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Dealing with amazon.com and the IRS - Authors!!
Thanks Murray, all nice and clear. will give it a go. I've tried to get thru a couple of times but was on hold so hung up. TBH I wasn't going to bother as UK tax and NI is more than the 30% withholding tax, but next year I stop paying NI so it'll be worth it.
I am confused. The guy at the embassy said as an individual I need an ITIN not an EIN and the website says that also.Which is correct.
I'm sure someone will be along soon to help, Alexandra.Sorry, I can't. Not an author, me.
Right well that was entirely unsuccessful. Apparently I need some other form to register the company ( it is isnt a company it is me.) The woman wasnt hugely helpful. I think I will just do it the slow way. The man at the embassy gave me the details so I will just use that. Thanks for the advice though.
Alexandra wrote: "Right well that was entirely unsuccessful. Apparently I need some other form to register the company ( it is isnt a company it is me.) The woman wasnt hugely helpful. I think I will just do it the..."An EIN is definitely OK for a non US citizen. She may have asked you about an SS4 - you don't need that. I've heard others mention that some of the less helpful IRS staff ask for that but you don't need it. Just give them a call back and explain you believe you don't need the SS4 if they ask for it as you are applying by phone.
It should be fine and a hell of a lot easier than the other option!
Alexandra, which phone number did you call? It should be 001-267-941-1099.You don't need to register a company at all. If they ask what company name is, just say it's the same as your name.
I've read a few cases where people have been told that they need to do XYZ first, but then when they ring again, they get through to someone else, and it goes swimmingly.
An EIN is what you need.
haven't tried to ring again, but I know I read somewhere that the EIN applies to sole traders, which is what you are as a writer
Well, I've followed the route suggested by george, above and we phoned the US. As a result we now have a EIN number to submit on the W8-BEN.To recap:
First try was to get notarised documents. These cost over £140. We filled in the form and it was rejected because we listed as a) not h). The notarised documents were shredded by the IRS although they were accepted. We were informed we would need new documents when resubmitting.
Second try was to use an agent. We were told by the agent that he would take care of everything, as he could sign and confirm that the documents were authentic. Another £130.
We received a letter this morning informing us that the rules had changed four days after our visit and that we would be required to send original drivers licence and birth certificate. Complete waste of time.
Followed George's EIN method and received a EIN number in 15 minutes.
Unbelievable. I just wish we'd known this when I created this thread.
Yup, I've read several similar stories to your's, Geoff.It's completely baffling why not even Amazon has detailed these steps.
It's also ridiculous that you still have to fill in forms, and mail them off once you get the EIN.
I've come to the conclusion that the IRS is living in the 18th century. I suspect the reason why some of the operators insist that you get an SS-4, is because they cannot be bothered to fill the thing in over the telephone.And I thought our civil service was bad.
In case it helps, I wrote a piece here about how I got the various tax numbers as an individual, and also about a few pitfalls filling in the subsequent W8-BEN. eg don't abbreviate things or they reject it! http://nailyournovel.wordpress.com/20...
I had an email from Amazon advising me to have royalties paid electronically into my account (US to UK) - trouble is they want a IBAN or BIC code.Does this mean anything to you lovely people?
How do I find out what my code is?
thank you,
hugs,
G x
Grace wrote: "I had an email from Amazon advising me to have royalties paid electronically into my account (US to UK) - trouble is they want a IBAN or BIC code.Does this mean anything to you lovely people?
How ..."
They are part of the banks identification codes along with your account number that identify the bank etc.
http://www.business.hsbc.co.uk/1/2/in...
That's weird tho. I thought they only sent cheques from US to UK. Have they changed that?
Roz wrote: "In case it helps, I wrote a piece here about how I got the various tax numbers as an individual, and also about a few pitfalls filling in the subsequent W8-BEN. eg don't abbreviate things or they r..."This is wonderful. I wish someone would do this for Canada. I've been rejected four times, but they refuse to tell me why. ??? Really not helpful at all.
