Royalties, US taxation and the EIN

 
 
Part 24: learn how to prevent the IRS from claiming a quarter of your Amazon royalties in 6 easy steps.
 
The bad news is that there is a base withholding rate of taxation for overseas authors publishing and being paid through a US entity such as Amazon. For Australians based in Australia, that withholding amount is 30% of all royalty income, which Amazon send to the Inland Revenue Service (IRS).

Royalty cake
Better learning through cake: how much of your delicious royalties the IRS wants to eat     (source)

However, because of tax treaties held between the US and Australia, this can be reduced to only 5% for Australian authors (which then, I believe, could be offset against your annual onshore taxation). You simply need to supply Amazon with an Employer Identification Number on a W-8BEN form, via the Inland Revenue Service, to claim this tax reduction as a “foreign person needing an EIN to comply with IRS withholding regulations”.
 
A list of other countries with applicable treaties is here. This information is also available in PDF format as IRS Publication 901.

Good news, everyone!

If you’ve had dealings in tax matters and just despaired at how much paperwork you have to collect to get anywhere, the good news is that applying for an EIN is ridiculously simple. Simply follow these steps:
 
1. Download form SS-4 and the instructions to complete the form. Note that you do not have to send this form anywhere (unless later instructed to do so because of a complication, I guess); you’ll actually be supplying the details to an IRS representative, who will fill the form in for you at their end. Your copy is simply for your own records.
 
2. You’ll have to call the IRS international applicants office on 0011 – 1 – 267 – 941 1099 (international dialling – country code – area code – local number), between 7am and 7pm, US eastern standard time. Right now, with daylight saving, that’s 11pm to 11am in Victoria. I applied four days before Christmas and was speaking to a representative within two minutes. Skype is fine, but make sure your connection is solid.
 
3. The rep will take a few of your address, contact details and your Australian tax file number. They will then supply you with an EIN, which you can use immediately.
 
4. Download a form W-8BEN, along with the instructions, and check out Amazon’s sample W-8BEN page.
 
5. Fill out the W-8BEN and send it to:
 
Amazon Digital Services
Attn: Vendor Maintenance
PO Box 80683
Seattle, WA 98108-0683

 
6. After a couple of weeks, you’ll receive an email from Amazon to tell you that the EIN was successfully applied to your account.
 
More advice is available here, here and on Amazon’s help page.

Proceed to Part 25: ‘Cheques, US bank account or Payoneer?’, or return to the article index.
Return to Re: writing
While I’ve endeavoured to provide you with accurate information, what is considered ‘accurate’ will change over time. If I’m wrong, or you’d like to ask a question or share your thoughts, I’d love to hear your take on things.

Rhys About Rhys

Teacher, writer, editor, cook: a bit like that nursery rhyme, really.
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