On US withholding tax

Posted March 15, 2014 by PaulineMRoss in Publishing/marketing / 1 Comment

Like everyone these days, I spend time randomly trawling the internet, reading tweets, clicking links, perusing blogs and in various other ways managing to kill vast amounts of otherwise productive time. But the great virtue of this is that every once in a while, I happen upon some really useful information.

Like US withholding tax.

What is it? It’s the 30% of royalties that Amazon retains on behalf of non-US authors selling through its online store in order to satisfy US tax laws. [Actually, it’s probably not just authors this applies to, but I came across it in that connection, and that might, in time, affect me, so I’m going to talk about authors here.] What does that mean? It means that any author not residing in the US will have to do some paperwork to satisfy the US tax authorities.

The truly wonderful thing about self-publishing right now is the vast number of intrepid authors who have already beaten a path through the trackless wastes of fiscal and legal bureaucracy. So there’s a huge amount of information out there about precisely how to deal with all this. That’s how I know that I need to get an EIN and that I have to phone to get it and if I delay and some tax has already been withheld, I’ll need an ITIN to get that back.

I do like the nice detail that US citizens can contact the relevant tax authorities online, but foreigners have to phone up, even though they might have to crawl out of bed to find a time when the office is open, even though they might struggle with English and find phoning tricky. Mind you, this isn’t a specific dig at the US tax system. The British system has its fair share of quaint requirements too; after all, it’s had several more centuries of archaic systems to incorporate. It wouldn’t surprise me if there were dark corners of the British system where elements of Saxon law are still quietly lurking, or at least Norman.

Anyway, I’m not going to attempt to explain the nuances of obtaining an EIN (or ITIN) here. The place to go for all the gory details, laid out in words of one syllable, including exactly what to say to the nice American on the other end of the phone, is here.

Isn’t the internet a lovely place?

[EDIT: Damn. The Yanks have changed the rules. Now an EIN will only work if you have actual employees. You have to get an ITIN, which (apparently) involves going to the US embassy in London with your passport and various other documents. This just got twelve degrees more uncivilised, especially for those of us living outside the home counties. Considerably outside, actually. But hey, on the plus side, you don’t have to phone the States any more.]


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