If you're a non-US author and you've noticed your royalty checks don't match your numbers online, it's most likely because a withholding tax has been implemented--30% on average. But there's a solution.
First, a non-US resident and DTP publisher/author does NOT need a US address or a US bank account. Amazon will mail you a check. I've been getting them for months and I'm in Canada.
However, Amazon will withhold approx. 30% of all earnings of non-US residents UNLESS authors have an ITIN, which you must get from the IRS.
For Canadian authors, this is how I did it:
1. I contacted an "Acceptance Agent" in my city. There's a list of Canadian Acceptance Agents (and US and International Acceptance Agents) on the IRS website.
2. I had Smashwords send me a letter stating I was selling my books through them. You need one letter only from one distributor, and when I asked Amazon they were completely uncooperative and refused to send me the letter.
3. I filled out the W-7 form at the Agent's office, he photocopied my passport and he sent these out along with the letter from Smashwords (who are aweseome about giving letters).
4. It took about 7 weeks before I got my letter from the IRS with my ITIN.
5. Now I must fill out the W-8BEN form and send one to each US distributor (Amazon, Smashwords etc). Once they process it (in about 3-4 weeks), I'll then start receiving 100% of my earnings and will pay tax on it in my country.
Smashwords has great instructions on all this on their site. I don't know why Amazon hasn't done the same. Smashwords also has links to all the forms and the address for sending the W-8BEN. Again, Amazon could take some pointers on customer service.
As per Smashwords, here are the important links you need:
- Request a letter for your W-7
- Download form W-8BEN
- Download W-8BEN Instructions
- Download form W-7
- Download W-7 Instructions
- Send us your completed W-8BEN
Is this a hassle? Most definitely. Especially since Amazon does nothing to assist its international publishers/authors.
Is it worth it? Yes. Why should 1/3 of my earnings be held back? I'm Canadian, I pay my taxes here.
Smashwords is fighting to have this hassle removed, and I support that. There's no reason for it. Amazon and Smashwords are acting as my distributor.
If you're Canadian and need assistance with this process, please email me via my website.
Amazon, I would be happy to work with you on a page for your Canadian & other non-US authors that would clearly and easily walk people through this process.
Does anyone know the correct mailing address for sending in the W-8BEN form to Amazon?
UPDATE:
After emailing Amazon's support, I finally received an answer.
"We need to receive a physical copy (paper form) of the W8 that contains a US tax id and that is signed in blue ink. Please put the supplier code/vendor code, vendor code: DUVNS in the upper right hand corner and then mail it to the below address. As soon as we receive it, we will update the account and reimburse withholding that has been deducted this year. Note: withholding can only be paid back in the current year it was deducted.
Amazon Digital Services
Attn: Vendor Maintenance
PO Box 80683
Seattle, WA 98108-0683
If you have further questions, please write back to us at dtp-support@amazon.com."
Please note that you may want to check to ensure that the "supplier code" is the same for everyone. I have no idea if it is or if it's linked to my account only. If you know the answer, please email me at cherylktardif (at) shaw.ca.
UPDATE 2: One writer reported to me that the supplier code was different than mine, so your best bet is to email DTP support and ask them.
UPDATE: May 18, 2011 -
- Createspace will send you the letter you need to get the ITIn rolling, if you sell your books via them.
- Smashwords has a Google Chrome bug that is preventing emails to go through to them via the customer support link at the top of Smashwords.com. If you've emailed them about this or any other matter and haven't heard back from them in 3-5 days, your email may never have reached them. They're working on this issue. In the meantime, try IE or another browser.
- From Mark Coker at Smashwords: "At Smashwords, authors request the letters through their payee profile at https://www.smashwords.com/account/payee. They can request the letter once their account balance reaches $10.00."
Cheryl Kaye Tardif
24 comments:
Thanks, appreciate the heads-up on your experiences. Dealing with governments and taxes is never fun...
My new book (fyi - http://www.amazon.com/dp/B004QS95SU ) is starting to get good volumes, so as the series rolls out I can see myself consulting this blog entry for help on the tax issue..
Thank you very much for this. I have a question though, I don't have an agent, could I just photocopy my passport myself and send the W7 with the smashwords letter directly to IRS?
Thank you very much!
Denise
http://www.denisewy.com
Hi Denise,
You can go through the process yourself, but trust me, it's easier if you have an acceptance agent do it for you. Acceptance agents are different from literary agents. My article has a link where you can find one. It's like hiring an income tax consultant--a one-shot thing.
