Tip to Get an Extra 25% Royalties for Australian Authors Publishing Through Amazon or CreateSpace

by JamieSEO 19 replies
I am Australian and could not believe how much of a pain in a neck it was to figure out how to deal with the IRS in America when it comes to self publishing through US sites such as Amazon/CreateSpace/SmashWords.

Print on Demand books through CreateSpace or Smashwords withhold 30% tax on your royalties unless you have a US tax ID.

If you are an Australian, but do have a US tax ID you only have to pay 5%... so you end up with a whopping 25% more money from your royalties.

In those cases because we do not have US tax ID's we need to get one.

The process for getting a US Tax ID for an individual is a pain in the butt, however through trawling through a bazillion different US tax related forums and sites I was able to find a great way around it

You can get an EIN (Employer Identification Number also known as a Federal Tax Identification Number) in your business name, or if you do not have a registered business name, in your own name.

If you call the IRS on 267-941-1099 and ask for an EIN they can issue it over the phone. It takes about 10 minutes and you will need your Australian Tax File Number.


I recommend using a service like Skype to make the call so you can do it cheaply.


Once you have that you just fill out a W-8BEN form and send it to CreateSpace/Smashwords,etc


Instructions about form: http://www.irs.gov/pub/irs-pdf/iw8ben.pdf

Form: http://www.irs.gov/pub/irs-pdf/fw8ben.pdf


The tax treaty between the US and Australia is Article 12

This allows you to pay only 5% withholding tax on book royalties

For the reason you are using the W-8BEN form you put "Australian author self publishing via US distributor
"

You only need to get an EIN once
#main internet marketing discussion forum #20% #amazon #australian #authors #createspace #earn more #extra #kindle #publishing #royalties #self publishing #smashwords #tip
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  • Profile picture of the author ThrillerAuthor
    I'm in South Africa and used this process in 2008 to apply for an EIN to get tax withholding for my CreateSpace books and also now for my kindle books. Luckily in South Aftrica our tax treaty with the US gives us 0% withholding!
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    • Profile picture of the author Just4kixbooks
      Has anyone found a simple method of getting a refund once you've got your EIN and been told you have a credit?
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    • Profile picture of the author Just4kixbooks
      Originally Posted by ThrillerAuthor View Post

      I'm in South Africa and used this process in 2008 to apply for an EIN to get tax withholding for my CreateSpace books and also now for my kindle books. Luckily in South Aftrica our tax treaty with the US gives us 0% withholding!
      Howzit,
      I'm also in South Africa and wondered if you have managed to get a refund on tax already paid in the US
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      • Profile picture of the author RosemaryB
        I like this idea of calling IRS by Skype to get EIN but can't work out how to do this.

        Can anyone explain please?

        Cheers
        Rosemary
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        • Profile picture of the author JamieSEO
          Originally Posted by RosemaryB View Post

          I like this idea of calling IRS by Skype to get EIN but can't work out how to do this.

          Can anyone explain please?

          Cheers
          Rosemary
          Download and install Skype. You then need to buy Skype credit.

          Open Skype. At the top of the screen select Skype -> Buy Skype Credit

          Once you have credit. At the top of the screen select Call -> Call a Phone Number

          Use the dropdown arrow to change the flag to the USA. Enter the phone number 2679411099 and press the Call button (green handset sign)
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  • Profile picture of the author iLifestyleClub
    Hi
    I am also from Australia and had no idea how to get an EIN.

    Thank you sooo very much for making the process so much easier!

    Leanne
    Gold Coast
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  • Profile picture of the author iLifestyleClub
    I just called the IRS and spoke to a man who told me that he could not help me without the SS-4 Form being completed and faxed over.

    When I asked if I could scan it and email, I was told that they do not use email and that he had to go.... and he hung up.

    I must say that I am shocked that the IRS would act in such a way.

