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Hi all,
Perhaps many of you know that I've been readying Felicia's Second Life for publishing on Amazon. What everyone doesn't know is that I'm wracking my brain trying to understood this whole withstanding tax thing.
It stated there that Amazon will withhold 30% withholding tax for non-US citizens. To overcome this, I need to give my income tax number. The problem is I don't have a tax income number because my income never reach the taxable rate.
I read on the net that people had gone around this by doing the SS-4 form or something and calling the IRS. The problem is, I don't live in the US, so calling the IRS is extremely expensive.
I would've been able to release FSL book 1 by next week on Amazon, but this withholding tax thing is too confusing for me. I'm afraid of editing it with my current state of mind because I'm afraid that I'd end up editing FSL into something gibberish. For people who can't tell, I've never paid income tax because my income never reached the taxable level in my country, therefore, I never had income tax number.
Is this something that I should be worried about? I read that it's better to do it before my book comes out because then I'll have to do the rebate thing or what nots. Can somebody help explain things to me? I'm so confused I'm not even sure what I'm doing anymore.
If you have to ask, I'm simply looking at the monitor right now without doing anything because I have no idea how to proceed. Thanks in advance. I'm not even sure if I'm making any sense with this post.
Comments
Tax withholding
In America, for American citizens withholding funds for federal tax is a way of life. For us it is mostly voluntary unless our income exceeds a certain level. I am usually below that level.
So if, for example, you make $100 over a year, Amazon will withhold $30 and that goes into a withholding fund. To get that money back, you will need to file for US Federal taxes showing that you make too little to pay taxes. If you wind up making a lot of money on the book and that puts you over the taxable income level, you will owe taxes on that money. After the first of the year, I will be filing my own taxes, and can ask some questions for you.
You may be able to go to the US Consulate in your own country and get more information, or if there is a US Military base, they might be able to tell you something. I have a friend living out that way and can ask her what she does.
Please PM me if you need more information.
Gwen
as a UK taxpayer... or rather as being not a US taxpayer
the UK has an agreement so we dont get clobbered twice for tax... to get them to dop the witholding..download and complete the form. Send it to the IRS at the US embassy in London. They will send back the certificate and you submit that to Amazon and any other non UK publishers. I did it four or five years ago and once done you are set up.
you just have to declare all income to the UK INLAND REVENUE AND CUSTOMS. Depending on your tax status, and how much you earn and normally pay unless you sell 100,000s of books, it is managable.
I am glad i did it.
Tanya
There's no such thing as bad weather, just the wrong clothes!
A bit ironic ...
... considering how Amazon has a reputation for tax dodging here in the UK by arranging profits to be made in countries where tax is very low. Of course this problem applies to numerous multi-nationals as well as Amazon.
Robi
IRS rules and forms
Most, if not all, forms and instructions can be downloaded from the IRS website: www.irs.gov The website's search function has worked well for me to find the forms I have needed, but I am in the US so that may make a difference but who knows.
I checked the SS-4 form and this are its instructions: https://www.irs.gov/pub/irs-pdf/iss4.pdf
Hope this helps
Jeri
Jeri Elaine
Homonyms, synonyms, heterographs, contractions, slang, colloquialisms, clichés, spoonerisms, and plain old misspellings are the bane of writers, but the art and magic of the story is in the telling not in the spelling.
In the UK...
Your tax reference number is the same as your National Insurance number which you should already have.
That worked for me when registering on Kindle, although I am a UK tax payer. Why not try that and see if it works.
But Robyn is certainly right about Amazon's tax dodging, paying its taxes in somewhere offshore to avoid payment, but expecting its non US writers to pay US taxes!
Filling In the SS-4 Form...
...which should be downloadable at irs.gov, will get you a taxpayer ID number (TIN) as an independent contractor. (The form is filed electronically, so that part shouldn't cause a logistics problem.)
Once you have the TIN, you can provide it to Amazon and opt out of withholding. I'm hoping that's the last anybody at the IRS needs to hear from you, since your income is very unlikely to reach taxable levels and there shouldn't be any filing requirement under those circumstances.
But IANAL or, more to the point, a tax accountant, so I'm reluctant to say anything with certainty after reading the SS-4 and W-8 information sections on their site.
Best, Eric
Thanks for the info
Thank you everyone for your help and inputs.
Unfortunately, someone messaged me and told me that I shouldn't have worried about it in the first place. It's because my country, Malaysia, is not one of the countries that has income tax treaty with the US. So even if I have the tax income number, I'll still be charged the 30% withholding tax.
Freaking annoying, but there's nothing I can do about it. In my country, an income tax of 30% is what the government charge the rich people. Even the higher middle income only pays 11%-15%... So now I can boast to my countrymen that I pay 30% income tax lol
Thanks again, everyone.
Filing for refund
You can file for a refund of tax if your income is not high enough to pay tax in the US.
Here's the IRS page: https://www.irs.gov/Individuals/International-Taxpayers/Help...
The relevant forms are 1040NR, 1040NR-EZ and 1042-S.
I used to be a tax preparer and I wrote tax software. :)
Hugs,
Erin
= Give everyone the benefit of the doubt because certainty is a fragile thing that can be shattered by one overlooked fact.
Income tax refund
Hi Erin,
Does that mean even if my country doesn't have tax treaty with US, I can claim a refund? How much refund will I be looking at and how much income is under taxable in the US? Thanks in advance.
Taxable income
I haven't kept up with this so I really can't answer as to how much income would be taxable. Something like the first $10,000 is not taxable with exemptions and deductions. After that, the low end is taxable at 10%. You should be able to get a full or nearly full refund.
Hugs,
Erin
= Give everyone the benefit of the doubt because certainty is a fragile thing that can be shattered by one overlooked fact.
If you ring the US Embassy
If you ring the US Embassy there is a guy who will talk you through what you need to do.
Polly