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Monday, December 29, 2014

Good News for Non-US-based Kindle Authors!
A few days ago I got an email from Kindle Direct Publishing, asking me to retake their 'Tax Interview'. I've copied the relevant part of the message below...
To avoid delays in receiving your year-end tax forms at your address, make sure to update or correct your contact information in your Kindle Direct Publishing (KDP) account by re-taking the tax interview on the website by December 31, 2014. 
To launch the interview and update your contact information, please follow these steps: 
1. Sign into your KDP Account:
2. Click on "(Your Name)’s Account" on the top right corner of page

3. Scroll to the "Tax Information" section

4. Click on the button to "Complete Tax Information"
I wasn't sure at first whether to bother doing this, as none of my circumstances had changed. I decided it couldn't do any harm, however, so went ahead and followed the steps set out above.

An important function of the tax interview is to determine whether Amazon will deduct US tax from your royalties (the so-called "withholding tax"). People living in countries that have tax treaties with the US, such as the UK (where I live) and South Africa, shouldn't have US tax deducted from their KDP earnings, as potentially this means they could end up paying tax twice over. Unless you can provide a US Tax Information Number (either an EIN or an ITIN), however, Amazon have previously deducted 30 percent tax from all such earnings.

Getting a US TIN typically involves phoning up or faxing the IRS in America, and appears to be rather a hit-or-miss procedure, surrounded by confusion even within the IRS itself. As I don't earn a great deal from my Kindle e-book sales in the US, I have never got around to applying for one.

So I was a little surprised to discover that the KDP Tax Interview now allows you to enter your own national tax reference if you don't have a US TIN. I duly entered my ten-figure UK self-assessment reference number, and at the end of the interview the withholding-tax rate displayed was immediately reduced to zero (see below).

So if you live in a country with a tax treaty with the US, it appears Amazon will now accept your own national tax reference number as proof of your non-US taxpayer status, and your withholding tax rate will be adjusted accordingly (for most countries with treaties it will be reduced to zero, though in some cases it will lowered, e.g. to 10%, rather than cancelled completely).

If you've previously put off applying for a US TIN because of the hassle involved, therefore, I highly recommend completing the tax interview now and providing your national tax reference number instead. Even if, like me, your earnings from Kindle are fairly modest, it is clearly far better that the 30 percent taken by the IRS goes into your pocket instead!

If you have any comments or questions (though do remember that I am not a tax expert and can only speak on the basis of my own experiences), please do post them below.

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Anonymous Anonymous said...

Thanks for this, Nick. I got the same email and re-did my 'tax interview' just before Christmas but I didn't notice that my tax withholding had gone to 0%. I've just logged back in to Amazon now to check and you're right, it's now 0%. That's a rare bit of good news from Amazon!

8:23 PM  
Blogger Nick said...

Thanks, Sally. Yes, Amazon kept quiet about that, and the KDP help pages are still saying that you need to get a TIN from the US. But thankfully that no longer appears to be the case, for UK authors at least.

10:06 AM  

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