The disadvantage to doing it on your own is that it takes much longer to process your ITIN. The IRS prefers when it's through an agent--less work for them, I guess. Also, if you do not fill out the form correctly, the IRS will deny you and you'll have to start all over.
I highly recommend you find a local acceptance agent and have him submit all your forms. :-)
Keith, you're very welcome. :-)
It appears that Smashwords has a little Google Chrome bug that is preventing anyone using this browser from sending emails via their customer support link at the top of Smashwords.com.
While they work at fixing this issue, if you've had no reply to an email sent to them via Chrome (especially if you're trying to request the letter you need to send the IRS), try using IE for your browser. Then resend your email to Smashwords. IE is working fine.
I'm also working on getting a contact name/email addy for someone at Smashwords who can help international authors with the letter they need for the IRS, to get the ITIN thing going.
Cheryl
One other note: your passport or ID must be notarized in a specific way to validate that you are who you say you are and so that no one can send in fake ID. Don't just photocopy it and mail it in.
The trick with this stuff is to read ALL the info several times and apply it; no missing lines, no signing in black ink when asked for blue, no thinking "that'll do".
If you are in the UK (and Ireland, I think - check) you can send all your paperwork and your passport Special Delivery to the IRS office in the London Embassy, or you can walk in and have it processed face-to-face, then they will deal on your behalf with the IRS in Austin, Txs.
Several countries have an IRS office attached to their embassy, or deal with European countries around them. Check their websites.
The UK site is http://london.usembassy.gov/irs/index.html
Thank you so much for this, and for your detailed and useful updates. I just called in at the IRS office of the embassy in London, with a letter from Createspace and my passport, and they did the rest. They even filled in the form for me with all the article treaty numbers.
Important point I didn't know - your passport copy has to be notarised by an American. They won't accept even officially notarised copies from any other source. But the US embassy will make a copy and notarise it without charging you - unlike some agencies.
Now I wait - but thank you for your painstaking research. And thank you, Linda Acaster, for pointing me here!
Hi dirtywhitecandy (lol),
Thanks for stopping by. Yes, IRS offices or embassies, I've been told, can notarize your passport. In Canada, an Acceptance Agent is also authorized to do this.
The embassies don't charge but you usually have to make an appointment and there could be a long wait. Something to keep in mind.
Thanks for letting me know how things work in London. Wait, is that London, Ontario, or London, UK? :-)
Thanks for pointing me to this blog. Great information!
I'll be launching my book in July so I will definitely be coming back here for advice.
One question, Do you have to get your ISBN number through Smashwords before they'll give you the letter? I've heard that once you get the ISBN through them and you take your book off Smashwords, you can't use the number. Is this true?
I have so much to learn still.
Hi Elena, I'm glad you stopped by.
No, don't buy your ISBN from Smashwords or any other ISBN provider. You don't need to. As a Canadian author, you're entitled to free ISBNs. Ones you'll own.
To register your ISBN, you'll first want to come up with a publishing company name. This could be your name or something creative.
Once you've figured out a publishing name, go to:
CISS and join. It's free too.
Once you're set up with CISS, go to:
ISBN page. You'll first register for a block of numbers with your special publisher prefix. This may take a day or so. Afterwards, you go back to the above page, log in and assign an ISBN to each book you plan to publish.
Keep in mind that you need a separate ISBN for an amazon Kindle ebook being sold using KDP, another # for the Smashwords edition and a 3rd # for a print edition.
Good luck.
Cheryl
Another question...
If I get my ISBN number under a publishing company name. Am I in effect creating a company that will have tax implications?
Will I need to file a tax return for the 'publishing company'?
Sorry for so many questions, just want to get it right.
thanks.
As a published author earning an income, you should be filing income tax for a home-based business. Believe me, if you do it right, you won't pay taxes. At least not until you're earning thousands per month. And that takes a while and many books.
You won't file as a separate company but there is a section for In-Home Office expenses. As an author, you'll have many deductions, including a percent of your home utilities paid for your work space/office. Talk to a tax consultant for more info, or join a writers' group. They can help you understand your deductions. I'll also see if I can find one who will write us a guest post.
You will need to claim this income, so be sure to keep gas bills for writing related expenses, phone bills, supply receipts, postage receipts etc.
Thanks.
I have a copywriting biz now, so I was thinking of using that name for the publishing. I do need to find a tax expert.
Thanks for the info.
IMPORTANT NOTE: The information above applies to self-published authors. Those who are PUBLISHERS in this situation and are passing royalties on to authors can skip the W-7 form and head right to the W-8BEN step which doesn't involve an Acceptance Agent filing for you. As one of the latter group, I've just saved six weeks and about $650 dollars.
