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Discussion Starter · #1 ·
Update: I'm getting a 'this number is not in service' repeatedly when I've tried to call the IRS.

Not sure if it's my phone service or if the IRS number has recently changed or if I'm missing a number at the beginning.

This is the number I'm calling:

Phone the IRS in the United States: +1-267-941-1000 Monday through Friday 6am - 11pm (U.S. Eastern Standard Time).
Has anyone else has trouble contacting them recently?

****************

I have a drawer full of cheques, with thousands of dollars of tax taken out.
Yes I know I should have done something by now, but the whole process does my head in. Seriously. It's just crazy Amazon puts us through this. I asked my accountant but he had no idea on anything to do with it.

Anyway, I looked up this old post (http://catherineryanhoward.com/2012/02/24/non-us-self-publisher-tax-issues-dont-need-to-be-taxing/) and want to know:

- if you haven't cashed/banked any of your cheques, can you get Amazon to reissue them after you gain your EIN and do your W8-BEN? Or should you bank the cheques and try to get your tax back from the IRS? (and how would you go about trying to get your tax back from the IRS?)

Edited to get rid of fuzzy, meandering questions.
 

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Bank your cheques whether you have a ITIN or not. All you need, in Australia, is to be operating as a sole trader. You don't need a company.

Because you don't have an ITIN, Amazon has deducted 30% of your royalties. You can claim these back by applying for an ITIN using a W8-BEN.

I'm a little hazy on this, because it's a few years since I've done it, but Smashwords has links to the appropriate form and will provide you with a letter you will need once you've earned $10 in royalties through them.
 

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I also haven't done anything about this.

The good thing is that any tax paid in the US is recognised by the ATO and deductible from tax liable in Australia.

Apparently, you can ring up and request an EIN over the phone. But I'm not good with phones and just the idea of ringing gives me the heebie-jeebies.

Why can Kobo deal with this properly and do we have to go through this shit from Amazon?
 

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I did this quite recently.  I just called the IRA in the US and told them I needed the EIN for the W8-BEN form.  They seem to be quite familar with the process and asked if I was selling books in the US.  They might ask if you have the form in front of you.  Say yes so you get the number over the phone (they also mail it but it takes about 3-4 weeks).

Then you just print the W8-BEN form off and fill it in.  There are some websites with the details but it's pretty simple.

Am just waiting for verification from Amazon that it's been processed now.  It's taken a while so I might try sending it again.

I also contacted KDP and got my payments stopped until the form is processed so I don't get taxed.  Pretty simple process - just email the "contact us" link on the KDP page.
 

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I made the phone call and am enjoying seeing only 5% of my royalties going to the US tax man (which I claim back in my tax returns). Do it, it's easy and you don't even need to have a registered business name.

You'll still need as ITIN if you want to get back what you've already paid  :'(.
 

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Discussion Starter · #6 ·
Thanks people :)

Patty, my accountant didn't know this: "The good thing is that any tax paid in the US is recognised by the ATO and deductible from tax liable in Australia." - although I'd rather have the cash in my hand.

Todd, does that mean I can claim back my tax via a W8-BEN form?

Reluctant Geek - there should be a way we can do this without the IRS taking 5% tax if we manage to get an EIN or ITIN. No other country that I know of gets taxed that 5%.

Kathryn - thanks for the tips. I actually did contact KDP soon after I started self-publishing and asked for holds on cheques. And later did the same for my pen names. But - they just keep on sending the cheques anyway! Better still, some of the cheques are written out to my pen names! I have no idea now what I have been paid or not paid.

*****

Ah, Thursday-morning brain-fuzz. I misread this passage from Catherine's post as being we needed to be a company to gain the EIN:

One final caveat: this only applies to self-published authors who are publishing through their own company (and that company must be set up outside the US). While the IRS doesn't appear to ask for proof that you have actually established your own publishing company, I'm sure there are all sorts of reasons why you shouldn't commence this process until you actually have.
Ok, so we can do this as a sole trader. I'll delete the bit about the company.

Todd, the process described to get your ITIN sounded way too complex.

(Process described to gain an ITIN:

Identification, usually your passport
A letter from one of the companies proving you publish with them
A W7 form.
Then contact a tax agent at a US embassy)
 

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Anya said:
Thanks people :)

Patty, my accountant didn't know this: "The good thing is that any tax paid in the US is recognised by the ATO and deductible from tax liable in Australia." - although I'd rather have the cash in my hand.
Just on a side-note: how hard is it finding accountants who know how to deal with money earned overseas!

I had one who seriously was trying to get me to put down my overseas income as "gifts". I refused. And I had another who told me over the phone they could deal with overseas income but once I got there didn't know what an EIN was or a W8-BEN form! I've had a really difficult time trying to get good financial advice for my overseas earnings.

Anyone in Melbourne found an accountant who knows what they are doing?
 

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Discussion Starter · #8 ·
Matthew, yes, it's strange. Surely there's lots of people other than us indie authors earning money from overseas. Although, maybe the difference is that these other overseas entities do not take tax out in the first place - which is certainly the case with money I receive via advertising.

And agents have spasms when you mention tax deductions for an indie author. The conversation goes something like this:

Agent: But you can't deduct expenses from your overall income.
me: Yes I know that. I just want to know what I can deduct from my author income.
Agent: You can only deduct from what you actually earn as an author.
me: Yes I know. That's what I want to do. Can you explain what those deductions are?
Agent: You can't claim that income as a business unless it's an actual business.
me: It is a business. I do actually earn money from being an author. This is what I've earned so far....
Agent: I have a son who writes. Can you tell me how he can do that too?
 

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Anyone in Melbourne found an accountant who knows what they are doing?
No but if you find someone, I'd love to know. I think the Vic Writers Centre used to run some tax courses but I looked on their program for this year and none mentioned. Even that would be more geared to domestic income I'd think cos you know Australian writers aren't supposed to make money (unless you are Bryce Courtney or a sportsman!)

I know there is a grey area between hobby and business - hobby meaning you don't declare income but don't get deductions - but not sure of the income limits for that. I also would like to know about claiming deductions for expenses in previous years eg. if I got a manuscript assessment done two years ago but have only just published now, how does that work?

Arrrgghh, tax. I did check on the Aust Arts Council site. They had a tax info pdf ... from 2001
 

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Anya said:
Thanks people :)

Todd, the process described to get your ITIN sounded way too complex.

(Process described to gain an ITIN:

Identification, usually your passport
A letter from one of the companies proving you publish with them
A W7 form.
Then contact a tax agent at a US embassy)
Yes, the process was a bit of a hassle, but I figured I only needed to do it once, so I went ahead and did it.

You do need some form of identification, and I think I had to have this verified by Foreign Affairs and Trade (or something).

Either way, Amazon's still going to retain 5% as the tax treaty Australia has with the US means that they keep 5%, but again, you can claim this on your tax.

However, I don't think you can claim it as a deduction.
 

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kathrynoh said:
No but if you find someone, I'd love to know. I think the Vic Writers Centre used to run some tax courses but I looked on their program for this year and none mentioned. Even that would be more geared to domestic income I'd think cos you know Australian writers aren't supposed to make money (unless you are Bryce Courtney or a sportsman!)

I know there is a grey area between hobby and business - hobby meaning you don't declare income but don't get deductions - but not sure of the income limits for that. I also would like to know about claiming deductions for expenses in previous years eg. if I got a manuscript assessment done two years ago but have only just published now, how does that work?

Arrrgghh, tax. I did check on the Aust Arts Council site. They had a tax info pdf ... from 2001
I can answer one bit - an expense in one year can only be claimed in that year. This is not including depreciation.

This came up because the accountant found that I had not been claiming books I'd bought but the only way to do so was to amend past tax returns which she said was pointless for the small amount of money and the risk of audit.

It is pretty terrible that there seem to be no accountants who can deal with freelancers and overseas income.
 

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Discussion Starter · #13 ·

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Anya said:
I just read that and then this link from there on how to offset and calculate foreign tax if it is over $1000:
http://www.ato.gov.au/corporate/content.aspx?menuid=0&doc=/content/00313612.htm&page=11&H11

Bloody hell.

Massive.Headache.Setting.In.
The ATO's online tax *brain fart* you know, that program you download from the ATO to do your taxes each year... anyway, I've been living in Canada the past 3 years, but still have to file my Aus tax and just use that and it works out all my offsets and limits etc. for me.
 

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Anya said:
(Process described to gain an ITIN:

Identification, usually your passport
A letter from one of the companies proving you publish with them
A W7 form.
Then contact a tax agent at a US embassy)
And that's why you don't want an ITIN you want an EIN - one Skype call - fill in some forms - money will return to you from IRS - eventually

I wrote a post on the details yesterday from the New ZEaland perspective - the only difference for Australians is that the correct withholding rate is 0% not 5% as for us and you will need to look up the article number for the Australian treaty http://lissowerbutts.com/getting-your-us-royalties-tax-back-non-american-authors-new-zealand-edition/

