US tax for UK authors

If you sell your books in the States, any money you earn there is subject to US tax. As a result, Amazon, Draft2Digital and other US companies will deduct 30% withholding tax from everything you earn through them. However, the US and UK have tax treaties designed to stop people being taxed twice on the same income. As a result, there are three ways to deal with this issue.

Get an ITIN
If you have an individual tax identification number (ITIN) issued by the US tax  people, you can complete form W-8BEN and send it to the companies concerned so they know not to deduct withholding tax. Getting an ITIN is quite a palaver, but it is useful.

Get an EIN
This is an Employer Identification Number and I believe that authors/self-publishers are eligible for one because they are small businesses (even if they don’t employ anyone). I haven’t applied for one myself but friends who have say it’s a much quicker and simpler process than getting an ITIN. Having an EIN lets you complete the W-8BEN form to exempt you from withholding tax in the same way as with an ITIN.

Pay the withholding tax 
If you are not earning much, the simplest route may be to just pay the tax. In that case, you may want to investigate whether you can  claim it back against your UK tax bill or claim it as a business expense. The exact rules change from time to time but you can start by looking here.

Diana Kimpton