Ok as far as I understand it.You need an ITIN for an individual - this allows you to register as a non US citizen and you won't get taxed by the US government (unfortunately you still get taxed by ours.)
Now some people say you can get round it with an EIN but the nice man at the embassy in London and the less nice woman at the EIN office said that is for companies only. As an individual you can't use an EIN. It does depend who you ask though.
To get this you need W7 form, 2 forms of ID such as passport, birth certificate etc, (see below-m these have codes). Take copies of what you send and add the codes to the copies
ITIN
Need Birth Certificate (code 17)
Voter Registration (code 24)
Take copies- add codes about to copies
Send to IRS with W7- Fill in A-H in box write exception 1d
Reason- Royalties UK
Article 12
Use month/day/year NOT UK date
Need letter from publisher- Amazon, LULU, CS SW.
Then send W8 BEN to publishers. Once you receive the number. You need one form per publisher.
I believe you can contact Amazon and ask them to withold any cheque payments until you tell them to release it. However I am not entirely sure.
I am not sure how much use this is and I haven't had much chance to check this out but I googled foreign checque cashing in the UK. Most places charge you a nice hefty fee but citibank apparently let you open an account in dollars and in sterling- and you can swap between the two. They quoted me £5 for the cashing of the dollar checque (as opposed to £20) and you can then just transfer the money to the sterling side.Now it seemed there was a monthly fee for the account but apparently depending on what facilities you take it can be cheaper.
Now I am not sure if there is internet banking and if so you just get Amazon to pay direct to it but here is the link. I am going to make a few more enquiries but I may well go with this.
http://www.citibank.co.uk/
Just to say quickly that I actually got a cheque from amazon.com for the first time ever during September, and although there was a certain amount of surprise and a lot of form-filling (by the bank clerk, not by me) at my branch of Lloyds TSB, they only charged £5 for the conversion and the cheque cleared through into my normal current account in about a week and a half. I wouldn't have thought this would be unique to Lloyds TSB. It might be worth checking out some other high street banks.
SOLVE YOUR US TAX PROBLEMS IN 20 MINUTESI would like to share this amazing website with the group. This process really does work (as suggested by George above.)
After a twenty minute phone call to a nice guy in Philadelphia (cost £9) I was the proud owner of an EIN - an Employer Individual Tax Number - happily accepted by amazon instead of an ITIN. Just register yourself as sole proprietor with your own publishing company.
http://catherineryanhoward.com/2012/0...
Exciting as all the above is, I would just like to point out that Al Capone was finally caught by the IRS, not the FBI or Eliot Ness.
Applying for an EIN rather than an ITIN, although quicker, is a get around short cut that could, maybe, have some negative consequences later.
For example, the forms state where you sign that knowingly telling the IRS something that isn't true could be perjury. I would assume that this would also apply if you are applying over the phone.
Avoiding the SS4 form could also be problematical as it is for additional information in support of the EIN claim, like for example how you intend to submit your IRS Tax Returns, quarterly or annually.
Basically, if you are claiming an EIN then you really ought to have a reason for doing so, rather than just using it as a getaround. Having a registered company to back it up would be a starting point.
I might be wrong on this, and just a fear monger, but even Al Capone knew that you don't mess with the IRS.
Applying for an EIN rather than an ITIN, although quicker, is a get around short cut that could, maybe, have some negative consequences later.
For example, the forms state where you sign that knowingly telling the IRS something that isn't true could be perjury. I would assume that this would also apply if you are applying over the phone.
Avoiding the SS4 form could also be problematical as it is for additional information in support of the EIN claim, like for example how you intend to submit your IRS Tax Returns, quarterly or annually.
Basically, if you are claiming an EIN then you really ought to have a reason for doing so, rather than just using it as a getaround. Having a registered company to back it up would be a starting point.
