Non-US Self-Publisher? Tax Issues Don’t Need to be Taxing

This post, by Catherine Ryan Howard, originally appeared on her Catherine, Caffeinated blog on 2/24/12.

OH FOR THE LOVE OF FUDGE.

That’s what this whole tax-withholding-for-non-US-residents makes me want to scream. Out loud, and repeatedly. But as I’ve said before, self-publishing your e-book on the biggest online retailer in the world is so easy, there had to be something like this to balance it out.

If you haven’t been keeping up with this ongoing saga, here’s a quick recap. I spent eight months, give or take, trying to get my own Individual Tax Identification Number (ITIN).

I relied on the experiences of two other self-publishers, Sally Clements and Roz Morris, to help me out; the information the IRS provides wouldn’t help you find your way out of a small paper bag, let alone anywhere near an ITIN. Luckily once I had the damn thing, getting my full royalty payments and the money withheld from me in the year to date was easy and quick. But then, in the last few weeks, people started telling me that I didn’t need an ITIN at all—an Employee Identification Number (EIN) would’ve done the job, and an EIN was much easier to get. I posted about this possibility, and fellow Irish self-publisher David Gaughran volunteered to be the guinea pig—and got his EIN within minutes, and over the phone. This was extremely useful information, especially since another commenter (thanks, Janet!) told us that new IRS rules mean that starting this year, monies withheld will only be available for refund through the IRS—and not refunded automatically by KDP and CreateSpace, as they have been up until now.

I feared that most people wouldn’t read through all the comments on the original post, so I asked David to write a guest post for us here about how he got his EIN. Take it away, David…

“As many of you will know, Amazon and Smashwords are required by law to withhold 30% of the royalties earned by non-US authors until they settle their tax status. The commonly accepted method of doing so was going through the laborious process of getting an International Tax Identification Number (ITIN), which necessitates arcane form-filling, notarized copies of passports, embassy trips, fees, and inexplicable rejection (writers should at least be used to the last part). And indeed, this was the path I was on myself, up until yesterday.

In the last few weeks, I had heard some mutterings that there was an easier, quicker way, but hadn’t had time to look into it. After Catherine’s post on Monday, suggesting that self-publishers might be able to get an Employer Identification Number (EIN) instead, which will also do the trick, I decided to give it a shot.

First things first: I’m no tax expert. In fact, the entire subject turns my brain to soup. And I know as much about the law as this guy. All I can explain is how I got my EIN in ten minutes and how you should be able to do the same.

One final caveat: this only applies to self-published authors who are publishing through their own company (and that company must be set up outside the US). While the IRS doesn’t appear to ask for proof that you have actually established your own publishing company, I’m sure there are all sorts of reasons why you shouldn’t commence this process until you actually have.

 

Read the rest of the post on Catherine, Caffeinated.

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