Claiming our Tax Treaty on US Withholding Tax

Australian authors, save yourself some time and trouble — I have researched about claiming the tax treaty on the 30% US withholding tax on US sales of books or ebooks. If you don’t recognise the platform name, then it won’t apply to you. Save up to 25% on taxes for American sales – as our treaty is 5%.

Stop Press!  Most Australians do not need to apply for an EIN or ITIN to claim the treaty. You will need to fill out the W8-BEN form or W8-BENE form (for entities) and send in directly to your royalty payment issuer.

If you are an agent, then another form applies and you will need the EIN (apply by phone–see bottom of page). The AMAZON Tax Interview will inform you of the correct form to use.

Amazon Kindle or CreateSpace Tax Form

Take your time with the online Tax Interview. If you are a company/sole trader, use your ABN or company TFN, however if you are publishing as an individual, then use your Tax File Number.

Unless you foresee making over $5,000 from royalties in the USA or conducting business there, then an Australian citizen or permanent resident should claim the tax treaty and reduce the withholding tax. (Always check with your accountant just to be sure).

LULU.com Tax Info

If you send the W-8BEN form, you make a sale in the USA and your book has a free Lulu ISBN, then the tax withheld will be reduced to the rate agreed between the USA and Australia, which is 5% (check on your own country’s agreed rate). This doesn’t apply if you bring your own ISBN as your income is “other revenue”.

You can do the W-8BEN form via a scan and send it within Lulu, or just mail it.  If you decide to send the form, you should mail it to (with your author account name):

Lulu Enterprises, Inc
Attention: Accounting Dept/Royalties
3101 Hillsborough St
Raleigh, NC 27607-5436
USA

Find all the information, including forms, here: http://connect.lulu.com/t5/Tax-Withholding/Royalties-and-Tax-Withholding/ta-p/33384

SmashWords Tax Info 

UPDATE March 2017:  Smashwords reminds you to update your Tax Information – on their new online W-8BEN form in order to claim your payments this year.

Your foreign TIN is either your Tax File Number, if claiming royalties as Individual, or ABN, if claiming royalties as a Business (Sole Trader). Company-registered publishing will need a different form.

When you see the Certification tick boxes, you’ll need to tick all those boxes after READING what they say, in case it does not apply to you.

https://www.smashwords.com/about/supportfaq#taxtreatychecklist

IngramSpark Tax Info

They have a whole heap of forms to sign for State sales tax exemptions; you may do this if you’re really selling hard in the US, where state sales tax ranges up to 9% or thereabouts. Mainly we are concerned to claim the general tax treaty.

AUSTRALIANS:  The entry to fill out is in your Account under “Tax Information”:  here enter your ABN number, if you have a business and are using it for publishing. We believe that entering the ABN and signing the agreement is enough for Lightning Source International to process it. If you need to register an ABN because you now want to run a small publishing business, just go to only the Government links (not the ads displayed) and you will get the ABN for nothing – however any business name chosen does have an annual fee.

If you do not desire to do this, then you will need to publish under one of the many self-publishing assistance houses or else approach a literary agent.

More Information:  Claiming Tax Treaty on US Withholding Tax  

Do you need to lodge a US tax form if making sales in the USA?  Generally not, as there is an exemption for those earning less than a certain amount.  It says on the IRS Exemptions 2016 publication: “Exemptions reduce your taxable income. You can deduct $4,050 for each exemption you claim in 2016” — Nonresident aliens are allowed one personal exemption.  The international tax treaty details are at the IRS website, if you like detail.

This information is provided for your education but is not verified as correct for your individual circumstance. Consult your tax accountant for personalised information.

Also consult the International Taxpayer Service who deals with US tax enquiries. You can apply for an EIN over the phone (download the SS-4 form first), as well:

0011 1 267 941 1000  from 9 pm to 11 am our time approx. (6 am to 11pm EST – please use the world clock to convert)

Fax: 267-941-1055

For major US tax needs, phone specialist accountants US Tax Central in Brisbane, Australia on (07) 3040 3586.