Most independent kindle ebook writers don’t realise that the American tax office will take 30% of their royalties.
Yes, you did read that right. Non-American authors who publish ebooks with Amazon, will have 30% of their royalties withheld by the IRS.
That is rather a large chunk of your earnings to have kept by a foreign tax office. Fortunately however, if your home country has a tax agreement with the USA, you can stop this daylight robbery. Most countries do have such an agreement, and it is surprisingly easy to get your royalty cheques in full.
First of all, you need a tax identification number from the IRS. As a non American, this can either be an ITIN (individual tax identification number) or an EIN (employers identification number). An American would be stunned that an individual can get an EIN, because domestically, out is reserved for limited companies. For non Americans however, it can be used by a sole trader – like authors.
The ITIN application process requires you to send your passport to the USA, or to an American embassy. This is because they need to be sure of your identity since the tax number is for an individual.
The EIN application process however is very straightforward and doesn’t require ID. There is a specific phone number for the IRS department which issues EINs for foreign applicants only.
Phoning America might sound expensive, but I used Skype, and a half hour wait before my call was answered cost me less than 50p. I called +12679411099 and the man I spoke to talked me through the application process. I was told my EIN over the phone before the end of the call, and received a letter confirming it a few weeks later.
Now armed with a tax id, I filled in the form W8-BEN I downloaded from the Amazon website. once this was filled in, it was posted to Amazon – the address is on the self publishing help pages. A few weeks later Amazon emailed me to say everything was in order, and I would not have tax withheld any more. Hurrah!
So it really is straightforward to get all of your royalties from kindle ebook sales. One phone call and one form to full in and post – job done in a couple of days.
If you publish ebooks (or ever decide to try), don’t let the IRS keep your hard earned royalties, it is easier than you think.