So, you’ve published your book on Amazon and you’re eagerly checking your KDP dashboard every half an hour to see if there have been any downloads. Another half hour, another page reload.
Check the clock.
Hit ‘refresh’.
Make a cup of tea.
Repeat.
After months of this routine, and after tirelessly promoting yourself and your books on blogs, Twitter, e-zines and anywhere else that’ll have you, (and totally pimping out your Goodreads author page, and sending out reams of paperbacks to reviewers, and driving ‘likes’ toward your Facebook fanpage, and participating in giveaways, and generally just doing everything you can think of to get people to notice you), you’re FINALLY rewarded with your first Amazon royalty cheque.
Woot! $100! Wait … make that $70. Yes, that’s right: a whopping 30% of your royalty cheque just got withheld. And as if that weren’t already enough to cry about, you’ll still have to pay income tax on the remainder when that time of year comes around.
I’m from Canada, and income tax for me here (in British Columbia, based on my total annual income) is 20.06%. That means, on a $100 royalty cheque, I would lose a total of 44.05% to tax. I would end up with $55.95. “That’s insanity!”, I hear you scream. Well, the good news is: there’s a way to stop this from happening.
First, check to see if the country you live in has a tax treaty with the US. If it does, you’re entitled to have the amount withheld from your royalty cheques reduced to the treaty amount. In my case, that’s 0% (hooray!). The IRS has a complete list of treaties HERE. If your country is listed, you’re ready for the next step: applying for an ITIN – an International Tax Identification Number.
For this, you need IRS form W-7. You can find that HERE. The only problem is, this form needs to be signed by a notary. You need to show your ID to confirm your foreign residence status, and the notary needs to verify this for you by making a Certified True Copy of your identification documents. (Full details on how to complete the form can be found HERE).
If your country of residence is part of the Hague Convention, no problem – you can use a local notary. If not, you MUST use either a US notary or a Certified Acceptance Agent. This is what I had to do, since my country (Canada) isn’t part of the Hague Convention, and I didn’t have a Canadian passport (meaning that I couldn’t cross the border to use a US notary). For a full list of Certified Acceptance Agents in your country, see HERE.
The good news is that the CAA or notary will walk you through the process of applying for the ITIN. The bad news is that this process can take up to 8 weeks. Processing times do vary, but typically an application made through a CAA (versus a notary) is quicker, and takes an average of just 4 weeks. Additionally, when you submit your ITIN application, you will need to submit a letter from the company you are expecting to receive royalties from (i.e., Createspace) explaining why you are applying for the ITIN. Createspace provides such a letter just for this purpose, and you can find a copy of that letter HERE.
Once your application is reviewed by the IRS, you’ll receive your ITIN in the mail. Keep this number safe – you’ll need it to complete a W-8BEN form, which is (thankfully) the last step in this excruciating process. The W-8BEN form can be found HERE, and there’s an example of how to complete the form properly HERE. All that remains now is for you to mail this completed form off to Amazon, Createspace, and wherever else in the US you are having royalties withheld. (Please note that although Createspace is owned by Amazon, there is a separate mailing address for sending in the W-8BEN form – I have no idea why).
Finally, when this is all said and done, you can sit back and take a deep sigh. Congratulations! You’ve successfully navigated the treacherous path of IRS tax withholding and survived unscathed. Now, if there were only a way to fix that wretched sticky plot point on page 147 … back to work I go …
Keira Michelle Telford is an award winning dystopian SF author from British Columbia, Canada.