I might be wrong on this, and just a fear monger, but even Al Capone knew that you don't mess with the IRS.
I agree with the previous post. Of course it is entirely up to the individual to do what suits them, but personally I am going the long and "official way."I rent my place and I am not allowed to run a business from their. For me it simply isnt worth the risk. I don't sell that much in the states, I have asked Amazon to hold my checque until I am sorted and that is fine for me.
Of course what other people do is entirely their own business.
Just to qualify my statement above, I have an ITIN which I use with Amazon, CreateSpace and Smashwords. And yes, I got it the long "official way" as outlined by Alexandra in post 128. It might be long-winded, and a little costly getting copy ID documents validated, but it is the correct way.
Re high street bank charges for cheques in dollars, Nat West starts at £5 for under £100,then £10 for up to £5000.
Having been through this experience, you are not perjuring yourself. An EIN can be used to register a business entity. As authors are self employed, you are a business entity. To ensure this is correct, I would recommend that you register with the HMRC as such. All authors should do this anyway, as it is a legal requirement to register as self employed.With regards to the SS4 form, there appears to be a difference between different people who work for the IRS. Some insist that you must send the form in, whilst others are more helpful and fill the form in for you while you are on the phone. It's as simple as that.
If applying for an EIN was an acceptable and correct way to proceed, then that would be the instructions that everyone would give you as an author receiving royalties. It's not. The fact that you can do it doesn't mean it is right.
An EIN is for a different business entity than an author. It's an Employer Identification Number. The SS4 then identifies if you actually employ anyone or not.
I don't think it is a good idea to advise other people to follow this route when all the official sources advise you to follow a different one. I am not a financial advisor, and neither am I a legal one, and I don't know if you are, either. But I am just saying.
An EIN is for a different business entity than an author. It's an Employer Identification Number. The SS4 then identifies if you actually employ anyone or not.
I don't think it is a good idea to advise other people to follow this route when all the official sources advise you to follow a different one. I am not a financial advisor, and neither am I a legal one, and I don't know if you are, either. But I am just saying.
All I know is that during the application we did not make any false claims or untruths. Sophie is registered as self employed by the HMRC. She is not employed by any publisher and therefore is neither An EIN is "A unique identification number that is assigned to a business entity so that they can easily be identified by the Internal Revenue Service."
A self employed author is a business entity.
I am not a lawyer or accountant either, but reading the voluminous notes relating to self employment, EIN is as valid as ITIN. In many ways, both are incorrect, as an ITIN does not fit the definition of a self employed writer.
Thank you Geoff for explaining it so well. 'The fact that you can do it doesn't mean it is right.'
David: it is RIGHT. It works and it is valid. I even explained to tax official in Philadephia who I was and why I wanted the EIN. He laughed had still had no qualms about giving me an EIN.
As Geoff says above, when we register with the UK tax office as authors we are effectively declaring ourselves as the sole proprietor of our company: I am Karen Charlton trading as Karen Charlton. For tax purposes, I am an entity. For those of us who have been self employed this makes perfect sense.
'If applying for an EIN was an acceptable and correct way to proceed, then that would be the instructions that everyone would give you as an author receiving royalties. It's not. '
Oh, yes it is, David. If you check on the instructions which amazon give us when we upload our eBooks, you can see that they happily accept either an EIN or a ITIN. But strangely enough they go into great detail about the ITIN - but hardly say anything at all about how to get an EIN.
Bottom line: The US tax man in Philadephia gave me an EIN after a twenty minute phone call. I instantly contacted amazon with the number and less that a week later I received an email from them which told me that they would NOT be withholding tax from my royalties for the US government. An offical letter from the IRS arrived at my home about ten days later. Sorted.
I know it sounds unbelievable compared with the merrygo round we have to go through to get an ITIN but I would strongly recommend this far simpler - and perfectly legal - route.