    Very disappointed with the response and lack of willingness to assist someone trying to find out the procedure to follow.
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  • Profile picture of the author iLifestyleClub
    I just phoned the IRS a second time and got a lovely lady on the line.

    She was so very helpful and I had my EIN in under 10 minutes.

    I have no idea why the man on the first call was not willing to help, but it is good to know that there are people at the IRS who are happy to help out! :-)
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    • Profile picture of the author AngelTraveler
      Hi Jamie

      Thank you so much for your information and so I rang the IRS via Skype and got through straight away. They took my details and gave me an EIN and that was all for a 25c internet phone call. This also means for anyone else reading this that your information is current as at January 2012.

      You have removed a big worry from my mind and I really appreciate you posting here to let us all benefit from your experience.
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      • Profile picture of the author JamieSEO
        Originally Posted by AngelTraveler View Post

        Hi Jamie

        Thank you so much for your information and so I rang the IRS via Skype and got through straight away. They took my details and gave me an EIN and that was all for a 25c internet phone call. This also means for anyone else reading this that your information is current as at January 2012.

        You have removed a big worry from my mind and I really appreciate you posting here to let us all benefit from your experience.
        I was surprised at how easy it was.... once I was able to actually FIND the details on how to do it :p

        Glad I could help
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    • Profile picture of the author JamieSEO
      Originally Posted by iLifestyleClub View Post

      I just phoned the IRS a second time and got a lovely lady on the line.

      She was so very helpful and I had my EIN in under 10 minutes.

      I have no idea why the man on the first call was not willing to help, but it is good to know that there are people at the IRS who are happy to help out! :-)
      It tends to be the same with all government agencies, whether in the US or Australia :p

      Some people are just lazy and so rather than trying to help they fob you off.

      Glad that you got someone good the 2nd time you tried
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  • Profile picture of the author rondo
    Thanks! I was wondering about this too.


    Andrew
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  • Profile picture of the author Amanda Craven
    There's a good article on Nick Daws' blog on how to do this for Smashwords as well as Amazon - written for UK based authors but relevant to the majority of non-US self-published authors:

    Nick's Writing Blog: How Non-US Authors on Amazon and Smashwords Can Reclaim US Tax
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    • Profile picture of the author Larquini
      Thanks for the post!
      It never ceases to amaze me how many aussies i come across on this forum. I think it's pretty cool
      Of course every one else is pretty cool too
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      • Profile picture of the author David Gilbertson
        Hi,

        Has anyone in Australia had experience with NOT getting a US tax number (ITIN or EIN) and instead claiming the tax paid (to the IRS) back with the normal Tax Return to the ATO?

        I can't paste links, but google "Guide to foreign income tax offset rules 2010-11" for the ATO site. It seems to mean one of two things, I can't work it out:

        1. You earn $100. You pay the IRS 30%. When you do your Australian tax return, you include the $100 in your taxable income, and claim back $30.
        2. You earn $100. You pay the IRS 30%. But because Australia has a tax treaty that says the IRS will collect only 10%, you can claim a credit of $10.
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  • Profile picture of the author Theresa Perez
    Thanks JamieSEO!

    I was looking for info about this before, and kept getting the ads for agents that will do it for a fee. Or a long wait since all recommended doing it by post.

    What a time saver!
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    • Profile picture of the author JamieSEO
      Originally Posted by Theresa Perez View Post

      Thanks JamieSEO!

      I was looking for info about this before, and kept getting the ads for agents that will do it for a fee. Or a long wait since all recommended doing it by post.

      What a time saver!
      I know what you mean! All of the standard info tells you to do it by post. Since we are in 2012 I knew there had to be a better way
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  • Profile picture of the author Raz0r
    Thanks for the tip! I'll definitely put this to good use
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    • Profile picture of the author AOLFAN
      I have a slightly different problem. I have my EIN already, but am thinking of signing with a small US Publisher. I would need to pay tax myself to the IRS as in my contract it says that I would be responsible for my own tax. I have no idea how to do that.
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