Incoming: how to get your tax number

Right then, your MS has been edited, polished, proofread, read by impartial beta readers, proofread, stared at for a while, then proofread again. Your cover looks lovely, you’re pleased as punch. You step confidently towards the end of the diving board, take a deep breath, then look down at the water below…

Okay, wait a second. Step back from the edge.

For all of you non-US scribes, I recommend that at some point during the above you get your tax ID number from the IRS. It’s not compulsory at this stage so you could go ahead and sort it out later if you wanted, but it’s a pretty big thing – and it impacts on your royalty payments – so why not just get it done.

Judging by the anguish leaping off the pages of noticeboards I checked out at the time, this is one of the most daunting elements of “your first time”. I felt exactly the same. After all, you’re dealing with the tax system. The Man. It’s an area of working life where you think you’ve done something wrong, even when you haven’t. It’s vast concrete buildings full of long, echoing corridors; men without faces injecting truth serum into your veins, trying to find out where you’ve hidden the £9.68 that cannot be accounted for in your annual returns…

But worry not, I’m here to tell you that it ain’t that bad. Really. I found the IRS to be helpful, polite and efficient, and as you’re ringing them on a dedicated line for getting your ID number, they’ve already been through it a million times with other indie authors. It’s routine.

And let’s be honest, you don’t really have much choice about this, because unless you want our friends at Amazon, Createspace, Smashwords et al to hand over 30% of your hard-earned to the IRS before paying you, then you need to get to it. Those companies are legally obliged to declare your earnings, and don’t forget that after the IRS has taken its slice, your own revenue system will then do the same. Death and taxes, remember?

Microsoft Word - Document1In a nutshell, Amazon etc need to submit a W8-BEN form to the IRS, which, assuming your country has an arrangement with the US, means tax will not be withheld from your earnings. And your unique tax ID number needs to be on this form. If you Google the subject you’ll find plenty of sites telling you that you need to get an Individual Tax Identification Number (ITIN), which is a tedious process, and probably the last thing you’ll want to be doing when your head is full of other writerly things. So listen to me – there is an easier way. What you really need is an Employer Identification Number (EIN), and you can get this with one call to the IRS on +1 267 941 1099.

I know, I know – it’s still not ideal. And yes, I was dreading it. But all that happens is you tell them you’re self-publishing a book, that you’re a sole proprietor (or if you have a company name, give them that) and they go through the W8-BEN form with you. They fill in all the details (date of birth, your address and so on), and then they say, “Okay, Mr/Mrs/Miss X, your EIN is … .” And that’s it. You say your goodbyes, hang up the phone, and do a little dance.

Not only that, after you’ve done it once… it’s done. That ID number is used across all the companies you’re dealing with, on your first book and all the other fine books that will surely follow.

About a month later official confirmation arrives in the post, but you don’t need to wait that long if you wrote the number down (which you did, didn’t you…?). KDP allows you to fill in all the details online via your dashboard, which is very handy. But be aware that it takes about a week for the IRS to input your details onto their database, so sit tight for that time. I didn’t. I freaked out when my KDP info kept getting rejected and phoned the IRS again, only to have this fact patiently explained to me.  Createspace and Smashwords, meanwhile, require you to post the completed W8-BEN form to them, which again is no big deal.

The main source of self-induced pressure for me was that because it’s so important to get the number, there is a certain requirement to NOT SCREW IT UP. I thought I’d get tongue-tied, offer contradictory information about my date of birth or gender, which would then raise their suspicions that I had something to hide. Which I’m pretty sure I don’t.

If I still haven’t convinced you that this process is straightforward, head over to Catherine Ryan Howard’s site for an excellent post by David Gaughran on his experience of getting an EIN and filling in the W8-BEN form.

Then make that call.

Advertisements

, , , , , , , ,

  1. #1 by Kate M. Colby on September 12, 2014 - 7:06 pm

    Thank you for posting this! My husband and I have been looking for more information on how the “business” side of self-publishing works, and this is a really helpful start on the topic of taxes. Much appreciated.

    • #2 by David Powning on September 12, 2014 - 7:19 pm

      Hi Kate.

      My pleasure. It’s all a bit daunting the first time around, but you’ll find a lot of people out there with good advice to give. Also, and I can’t speak for other people’s experiences, but whenever I emailed Createspace or Amazon with a query, they were always really prompt and helpful. Good luck with your endeavours!

  2. #3 by Maureen Egan on September 15, 2014 - 8:16 pm

    Thank you for this. I inputted my data, so it is useful to know that the IRS take at least a week to deal with this matter. This reduces the strain considerably. May I wish you every success in your endeavours.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: