Income tax

Taxes for non-US Self-Publishers

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Tax-Deductions
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Nothing in the world is so certain as death and taxes.  Even if it is not tax time, let’s talk about taxes: Self-publishing an e-book on the biggest online retailer in the world is very easy, but it does not mean you can ignore the taxes.  IRS rules mean that tax monies for your revenues withheld will only be available for refund through the IRS and not refunded automatically by KDP and CreateSpace, as they have been up in the past.  Amazon will remind you… They will send you a form to fill out.  If not, here is the way to go:

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Amazon and other retailers are required by law to withhold 30% of the royalties earned by non-US authors until they settle their tax status.
The commonly accepted method was going through the laborious process of getting an International Tax Identification Number (ITIN), which requires form-filling, notarized copies of passports, embassy trips, fees, and inexplicable rejection.  Self-publishers might be able to get an Employer Identification Number (EIN) instead, which will also do the trick.
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Applies Only to Independent Authors:
Are you publishing through their own company outside the US? Also the IRS doesn’t appear to ask for proof that you have actually established your own publishing company, there are all sorts of reasons why you shouldn’t commence this process until you actually have.

  • Call the IRS (tax authorities) at 1-267-941-1099
  • This is a direct line to the dedicated unit in Philadelphia that deals with foreign entities (you) who need an EIN.
    Explain them you are applying for an EIN for a foreign entity.
  • Tell them you are a sole proprietor, and the owner of the business.
  • They will ask for your name, mailing address, phone number, the name of your company, and the country it was incorporated. This will involve a lot of spelling and repetition, but make sure all the details are correct.
  • You will be asked if this is for compliance with withholding taxes and if it is for e-books.
  • After confirming all your details, you will receive your EIN (Employer Identification Number) right away. Write your EIN down on paper and also save it on your computer.
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Submitting the W8-BEN
If you follow these steps, you will save yourself time, money, and a whole load of heartache. All you have left to do is fill out the W8-BEN form. Download the W8-BEN form from the IRS’ website, and print it out.

IMPORTANT:
You will need one copy each for Amazon KDP, CreateSpace etc and/or other retailers.
Don’t abbreviate your country, write it out in full

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Part I (fill out everything in blue ink)

  • Your full legal name.
  • The country you live in/pay taxes.
  • Type of beneficial owner: Check the box that says Individual (unless you are an LLP for example).
  • Your physical address / street address.
  • Your mailing address.
  • Select the EIN box, and fill your number in
  • Your foreign tax number (i.e. your tax number in your country of residence
  • Fill in your KDP Publisher No. (in Account Settings, bottom right)

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Part II

  • Write your country in the line provided
  • Tick the box and fill in your EIN.
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Skip Part III

At the final section – explain the reasons – write “beneficial owner is a resident of (fill in your country)”
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Part IV

  • Sign your name, date it, and write Self at Capacity.
  • Send the original! W8-BEN – not a photocopy! – to every company, that sells your book or that you have published with
  • Add a simple cover letter stating you attach the W8-BEN for compliance with withholding. It takes them a few weeks to process, but within a month or so, they should stop withholding your royalties.

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Conclusion:
Don’t delay to apply for an EIN. It means only a phone call to get an EIN. Best way to do this is before you launch your book. Once you have done it, you will feel relieved – and you will receive 30% more book revenue from your online retailer.

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More info:  http://www.irs.gov/
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online
http://www.irs.gov/Businesses/International-Businesses/U.S.-Withholding-Agent-Frequently-Asked-Question

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If you would like to get help in all things publishing, have your book intensively promoted and learn how to navigate social media sites: We offer all this and more for only $179 for 3 months! Learn more about this individual book marketing help: http://www.111Publishing.com/Seminars

Please check out all previous posts of this blog (there are more than 1,100 of them : ) if you haven’t already. Why not sign up to receive them regularly by email? Just click on “Follow” in the upper line on each page – and then on “LIKE” next to it. There is also the “SHARE” button underneath each article where you can submit the article to Pinterest, Google+, Twitter, Facebook, Tumblr and StumpleUpon.