I am no tax dodging Al Capone. I pay taxes in the UK and NOBODY is expected to pay taxes to two different governments.
I posted this to try to help fellow authors. Please don't villify me. I ain't no Al Capone... :(
P.S. Becoming a registered company is only necessary in the UK if you think that you are going to earn that much you will be paying V.A.T. on top of your normal tax. Sadly, my royalties ain't in that bracket yet...but I live in hope. :)
Only the real Al Capone would dare claim he wasn't Al Capone.
Actually Karen, the main reason for creating a limited company is to limit liability to the amount of money invested in the business. With self employment, there is no limit to the liability, as a friend of mine who was bankrupted last year will attest.If you think of businesses as entities, not people, the tax system becomes clearer, a little anyway. The whole purpose behind ITIN and EIN references is to enable identification. Which type you have is to allow the IRS system to segment administration. Both areas have the administration to process overseas entities, where treaty arrangements are in place. There is obviously not that much of this going on at the moment as there is no plans to combine the two offices for economy of scale. With all the new wave of ebook authors appearing, this could change, of course.
Nicola wrote: "Re high street bank charges for cheques in dollars, Nat West starts at £5 for under £100,then £10 for up to £5000."Oh yes I must do that. Adds to list for next week. Not that I have earned enough to make much difference but best not to wait.
Alexandra wrote: "Nicola wrote: "Re high street bank charges for cheques in dollars, Nat West starts at £5 for under £100,then £10 for up to £5000."Oh yes I must do that. Adds to list for next week. Not that I ha..."
Well as I havent got around for doing either EIN or ITIN I best decide which one to do. I will stick with the ITIN I think as that is what the nice man advised. However what people do with their financial affair is up to them. I am pretty sure Amazon are savvy on this and would refuse if it wasn't done correctly. I would just rather go the way I was advise asknowing my luck it would all backfire horibly;)
I suppose it depends if you want to register yourself as a company or not.
If this is of help0845 9154515 is the number to register as self employed (which appearently you need to do.)
You need for CWF1 which can be found on the HMRC website. You need to submit that when the returns are due (April next year I think.) If it is second income it is 20%.
Michael wrote: "Only the real Al Capone would dare claim he wasn't Al Capone."OK I give up the pretence. I am Al Capone reincarnated as a small, Yorkshire woman. I am also into conspiracy theories. The main one dominating my small mind this year, is that Amazon is in league with the IRS to make more money for the American tax system. which is why they DON'T tell their self-published authors about HOW EASY IT IS TO GET AN EIN.
This maybe because I've got a friend who has self-published FOURTEEN books on kindle and still pays 30% tax to the US government (and then another 20+% on her royalties to the UK government) ....or it maybe not... Go figure.... ;)
So Karen, your friend is paying 50% tax. Don't tell Romney.
Geoff (G. Robbins) (The noisy passionfruit) wrote: "So Karen, your friend is paying 50% tax. Don't tell Romney."I won't. But I have to confess that the small, Yorkshire woman inside me is scandalized. None of us 'oop North' gained our reputation for thrift and frugality by overpaying on taxes. She is letting down the side. :(
My friend admitted that she gave up at the first hurdle i.e. the ITIN.
If you have already paid the tax to the States, you won't pay in the uk too - there's a 'reciprocal' tax arrangement so it will be exempt - but if income earned in the US isn't taxed there, then you'll have to pay tax AND NI on it here (at least, income tax on any profit after business expenses). Which amounts to pretty much the same figure. The NI on income from self employment (Class 4) is 9 per cent on annual profits between £7,605 and £42,475 (2012-13) and you also pay Class 2 NI.
Ah now that I didn't know. I am so not looking forward to my tax return next year. £42k would be very nice, but somehow wishful thinking;)
message 141:
by
Geoff (G. Robbins) (merda constat variat altitudo)
(last edited Oct 07, 2012 02:20AM)
(new)
Don't forget Karen, that if you are using your book sales as a second income, you will most likely have paid Class 1 NI with your main employer.There is a link here with examples of mixing the two types of employment.
http://www.hmrc.gov.uk/working/intro/...
