Removing US Withholding Tax from your royalties (Part 3)

Intro and disclaimer: I am a UK-based writer. Towards the end of 2012 I began proceedings to strip US Withholding Tax from any royalties earned through US companies. This short series of blog posts documents the process I followed. The usual caveats apply: this is the internet, folks, so you shouldn’t consider this to be professional advice. That said I hope you still find these posts of use. Okay, let’s get stuck in.

Part Three: Completing W-8BEN forms for each publishing platform

In the previous part I described how to apply for an Individual Taxpayer Identification Number (ITIN) from the IRS. In this part I’ll detail how you can use your number to remove or reduce US Withholding Tax levied on your royalties.

There are a number of platforms writers can use to self-publish their work, such as Amazon’s KDP (Kindle Direct Publishing) and Smashwords. Both of these companies will automatically deduct 30% of your royalties to pay US Withholding Tax unless you apply to have this tax reduced or removed.

To do this you need to submit a completed W-8BEN form. You can download a form from the IRS website via this link: http://www.irs.gov/pub/irs-pdf/fw8ben.pdf

You will need to complete a W-8BEN form for each company you use to publish your work, e.g. one for Amazon, one for CreateSpace, and another for Smashwords. When a company has a completed W-8BEN form they can then reduce or remove the tax, meaning more royalties for you.

Here is a run-through how to complete the form. (The following assumes you are an individual tax payer, not a company. These instructions apply to the February 2006 revision of the W-8BEN form.)

– Enter your full name in line 1, e.g. LUCIAN POLL. Do not add any titles, e.g. no “Mrs” and no “Esq”. You might think your MBE is terribly important, but the IRS couldn’t care less.
– Enter N/A in line 2, as you are not a company.
– In line 3 tick the Individual box.
– Enter the house number and street of your permanent residential address, e.g. 123 ACACIA AVENUE
– Enter the remainder of your address in the next line, e.g. NORWICH, NORFOLK NR99 9ZZ
– Enter your country, e.g. UNITED KINGDOM
– If you have a chez away from chez enter it in line 5, otherwise leave it blank
– In line 6 enter your tax identification number. For an ITIN this will be three digits, a dash, two digits, a second dash, and then four digits, e.g. 999-99-9999
– Tick the SSN or ITIN box.
– Leave line 7 blank, as this is optional
– Line 8 is used to house a reference that identifies you to the company that is paying you royalties. Amazon’s example W-8BEN form has this section blank, but for my form I’ve put in my KDP publisher number, which I found on the account settings page of my KDP dashboard. Smashwords, on the other hand, requires you to enter either your email address or Smashwords display name. CreateSpace requires your membership number, which you can filch from the CreateSpace dashboard.
– Tick box 9a and enter your country of residence, e.g. UNITED KINGDOM.
– Tick box 9b, as you will have provided your tax number in line 6.
– Line 10 in Amazon’s example form is empty, however I have seen several people complete this line, so I’ve done likewise. Line 10 therefore reads as follows, with the gaps completed as highlighted:
The beneficial owner is claiming the provisions of Article 12 of the treaty identified on line 9a above to claim a 0 % rate of withholding on (specify type of income): BOOK ROYALTIES. Explain the reasons the beneficial owner meets the terms of the treaty article: BENEFICIAL OWNER IS A PERMANENT RESIDENT OF THE UNITED KINGDOM.
 – Skip Part III and move to Part IV. Sign the form, enter the date in MM/DD/YYYY format (remember this is a US form) and enter SELF for “Capacity in which acting”.

Your completed W-8BEN form will look a little like that shown below. (Click for a larger image.):

Example of a W-8BEN form, complete except for a signature and a date

Example of a W-8BEN form, complete except for a signature and a date

You will then need to post the form to the company that will pay you royalties. A covering letter for each form won’t go amiss. You are advised to make a copy of each  form you complete in case you receive any queries about your application.

The postal addresses for Amazon Digital Services and CreateSpace are much the same, which is unsurprising given one is a member company of the other. (Scroll down each respective page for the address.) The postal address for Smashwords can be found here.

And that’s it for this short series of posts on removing US Withholding Tax from your royalties. I hope you found it of some use.

Final note: If you see anything that is incorrect in any of these pages please let me know. It’s not my intention to misinform!

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