I entirely agree about thew worth of an Acceptance Agent being involved for those authors in this situation, and whole-heartedly endorse the wonder chap at Bluecarp Tax Consulting at 1055 West Hastings Street in Vancouver. He's gem and both knowledgeable and incredibly nice.
Not sure I agree with your comment, I.A.M. The W7 form is to get the ITIN, which you need to submit to Smashwords, Amazon etc so they won't deduct withholding taxes. As far as I know these companies will withhold taxes even if you're a small publisher. It's an IRS thing.
Something publishers should definitely check into. Though I'm now a publisher too, I had my ITINs in place BEFORE I went into publishing.
I'll have an update on this ASAP.
I received confirmation that publishers DO need to apply for an ITIN or EIN.
According to Mark Coker, CEO of Smashwords: "We need a completed W8-BEN form that contains either an IRS-issued ITIN (individuals), EIN (companies) or SSN for folks to receive the tax
treaty benefit."
Well, the guy who acts as a Certifying form guy in Vancouver says that the reason a publisher doesn't need an ITIN (and he didn't mention any other identifying number) is that the publisher isn't receiving 'royalties'. The publisher sends those on to the authors. Yes, there is 'income' for the publisher, but that is taken care of by the Canadian Revenue Agency, and the W-8BEN is the only thing required for someone who is only a publisher and not a self-publisher.
Of additional clarification might be that one's Canadian SIN is sufficient for identification.
I've saved $650 and two hours of the guy's time by not requesting an ITIN. Granted, I'm a non-author operating a registered sole proprietorship, so perhaps that helps.
I.A.M., please read my comment above. I received confirmation from Smashwords that they WILL withhold tax from international publishers if they have not filed for an ITIN/EIN. Authors who have turned publisher can use their existing ITIN.
Any US company that a non-US resident author does business with can withhold tax, usually 30%. It is worth it to get the ITIN.
Acceptance agents are supposed to verify your identity. This means they need picture ID. Again, I highly recommend you go through a professional acceptance agent and do this right the first time.
Otherwise, you may find 30% of your income withheld. Saving $650 may seem like a great idea, but you can have that much withheld from one month's royalties.
Authors and publishers must remember this is a business. You can write off these kinds of expenses (fees for agents). Doing it right the first time will save you a lot of headaches. :-)
The Acceptance Agent I dealt with in Vancouver was the one recommended by the list from the IRS. I made clear to the man I was only a publisher and *not* an author. We did not discuss anything to do with my business registration or anything else. If he wanted to make $640 from me for an ITIN application,l he could have. He says "you don't need one if you're the publisher", then who am I to tell him his business?
I don't want to pick a fight with anyone here, I'm just passing on what he's telling me.
Re-reading things makes me think something of possible clarity. Mr. Coker specifies one of the possible things that are acceptable are the SSN of the person they deal with is fine. Under the tax treaty, the tax will be assessed by Canada Revenue Agency, and your Canadian ID is the Social Insurance Number which is our version of the American SSN. Thus, it'll be fine because they have the cross reference; thus you don't need an ITIN unless you began as an author. Plus you probably have an HST/GST account number, so that covers the import/exportation of things as well. Basically, if you're the *end point* of monies or the portion there of for intellectual property (i.e.: consultation services or the intellectual property of a book) then you need to cover your earning in the USA. As a publisher, you're not doing any of that, because you're splitting things up further to cover internal costs as well as authors and so on. Ergo: no need for the ITIN if *all* you're doing is being a publisher.
Hi I.A.M.,
I really appreciate your comments here and I appreciate that you're relaying what the Acceptance Agent told you.
My point is that Smashwords will withhold 30% of an author or publisher's income, as per Mark Coker's statement to me posted here, UNLESS an author/publisher has and ITIN or EIN or as they say the SSN, which is a new addition. Small publishers can get away with just the ITIN if they have it and are publishing their own works as well as others.
I.A.M., if you have been receiving 100% of your income from Smashwords and Amazon, without providing an ITIN or EIN, I'd be interested to know that. Laws and requirements do change over time. If all Smashwords requires now is a Canadian SIN, that would be great!
My advice to authors and publisher: always check with the retailers/distributors you want to deal with. Whatever THEY want is what you must supply.
Createspace also required an ITIN.
Remember: this is for non-US authors/publishers.
I applied and got over the phone from the IRS an EIN number without having to supply any passport identification. If I understand it correctly an EIN or ITIN are both eqiually valid to qualify for tax exemption. Am I mistaken
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