Support for Indie Authors discussion

Archived Author Help > Getting payed by US companies without double taxes?

Comments Showing 1-6 of 6 (6 new)    post a comment »
dateDown arrow    newest »

message 1: by Owen (new)

Owen O'Neill (owen_r_oneill) | 1509 comments Sorry, Rob. As a US business owner, all I can say is that the 30% applies to people who can't check off the box to avoid withholding on the whatever form it is. In the US, one gets a 1099 from Smashwords, Amazon, whoever stating income and withholding. If you don't provide a TIN, they will take that 30% (my understanding).

Someone else here was asking about what sort of TIN the IRS will accept for non-US citizens. I can be no help there. Check the IRS website. I know you can get TINs for all sorts of things -- for example, when we set up a family trust, we got it its own TIN from the IRS, because it was it's own legal entity, independent of any of us.

Non-US companies must have a way to deal with this. If the IRS does not recognize your TIN (whatever you use there), I suspect there is a way to ask for one. Then the 30% is not withheld and you'll need to file taxes here, if you make enough (I would assume).

Don't quote me, but the chances you would actually owe 30% in the IRS seems small. In fact, if you don't make at least $600 in a year, there is no requirement to report it (for US citizens, at least). Really, I think Smashwords has no business reporting or withholding anything unless your annual payout exceeds that, but given the unpredictable nature of royalties I think can see why they'd elect too.

If they do, you should be able to get your 30% back, since I suspect you don't owe it. I have no idea how, I'm afraid. (I've heard of similar situations where US citizens pay taxes they don't owe when traveling to the UK. You have to file to get them refunded once you return and few people seem to bother.)

Again, I know nothing definite, so I can't say if non-US citizens have to pay different taxes in the US with different tax thresholds, but that info should be available on line.

Is there no threshold on taxes there? Do they take 52% even if you maybe a small amount?

All I can suggest is check out the IRS website, and see if they say how to file to pay only the taxes you own in the US, and not the punitive 30% (which is about the maximum tax rate for individuals here, I think.)

message 2: by Owen (new)

Owen O'Neill (owen_r_oneill) | 1509 comments Another thought. Form a deal with a US publisher.

message 3: by P.D. (new)

P.D. Workman (pdworkman) You should be able to file your US withholdings with your Netherlands tax return, showing that you have already paid a portion of the taxes. Have you talked to your tax authority or a tax expert on this?

And per Owen's suggestion, you could also incorporate a limited corporation in the US, and keep your profits in that corporation, using them to pay for your expenses. Then you only need to pay personal tax once you are making enough to draw a salary from your corporation.

I am not a tax expert, nor do I live in the US or the Netherlands, so do not trust anything I say without checking first!

message 4: by Christina (new)

Christina McMullen (cmcmullen) This is UK, but it's regarding the same 30% sp there might be something to start from:󋁩

message 5: by Chris (new)

Chris Oler | 2 comments Rob wrote: "After looking a bit at my options for my first time getting payed for my Smaswords sales, It all seems to start to look as if making everything permafree is probably the best option, given that aft..."

Rob, I haven't read through it, but below is the relevant tax treaty between The Netherlands and the United States. If it works the same as reciprocity between states, then the 30% withholding is given to the Dutch government and should be applied to your domestic tax bill.

If you supplied Smashwords with a Netherlands Tax ID (TIN), then the IRS should recognize that number and where it originated from, but I would imagine this is the step where things sometimes hit a snag.

Again, I haven't read the treaty, but that's how it works between most states. There may be a process where you need to claim these withholdings through your government.

I found this by searching "international tax reciprocal agreements" and you might be able to find some sources that explain the process. Good luck!

message 6: by Gordon (last edited May 24, 2015 01:09AM) (new)

Gordon Bickerstaff (gfb12345) | 6 comments Rob wrote: "After looking a bit at my options for my first time getting payed for my Smaswords sales, It all seems to start to look as if making everything permafree is probably the best option, given that aft..."

Rob - I avoided deduction of the 30% tax by obtaining a TIN from the US IRS. Fill out a form indicating there is a treaty agreement with your country and submit it to your distributor. Once they have it they they don't deduct the 30%. I searched the internet on how to get a TIN and for advice on filling out the form - there is loads of advice from authors who have done it.

Depending on which TIN you get the form is either a W8-BEN or a W8-BEN-E. Search internet for authors how to submit W8-BEN. Should find what you need.

back to top