
Thanks for this post. I have a problem I hope you could help me with (or point me into the right direction); according to the tax treaty between my country (Spain) and the US, I should pay 10% taxes to the US. After I got an ITIN and filed the proper papers with my publishers, they stopped withholding the 30% they had been withholding. At the moment, they aren’t withholding any money from my checks, so my question is; how do I pay this 10% if I’m not a US resident and I don’t have a US bank account? Thank you very much for your time. Elena
There’s a useful article on the Amazon website Elle at: https://kdp.amazon.com/self-publishing/help?topicId=A1VDYJ32T5D3U4
It would appear that your publishers should still be withholding US tax from your royalties but, because there is a tax treaty between Spain and the US, they should be withholding tax at the reduced rate specified by the treaty.
You may be able to claim a refund of US tax withheld but, if not, the tax treaty will allow you to set the US tax withheld against your liability to Spanish tax.
I think you will have to file a US tax return to claim a refund or pay any tax due for periods before you had your ITIN or when the withholding tax has been dealt with incorrectly.
Thanks, Nick! Hope you are well! Karen
I know this is an old post but thought I’d post it in case it helps others. This site gives the steps to set up a virtual US bank account: http://americanbenefit.weebly.com/get-paid-into-a-us-account.html
Thanks for this – I’m not sure it’s relevant to this particular post but will leave it here just in case it is. Amazon will pay into your account in your own country so I’m not sure why you might need a virtual account for the US? However there may be something I’ve not thought of! Beware the fees with this though if deciding to use it…
Hi Karen – I tried emailing you as you suggested, but perhaps it didn’t get through (or perhaps you are on holiday?). The weather here is so hot it’s unbearable, to be honest. But I would still LOVE a guest post from you, if you have the time. My email is rachel@rachel-abbott.com, and I’d love to hear from you.
You’ve just saved me a load of heartache here! I was puzzling about how I was going to fill in the ITIN as my royalties are paid to my company, with the further complication that I live in Italy. But this is a huge help, and it sounds so much simpler! thanks for taking the time and trouble to explain it so well. Would you be interested in either doing a guest blog for my indie author readers on the subject?
Hi Rachel
So glad you found it helpful! I remember at the time what a pain it was trying to find out how to do this and I discovered this method by reading the small print on the IRS website as I recall…. Once I made the call I coudn’t believe how quick it was to do! I’d be very happy to do a guest post on it… see my contact details on the contact page to get in touch….. I’m busy in the day job during the week so will be more likely to reply at the weekend…. I trust that you’re having better weather over in Italy than we are here!
So helpful, many thanks!!
My pleasure, Jen! Karen
That’s really informative – thank you!
I want to give all the proceeds from my book to charity. The proceeds from US sales on Kindle are already set up to go to a charity in the States to avoid bank charges with cheques in dollars etc. Can I do the same with sales on CreateSpace? Is there a facility for the charity to get the 30% tax back, the way gift aid works in the States?
Hello there – I’m afraid that I have no idea. However, CreateSpace is really helpful – if you email their contact team they generally reply within a business day. Otherwise why not try asking in the CreateSpace Community Forum. You’ll find a link to it on my page about Print on demand. Everyone there is really helpful too.
Best of luck! Karen
Hi David – I don’t recall that – but I do remember getting something initially that made me double check if I had to send something in and I therefore asked my accountant – plus faxed the US embassy in London – I’ll check out the response over the next few days and leave another note…. Karen
Got my EIN – yay!
I also got a letter from the IRS saying I’d have to complete and return form 1065 by April 15th, 2013. Did you have to do that, too?
I have just received this request for a 1065 by April 15th 2018. Help what shall I do???
Glad you found it of use!
Thank you so much for writing this. I was really struggling to get my head around how to fill in the ITIN application form with my UK limited company information! This has really helped me.
My pleasure, Sally. Glad to help spare others unnecessary pain! It’s odd how much simpler it is if you’re a business…
Hi Karen, I have just completed the Tax Interview Form to register my books on Kindle and it was very easy to follow and well set out.
It also went through and was accepted by Amazon immediately and I was able to print a copy. Only thing I still have to do is enter a Bank to which any payments can be made and when they get back to me with this info. I’ll advise you.
The Tax Interview is something very new, but it can be found easily on the normal Kindle pages and also by clicking onto your account at top of the page and then moving down to find it. In the end you just click ‘send’ and off it goes.
Hi Karen and fellow self publishing authors
I have recently (March) published my children’s book ‘Cell Wars’ by A.Miles on Amazon. I wasn’t sure whether I was going to bother with getting an EIN number but after my first two forms failed to reach Createspace I thought fate was trying to tell me something. So before I sent off another W-8BEN form (updated one from http://www.irs.gov – just put W-8BEN in search bar and it comes up) I thought I would try getting the magic EIN number. I have read quite a few articles on this and most of the information on Karen’s site and others is still relevant but there were some differences which I will go through here.
I too phoned the number 001 267 941 1099 at 11 am our time. An automated machine picked up and went through the options to choose. You need option 1. (I had to listen to it a few times just to check). I then waited for about 5 mins. An American gentleman answered ( I had read all about strange accents and was a little concerned but all was straightforward, although I did feel he was very serious, so jokes are probably not the way to go!)
I told him I was the owner of the business, writing books and selling on Amazon and needed an EIN to comply with IRS witholding regulations. First he asked if I had the SS 4 form in front of me and then we went through it. I spelt out my name and address as required by the first few questions. He asked me question 7b and I replied EIN and then he went to question 9a. At first he wanted to put down ‘Sole proprietor’ but I said (after reading Karen’s comments) that I thought ‘Other’ and ‘self employed sole trader UK’ would be more relevant. He agreed with this. Question 10 is ‘compliance with IRS witholding regulations’. I thought this was it but he then asked me question 13 about employes. I told him I didn’t have any. He then asked me qu 17 (type of product) I said ‘Books’ and he added ‘royalties’ and finally qu 18 ‘No. Not had EIN number before’.
He then told me to hold the line and then came back with my magic EIN number. All in all 20 minutes on the phone and not as scary as I thought it would be!
I have also filled in the tax interview online form for Kindle (KDP) and that was very straightforward except make sure you put your name exactly as you gave it to the IRS. I put in a middle initial on the online form (as there was a box for it) and then couldn’t work out why my form wouldn’t work when I pressed submit.
Anyway I hope this helps and good luck!
Thanks for this, Amanda – really useful to have a recent update and the info on the Kindle form info too. I’ve not seen that as it was introduced after I got my EIN – I should look it out… Mind you, since you got your EIN number they have updated the W-8BEN form further and created a separate one for businesses (from end of March). I’ve left a note about that in the blog post in red.
Hi Karen,
I have just started dipping my toes in to setting up on KDP. I found your post super helpful and I just wanted to say thank you. Tax and things like it are basically incomprehensible to me and you made it far less of a stress. Thanks!
Hi Amanda – glad you found it useful! Karen
Thanks for this post Karen – it helps a lot! I was honestly so put off by the process for an individual that I was prepared to skip it and put up with a double-taxation (on a book that wouldn’t be making much to begin with). But since I’m also the technical publisher, I’ll apply as a business.