Now in NZ you can't just claim back the over-paid tax against your local tax - I have to get the right rate withheld and THEN I can claim the residual 5% against my NZ tax. So that part you need to check with an Australian accountant. But think about it - why should your govt forgo reveneue just because you are too lazy to sort out the paperwork with the Americans? I think you may find it's up to you to sort it out with the IRS and Amazon (and Smashwords)
 

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Lissie said:
I wrote a post on the details yesterday from the New ZEaland perspective - the only difference for Australians is that the correct withholding rate is 0% not 5% as for us and you will need to look up the article number for the Australian treaty http://lissowerbutts.com/getting-your-us-royalties-tax-back-non-american-authors-new-zealand-edition/
Thank you. That is so awesome (I'm in NZ too). I have been meaning to do something about this as well but had been putting it off so this is really helpful. Thankfully I have a friendly accountant I can call on for help.
 

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I came on your thread to see if I could help you, and was delighted to see that their appears to be lots of us Aussies around!

I can't really add anything except to say I remember reading somewhere that the IRS is changing the way you can claim tax from them AFTER the fact. Starting from the last US financial year (October, not June like Australia) I think they are making it harder for foreigners to claim back on the tax treaty if they haven't submitted their forms in time. You should still be able to do something about the previous years, but you might want to make sure you get your details in this year.

It really is easy. I rang and asked for an EIN (easier and quicker than an ITN) over the phone, was given my number on the spot, and received the 'official' documents a few weeks later. I then sent a copy to Amazon and a few weeks later received an email saying that my tax threshold had been lowered.

Shame we still have to pay 5% tax when some countries don't have to pay any - but at least we have this opportunity so that's not a proper whinge, just something I noticed.

 

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Hi Anya! Just got onto this post.
I filled out the forms and got my US EIN two years ago. It's not hard, just time consuming. Had to send my passport to the US embassy office in Sydney, even though they have an embassy in Canberra where I live. A lot of your questions have been answered here, but there are two other points I'd like to add.
1) You can claim tax deductions on your income earned as a writer. I have more than one source of income. For my royalty income, I claimed deductions last year for a new computer, printer, my membership with the Australian Writers Guild and an AWG conference I attended. All writing/work related. And I got a tax return on what I earned from my royalties. Noice!
2) Instead of doing battle with the cheques, you can open a Payoneer account. This has been covered in some detail on Kindleboards about a year ago, but for those new to it, Payoneer is a credit card which uploads from a virtual US bank called First Century Bank and which Amazon will deposit your royalties into each month. Once the royalty is deposited (about the third week of each month), the amount is automatically uploaded to your Payoneer card a few days later, which is a Mastercard that can be used like any other Mastercard anywhere in the world. Does away with those ridiculous cheques, the cheque fees and the waiting period to get your money. Many of us got more details from [email protected], and very helpful person from Payoneer who can show you how to go about setting up the account. If you're not sure what a virtual bank account is, it's just like Paypal - only Amazon WON'T pay our royalties into Paypal. Smashwords does, but not Amazon. I have lobbied Amazon about Paypal, along with a lot of others, but to no avail. So Payoneer is a good alternative. Once your account is set up, you just update your account details on KDP and each month you get a nice little email detailing how much money they've deposited into your account. A few days later, you get another email informing you that your Payoneer card has been loaded - and that's when I go shopping! Double noice!
Hope this has helped.
Cheers!
Carole
 

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L M May said:
Shame we still have to pay 5% tax when some countries don't have to pay any - but at least we have this opportunity so that's not a proper whinge, just something I noticed.
You can claim the 5% against your NZ tax - so you don't pay double tax which is good
 

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Just to clarify, you don't need to send your passport anywhere for an EIN. You just call a US number and they'll issue it to you. You can then use to lower your tax rate from 30% to 5% (for Aussies or 0 for Kiwis).

If you've already paid tax and haven't claimed it back through a Aus/NZ tax return, then you can get an ITIN which allows you to file a US tax return. I think you can only go back two years, so anything > 2yrs is lost. To get an ITIN, you need to send $50, your passport, and various other docs to the US Embassy/Consulate in Sydney (don't know about NZ) and they'll send you a notorized copy of your passport which you then send with the appropriate forms to the US IRS. As you can tell, getting an ITIN is a PITA.

Payoneer is good, I use it myself, but the debit card they send can be expensive if you want to withdraw cash. I use it like a CC when shopping to keep the fees down but it's not ideal.

Draft2Digital may be the saviour of all antipodean Amazon users because they'll distribute our books to Amazon and then send the royalties, less a reasonable fee, to our paypal account. They are still in beta at the moment, but they are planning on sending out their first batch of payments tomorrow. Check out the long thread that's floating around (it's on the front page quite often).
 
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