Thanks a lot for following:

@111publishing

http://www.111publishing.com

http://www.e-Book-PR.com/

http://www.international-ebooks.com/

http://bit.ly/VmtVAS 111Publishing @ Google+

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Hyper Smash

Pingate


Tagged: deduct taxes, EIN, how to become a publisher, Income tax, IRS form, IRS.org, practical tips to set up your own publishing company, Publishing business, save tax


It’s this Time of the Year

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Income-Tax

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Benjamin Franklin said that “nothing is certain but death and taxes.”  It’s that time of the year again when we all must sit down and face the reality of just how much we did or did not earn during the last twelve months. Many writers are not aware of how they should be reporting certain income to get the greatest benefit.  Writers can get away with business tax deductions that ordinary people can’t get away with. Michael N. Marcus wrote a great article and showed samples of “tax avoidance”:
“If you are an author or a journalist, the key to creative tax avoidance is to write about things you like.”

 

  • If you like to travel, write about travel, and then deduct the cost of traveling.
  • If you like cars, rent some really cool cars, and write about them.
  • If you like to eat—and who doesn’t?—go to lots of restaurants, attend cooking schools, stock your pantry, and write about food.

Read his whole blog article here:  It’s Time to Think About Taxes

 

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Writers are presumed to be a professional if their writing made a profit in at least three out of the last five tax years, including the current year. Which means:  Not more than two years of expenses that are higher than the author income. Profits from your writing cannot be used to offset other income for tax purposes, such as a day job or other means of income, if you have more than two years of losses.

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Considerations of Profitability
There are a couple of other considerations that revenue agencies, such as the IRS, are listing, for example:

  • Have you made a profit in similar activities in the past? If you have a successful book under your belt — or even a series of articles in paid publications, such as newspapers, magazines or online publications, which can be a predictor that you are a professional writer.
  • Do you have the knowledge needed to carry on the activity as a successful business? How much do you know about running that business? Are you running it like a business, keeping records, keeping an eye to profitability? Did you take classes/seminars about the publishing business (e.g. marketing or tax etc.) no matter if online or offline?
  • Have you created a professional book marketing and publicity plan? This might even be shown by including affiliate programs on your website/blog. If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?

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Expenses You Can Deduct
Always try to pay from a separate account, set up for your writing business, to make book keeping easier. Keep receipts or / make copies of payments to contractors, freelancers and agency fees for book production, such as:

  • Proofreading
  • Editing
  • Illustrations
  • Photos
  • Graphic Design
  • Book Layout
  • Printing costs
  • eBook Formatting
  • Advanced Copy reviews
  • Book Trailer Design
    .

Book Promotion Costs, e.g.:

  • Advertisements, online and offline
  • Giveaways (free books, review copies, pens etc.)
  • Flyers, brochures, business cards, book marks
  • Book Fair expenses
  • Costs for newsletters (AWeber, MailChimp etc.)
  • Entry fee for writing contests
    .

Other costs, such as:

  • Transportation costs (note the dates, distance, reason)
  • Rental for book readings
  • Office rental or mortgage, heating, electricity for your home office by square feet
  • Phone / Internet / e-Reader costs
  • Website / blog costs, such as hosting or development
  • Office Supplies
  • Meal expenses: in the USA full for public events you might host, and 50% if it is for a business purpose (interview, writers conference, meeting with book professionals, publishers, agents etc.)
  • Transportation to meetings, events
  • Research costs
  • Copyright registration and ISBN fees
  • Your tax preparer or tax lawyer.
    .

Keep all your expense slips sorted by date and neatly filed to make it easier to find them
If you pay anyone of the above listed more than a couple of hundred dollars, you would need to include the contract and a form (in the United States it is IRS Form 1099-MISC). Note for each meal/entertainment expense the names, number of people participating and reason for meeting).

Further Reading:
http://www.freelancetaxation.com/deductions-writers
http://www.bus.lsu.edu/accounting/faculty/lcrumbley/tax_aspects.html

Disclaimer: These tips are meant to give general insight into tax information to writers, especially in the USA, and to give you an entry point so you can research further. While every effort was made to ensure the information in this article is accurate at the time it was written, we are not tax experts. Anyone filing taxes should consult a qualified tax prepare r for updated tax laws and further specifics on how these rules might apply to your individual tax situation.

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If you would like to get help in all things publishing, have your book intensively promoted and learn how to navigate social media sites: We offer all this and more for only $159 for 3 months! Learn more about this individual book marketing help: http://www.111Publishing.com/Seminars
Or visit http://www.e-book-pr.com/book-promo/ to advertise your new book, specials or your KDP Select Free Days.

