Getting Out of the 30% Tax Withholding for Non-US Amazon Kindle Authors
Mar12

Getting Out of the 30% Tax Withholding for Non-US Amazon Kindle Authors

    One of the best things about publishing your books with Amazon Kindle is that almost anyone can do it from anywhere in the world. This is great for international authors outside the US who have always wanted to expand their audience base. Unfortunately, Amazon makes non-US authors fill in a ‘tax questionnaire’ before you’re able to publish your first book. If you’ve filled in the quick and easy online form, you’ll already know that authors outside of the US are subjected to a 30% tax withholding. What this means is for every dollar you earn from Amazon Kindle sales, Amazon will withhold 30% to be reported to the IRS. The remaining 70% of your royalty earnings are paid to you via check. If it wasn’t bad enough that non-US authors get the joy of paying exorbitant foreign exchange rates and currency exchange bank fees on a check drawn in US dollars, we also have the issue of losing 30% of our income on withholding. (another post on reducing your foreign exchange rates and fees coming soon…) What you may not realize is that it’s possible to get out of paying that 30% withholding at all – but only if you set up your Amazon account the right way. Avoid Paying the 30% Withholding for Non-US Authors with an EIN When you fill out your tax questionnaire with Amazon, you may be asked to fill in your ITIN (Individual Taxation Identification Number), if you have one. If you don’t, you can opt to fill in your tax file number for wherever you do report your taxes. Even if you DO have an ITIN, you are still required to pay the 30% withholding. However, what they DON’T tell you is that non-US authors with an EIN (Employer Identification Number) aren’t subjected to the same withholding rules. Awesome! Most authors are their own bosses and the IRS concedes that sole traders from most countries are typically self-employed small business owners. As a business owner, you’re potentially an employer, so you definitely need an EIN. If you’re in Australia and you’ve registered an ABN (Australian Business Number), you’re in business, which makes you potentially an employer, so you qualify for your EIN right away. You can apply for your EIN via the IRS website here: https://sa1.www4.irs.gov/modiein/individual/index.jsp Remember, you must complete your session in one sitting. If your session is inactive for more than 15 minutes, you’ll be logged out. As the site doesn’t save your personal information, you’ll need to start over. Once you’ve completed the form, you can download the PDF file that shows your EIN and print the confirmation...

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