If you are a Canadian self-published author, did you know that you could be being taxed as high as 30% for all book sales in the United States?
When you’re selling your books as either paperbacks or eBooks through Amazon, did you know that they keep 30% of your royalties as tax? The good news is that if you’re a Canadian self-published author, there is a simple and effective way to avoid this and ensure that you’re not being overtaxed.
The same thing applies if you have a literary agent or publisher that’s based in the United States. They’ll send you your royalty cheque or advance, minus the 30% that is automatically sent to the IRS. Learning how to avoid paying taxes US taxes could save you a fortune! As a new author, you can’t afford to be paying extra money, so you need to learn all the author tricks and tips. It’s great to sell books in the US, but double taxation is not!
Amazon follows the US taxation laws and automatically deducts 30% of your royalties as income tax. That 30% deduction can be quite a blow to your budget, especially when you still need to declare your income in Canada or whatever country you reside in and then pay income taxes again.
The good news is that there a list of countries that have a reciprocal tax agreement with the United States, and Canada is one of them. You can see the full list of countries here. The important thing which you’ll need to avoid the 30% tax is an Individual Taxpayer Identification Number (ITIN). It can seem quite daunting, but it really isn’t. You’ll be glad that you made the effort to learn how to avoid paying US taxes on your books.
How Do I Get An ITIN Number?
The process of obtaining an ITIN can take some time, but the good news is if you’ve already been losing the 30%, you can apply to have it reimbursed to you! To get an ITIN number you need to fill out and lodge a Form W-7, Application for IRS Individual Taxpayer Identification Number.
There is full instruction available on the IRS website here about how to fill out the W-7 Form and also about what documents that you need to submit along with the form. Other people will be required to post things forms and documents in, and others may not.
You’ll need to have identification ready to submit along with your W-7 Form. The process for every author is not always going to be the same. One Canadian author we spoke with told us that they simply phoned the IRS number and answered questions along with submitting the form, and they were granted and ITIN number.
The entire process can take some time to complete, with many authors having a varying return time of between 2-8 weeks. Once you get your ITIN number, you fill out the appropriate documents or online forms on your Amazon KDP dashboard and they will stop taking the 30% tax out of your royalties.
We hope that this information helps you to get your ITIN number! If you would like to learn more about self-publishing, then be sure to check out some of the other Indie Publishing Group blog posts. The information contained in this post should not be considered legal or financial advice, and we strongly recommend that you do your own research prior to making any financial or legal decisions.