kindleI have been preparing some of my teaching stuff for possible publication via the Kindle store, but I have been a little overwhelmed by the process. I want to make sure I do everything correctly, from a business standpoint. But it does not seem like there is good information out there about how to set everything up. Here is what I have found so far:

1) This blog post talks about Amazon withholding taxes for all authors, even non-American ones, and suggests that you need a special American tax number to get out of this.

2) My personal tax accountant, who is not a publishing expert but is a tax expert, has suggested that this would be a bad idea and that I should not ‘involve’ myself with the IRS if I can help it because then I will be filing tax paperwork with them forever after for the rest of my life. He also said that if they DID withhold taxes from a Canadian author, a tax accountant could probably get it back for them as a tax refund later.

3) This blog post says you don’t need that number anymore; that Amazon has built in some filtering questions to the KDP sign-up process which eliminate this need. Apparently, I can provide the tax information number for my own country (this may be my social security number?) and it will exempt me from the withholding.

4) Amazon.ca has its own support page for Kindle Direct, which promises features such as getting paid in your own currency directly to your bank account. But when you click on the link, it redirects you to the .com portal. So, does this mean I still have to worry about Amazon withholding taxes?

In a perfect world, I think Amazon should collect taxes from nobody; they should instead simply issue a royalty statement and let the person file it as income on their taxes for whichever country they pay to, and so be it. But in the meantime, I am trying to sort this issue out. Does anybody know this, conclusively? What do I need to do before I can publish my books?

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"I’m a journalist, a teacher and an e-book fiend. I work as a French teacher at a K-3 private school. I use drama, music, puppets, props and all manner of tech in my job, and I love it. I enjoy moving between all the classes and having a relationship with each child in the school. Kids are hilarious, and I enjoy watching them grow and learn. My current device of choice for reading is my Amazon Kindle Touch, but I have owned or used devices by Sony, Kobo, Aluratek and others. I also read on my tablet devices using the Kindle app, and I enjoy synching between them, so that I’m always up to date no matter where I am or what I have with me."

5 COMMENTS

  1. Governments want to hear from corporations who can be more easily punished than individuals. That’s why they want those who pay you reporting on you. They don’t trust you to file that income statement with your taxes. “Oops, now why did I forget that Amazon royalty statement. I must have put it in the wrong folder.” That sort of thing.

    This does illustrate one of the advantages of having a publisher based in your country. They become a buffer between you and the tax men in various countries.. Your income is what they pay you. Of course, that comes with a host of downsides.

    Life is always compromises. There’s a part of me as a writer that just likes to do my own thing. There’s another that would like to be so successful, I could pay other people to do the what I dislike, including the accounting.

    This illustrates that. You publish, you have all the hassles. They publish, they have some say.

  2. Because of my situation as a self-published author who sends print copies to a U.S. distributor, I had to get both an ITIN and an EIN from the IRS.

    You say, “My personal tax accountant, who is not a publishing expert but is a tax expert, has suggested that this would be a bad idea and that I should not ‘involve’ myself with the IRS if I can help it because then I will be filing tax paperwork with them forever after for the rest of my life. He also said that if they DID withhold taxes from a Canadian author, a tax accountant could probably get it back for them as a tax refund later.”

    I don’t think your personal tax accountant is the expert he claims he is. First, I got my two numbers from the IRS over 6 years ago and the IRS has not asked me to fill out any paperwork since then.

    Second, yes, you can take the route of having CreateSpace or Amazon or whoever deduct the 30 percent of proceeds for the IRS and then claim a Foreign Tax Credit when you fill out your tax form with Revenue Canada. The problem with this is that if you start making a lot of money in the U.S. like I am, the Foreign Tax Credit that Revenue Canada gives you will not fully compensate for the tax that you paid in the U.S. In other words, you are better off to get the proper IRS number required and then declare the income you make in the US on your Revenue Canada return.
    Warning: Do not try to hide the income you make in the US from Revenue Canada. Revenue Canada and the IRS continually share information. Also, Revenue Canada shares information with tax authorities in European countries. A few years ago I got a letter from Revenue Canada asking me to prove that I had declared the royalties I had received from a French publisher the previous year. Revenue Canada knew exactly the amount of royalties I had received from the French publisher because the French tax authorities provided this to Revenue Canada. Of course, I had no problem proving that I had declared this income since I have always declared all the income I have made in the 29 countries that I have been published in.

    Ernie J. Zelinski
    The Prosperity Guy
    “Helping Adventurous Souls Live Prosperous and Free”
    Author of the Bestseller “How to Retire Happy, Wild, and Free”
    (Over 250,000 copies sold and published in 9 languages)
    and the International Bestseller “The Joy of Not Working”
    (Over 280,000 copies sold and published in 17 languages)

  3. Does Amazon actually withhold revenue to pay taxes? I get Form 1099’s form them every year, that shows how much they paid me in that tax year, and this means they have given the IRS the same info, but they aren’t withholding or paying the IRS any money. It’s been a long time since I signed up with KDP so I don’t recall if this is a situation with more than one option. It might also be affected by the amount of money an author makes.

  4. Go the IRS website and search for form W8-BEN and then read the guidelines to filling it in. This is an IRS issue and so go to them for the answer. The answer depends on whether Canada has a tax treaty with the US that reduces or removes the ability of the US to tax royalties. The new W8-BEN came out in February 2014 and so that is when the policy changed. Unfortunately the change happened just after I went through a lot of hassle to obtain an ITIN, but such is life.

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