And people wonder why there are so many accountants around.
(Note to self. Put the bloody link in, you idiot.)
Thanks Geoff. Good link. Gave me a headache.At least Income from Small Earnings will prob be exempt from NI, but you need to keep an eye on likely total income.
I think most people do not realise that there is an ceiling on NI contributions. This is why company directors, such as me, have to pay our NI in a different manner. There was a nasty little wheeze some years ago where directors could pay themselves big, one off bonuses, and blow the monthly limit on NI. The change was introduced to specifically stop that. Directors no longer have a monthly limit.
Hurrah. Just got my EIN: easy peasy. With Skype pay-as-you-go it costs 1.6p per minute. Hurrah. I rang at 3:30pm and was on hold till 4:05pm. The man who answered did ask me about having an SS-4 form. When I told him that I am "sole proprietor and the owner of the business" he said that I didn't need an SS-4 then. Hurrah.
message 148:
by
Geoff (G. Robbins) (merda constat variat altitudo)
(last edited Nov 17, 2012 08:39AM)
(new)
Having been in business for many years and helped others who are sole traders, you need to be almost schizophrenic to operate properly. You need to abandon your existence at the door when dealing with the tax authorities.When you deal with them you are not a person but an entity. Your entity for example does not attend interviews but client meetings. One is tax deductible, the other isn't.
If you are self employed, expect the HMRC to demand that you prove it. This demand is often accompanied by a demand for money. This is their way to attract your attention. It's very effective.
You will need to keep a list of all your business income and your expenses. In one column list your income from your books. In the next column, the expenses you have incurred, including advertising, costs of applying for EIN's (the phone calls), cost of en-cashing dollar cheques, etc, etc. Do not omit any expenses, no matter how trivial. You are an entrepreneur, not a wage slave, you need to act like it. Finally, deduct column two from column one and you have your profit. This is what HMRC wants, but remember, unless you earn income elsewhere, you can use your personal allowance to offset any possible tax.
Once you post this explanation (You expensed the stamp and envelope, right?)the HMRC will take you out of their investigatory headlight and you can get on with what you do best, write.
See you in The Bahamas. The first Mai Tai is on you.
Thanks, this is useful. Igot the letter with the number they give you stating I am self employed, and now I have a letter saying I have 3 months to do a tax return.I haven't earned all that much so I doubt I will end up paying ooddles of tax on it. Just a question- I have a day job on which, of course I pay tax deducted from my salary I assume I don't have to state this as this does not relate to the second income?
I will set something up stating what I have paid out (I didn't know you could take into account postage and phone calls regarding this- I have no idea what i paid for my ITIN as it was a while ago so that will probably have to be forgotten unless I can find the postage slip) and also what come sin.
Ha. Putting the quid for the Skype call on expenses? Never occurred to me. I shall!Someone mentioned we'd need to do a US tax return once we've got any sort of TIN (tax identification number). Does anyone know whether that's true?
STEP 1
Call - 001-267-941-1099 any time after noon UK time (quietest then)
Phone number for IRS who will give you your EIN Number for the W8 form. You don't need to do anything before making the call, nor do you need to give anything other than your home address
STEP 2
Fill in the W-8BEN form (a) below as per the example (b)
a. Form W8
https://images-na.ssl-images-amazon.c...
b. Example form - replace x's in question 6 with your EIN number that they give you on the phone call and cross the EIN box NOT the SSN or ITIN box
https://images-na.ssl-images-amazon.c...
STEP 3
post form to
Amazon.com
c/o Vendor Maintenance
PO Box 80683
Seattle, WA 98108-0683
I had my confirmation in about two weeks and a rather nice refund of withheld taxes shortly thereafter.