Friday, 1 March 2013

Hassle-free Taxes for Non-US Authors

At last, I have an IRS number!  After all the struggles I spoke of in my 2011 blog post NO ESCAPING TAX PAYMENTS, multi-talented romance author CLAIRE ROBYNS sent me a list of the steps she followed to get her ITN (Income Tax Number) from the dreaded Internal Revenue Services (USA). 

Claire had found the excellent and detailed blog post by Irish author CATHERINE RYAN HOWARD very helpful and passed on a useful list of steps to follow:

1. Phone 001 267 941 1099 (This is from SA, check your international codes and this is a USA number. Time difference between South Africa and USA is approx 6 hours, so factor that in when you call as well)

2. You'll get through to an auto-responder and be asked to select number options

3. I selected "1" and was put through to an on-hold waiting pattern. I waited about 2 rings (Claire pressed 2,  had to wait about 15 minutes , then was  transferred to another department and put into a waiting queue for another 10 minutes, so 25 minute wiat for Claire altogether). When the lady answered, I said "I'd like to apply for Tax Withholding for a foreign entity"

 4. Both Claire and I had no problem with our operators - they immediately took us through the questions and steps to get our ITN number. But there are stories on the 'net where, at this point, they might mention the SS4 form and say you need to fill this in. In that case, either say "I was told I can do this directly over the phone" and they should accept that and continue. If they get sticky, simply put phone down and try again a few minutes later to get through to someone else.

5. The Questions/Answers: The IRS telephone operators  basically take you through the SS4 application form. You can look at an SS4 form on the IRS website here.  If you take a look at the SS4, you'll see what they ask. But basically, they ignore most of those questions and simply ask what they need from you. You may need to spell your answers out, and then they'll spell it back to you, to ensure everything is correct:

   (a) Full Name (I gave my full legal name)

   (b) Trading as Name (my trading as name, Aztar Press)

   (c) Mailing address 

   (d) postal address (if different from mailing address)

   (e)They will ask if this is for compliance with withholding (I answered yes)

   (f) first day of business (I chose 1/March/2013 because that is the date I've registered with South African Revenue Services). 

    (g) how many people you think you might employ in the next 12 months? "0"

    (h) the nature of your business? I said, Retail - selling books through US distributors such as Amazon"

6. And that's it. They'll spell all your answers back to you, and then she'll say, "You need a pen to write down your ITN (or EIN) number ..." The operator then advises you that you'll receive the official form with your ITN number on it within two weeks. 

I asked if she could email it to me, but it can only be faxed to a place where you are or mailed. But, at this point you are an officially registered taxpayer with the IRS!

Nothing is this easy, right? Like Claire, I was very nervous before phoning, but both of us found the IRS operators so friendly and helpful. Nothing like the big bad IRS wolf I'd expected!

The next step is then to fill out the W8-BEN form and submit it to each of the places you've published with (Amazon KDP, Createspace, Smashwords). Catherine Ryan Howard gives a detailed step by step outline of how to complete the W8-BEN form, which you can download here.  

After that, you send of the forms to the distributor addresses listed on Catherine's website and you're safe from paying double taxes on your hard-earned royalties.

Whew. I, for one, am glad that's over. 

With thanks to Claire Robyns and Catherine Ryan Howard for their fantastic tips and advice on how to escape the hassles of paying tax to the IRS. Good luck registering yourself because remember this: there is no escape from taxes!

DISCLAIMER: I must be more brainwashed about tax after 20 years with my hubby Dr Beric Croome than I realised. This article, and my idea for the 2011 tax article were all my own - a middle of the night brainstorm!  One doesn't get free advice from tax lawyers, I'm afraid, not even when you're married to one!!! :)