After finding out I had to deal with IRS paperwork since I’m a non-US citizen, I freaked out a bit. Read a lot about it, maybe too much as I was starting to get a bit confused and blow up my paranoia even more about this whole issue. Then at one point, I realized I better get going on this because paperwork takes a long time to process.
Why do I need to deal with the IRS? By default all books published through Amazon, Barnes & Noble and other US retailers will have 30% extracted out of your royalties for US taxes. So, you have to prove that you are not a US citizen in order for them not to do this. Or else you are paying taxes to the US and your home country on your royalties.
To solve this issue you need an ITIN or “An Individual Taxpayer Identification Number” (ITIN) which is a tax processing number issued by the IRS to a variety of people who have a reason to not pay US taxes.
The following are instructions for Canadians, but in general, the concept applies to all non-US countries.
1) Read through the requirements to obtain a IRS ITIN – look at these simplified Amazon instructions. This is what you need to give Amazon and other US companies along with another form called the W-8BEN in order for them not to take 30% of your royalties from you. More on W-8BEN here, but the US company will submit this form after you start selling.
Basically you are preparing yourself to fill in a form called W-7. General instructions here and actual form here. But before we can do this, we have to gather our paperwork.
2) Obtain a certified copy of your passport – You have to visit your passport office (make sure it’s a full service one!), in my case, Passport Canada and ask them to give you photocopies of your passport which they will stamp and validate.
I lined up for an hour before someone told me all I had to do was skip the line and go to the “passport pickup” area. Then I filled in a form and I asked for 3 copies just in case something happens. Fee $0! You have to give them your passport for about a week or so and then pick it up again.
3) Fill in the W-7 & “proof” that you need the ITIN.
Fill in W-7 by using pdf form. The reason you are filling this in is Exception 1d) royalties. You will notice that in the instructions chart you will need “1(d) A signed letter or document from the withholding agent, on official letterhead, showing your name and verifying that an ITIN is required to make distributions to you during the current tax year that are subject to IRS information reporting and/or federal tax withholding.”
Then go to whatever site you plan to sell to see how you can obtain a document to prove that you need the ITIN number. For Amazon, they have a blanket letter which you fill in date and name.
4) Mail everything and wait for 8 weeks.
5) Will write more about next step after obtaining ITIN, but basically you then have to give your US retailer both your ITIN number and W-8BEN. W-8BEN form is here with instructions. Someone told me a horror story that Amazon took 2 years with this…we will see…
I’m glad that getting the paperwork ready was easier than I thought! Alas, I only hope that step #5 will go more smoothly for me than my fellow author friend…
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