We publish and sell Kindle books on Amazon and since we live and work in Australia, we have to deal with withholding tax issues. This has always been confusing for us and still is to be quite honest, but until recently we have never had to pay withholding tax. We would just complete the W-8 form and just state we didn’t live or work, or hold a business entity in the US, post it in to Amazon and that would be it.
However, when our latest cheque came through from Kindle, we noticed that they had taken out 30% of the earnings. When we went and checked the last 4 cheques, we realized that yes, they had been withholding some of our money and we just hadn’t noticed before. At this point, we felt it was time to investigate this properly and figure out what we needed to do. So the following information is based on what we did.
DISCLAIMER: Bear in mind, that this is just what we did and may not apply to you. Each country is different and each individual is different…PLUS, we aren’t experts in tax laws by any means…so make sure you do your research first to make sure you are doing the right thing.
Step 1: Get an EIN or ITIN
This part wasn’t very clear for us. We kept reading on forums that you needed to get an Individual Tax Identification Number (ITIN). Since we are a partnership, we didn’t think this applied to us. Eventually we found out that we needed an Employer Identification Number (EIN).
So if you are an individual you will need to complete Form W-7.
If you are a business of some sort, your will need to complete Form SS-4. And yes I know it does say Employer Identification Number (and we don’t employ anyone) but it is the correct one…at least it was for us.
As far as I can tell, the W-7 form needs to be mailed in. The SS-4 can also be mailed in, but it is so much easier just to ring them (+1 267 941 1099). We used Skype for this because it isn’t a toll free number and would have been quite expensive otherwise. The whole process was extremely easy. Make sure you have the SS-4 form in front of you already completed so you can answer their questions promptly. They will give you the EIN immediately once completed and will send out documentation in the mail.
Step 2: Complete the online form in your Kindle KDP account
Once you have your EIN or ITIN, you will need to login to your KDP account and complete the Tax Information section. This can be found by clicking your Account at very top right of the screen.
When it came to the part where it asked if we wanted to claim treaty benefits we ticked YES. We had always selected NO at this point and it wasn’t until we researched this that we realized that YES was the correct response. It will ask you to enter your ITIN/EIN and once done it will tell you what the amount of withholding tax will be. Once that is completed a message will appear stating that your information has been submitted and will be reviewed by the IRS. At that point, you will not be able to make any changes so ensure you have entered the correct information to begin with.