Please check out all previous posts of this blog (there are more than 1.070 of them : ) if you haven’t already. Why not sign up to receive them regularly by email? Just click on “Follow” in the upper line on each page – and then on “LIKE” next to it. There is also the “SHARE” button underneath each article where you can submit the article to Pinterest, Google+, Twitter, Facebook, Tumblr and StumpleUpon.

Thanks a lot for following:

@111publishing

http://www.111publishing.com

http://www.e-Book-PR.com/

http://www.international-ebooks.com/

http://bit.ly/VmtVAS 111Publishing @ Google+

 


Tagged: deduct even more expenses, deduct them from taxes, did you write more books, how to become a publisher, Income tax, IRS.org, practical tips to set up your own publishing company, Publishing business


Authors: Which of Your Expenses are Tax-Deductible?

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Tax-Deductions

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Income tax preparation might be months away, but it is never too early to start collecting expense receipts. Many self-published book authors want to make a profit and become a professional author, having writing as their vocation.  Writers are presumed to be a professional if their writing made a profit in at least three out of the last five tax years, including the current year. Which means:  Not more than two years of expenses that are higher than the author income. Profits from your writing cannot be used to offset other income for tax purposes, such as a day job or other means of income, if you have more than two years of losses.

.
Considerations of Profitability
There are a couple of other considerations that revenue agencies, such as the IRS, are listing, for example:

  • Have you made a profit in similar activities in the past? If you have a successful book under your belt — or even a series of articles in paid publications, such as newspapers, magazines or online publications, which can be a predictor that you are a professional writer.
  • Do you have the knowledge needed to carry on the activity as a successful business? How much do you know about running that business? Are you running it like a business, keeping records, keeping an eye to profitability? Did you take classes/seminars about the publishing business (e.g. marketing or tax etc.) no matter if online or offline?
  • Have you created a professional book marketing and publicity plan? This might even be shown by including affiliate programs on your website/blog. If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?

.
Expenses You Can Deduct
Always try to pay from a separate account, set up for your writing business, to make book keeping easier. Keep receipts or / make copies of payments to contractors, freelancers and agency fees for book production, such as:

  • Proofreading
  • Editing
  • Illustrations
  • Photos
  • Graphic Design
  • Book Layout
  • Printing costs
  • eBook Formatting
  • Advanced Copy reviews
  • Book Trailer Design
    .

Book Promotion Costs, e.g.:

  • Advertisements, online and offline
  • Giveaways (free book review copies, pens etc.)
  • Flyers, brochures, business cards, book marks
  • Book Fair expenses
  • Costs for newsletters (AWeber, MailChimp etc.)
  • Entry fee for writing contests
    .

Other costs, such as:

  • Transportation costs (note the dates, distance, reason)
  • Rental for book readings
  • Office rental or mortgage, heating, electricity for your home office by square feet
  • Phone / Internet / e-Reader costs
  • Website / blog costs, such as hosting or development
  • Office Supplies
  • Meal expenses: in the USA full for public events you might host, and 50% if it is for a business purpose (interview, writers conference, meeting with book professionals, publishers, agents etc.)
  • Transportation to meetings, events
  • Research costs
  • Copyright registration and ISBN fees
  • your tax preparer or tax lawyer.
    .

Keep all your expense slips sorted by date and neatly filed to make it easier to find them
If you pay anyone of the above listed more than a couple of hundred dollars, you would need to include the contract and a form (in the United States it is IRS Form 1099-MISC). Note for each meal/entertainment expense the names, number of people participating and reason for meeting)

Further Reading:
http://www.freelancetaxation.com/deductions-writers
http://www.bus.lsu.edu/accounting/faculty/lcrumbley/tax_aspects.html

Disclaimer: This tips are meant to give general insight into tax information to writers, especially in the USA, and to give you an entry point so you can research further. While every effort was made to ensure the information in this article is accurate at the time it was written, we are not a tax experts. Anyone filing taxes should consult a qualified tax preparer for updated tax laws and further specifics on how these rules might apply to an individual tax situation.

.

<><><><><>

.

If you would like to get help in all things publishing, have your book intensively promoted and learn how to navigate social media sites: We offer all this and more for only $159 for 3 months! Learn more about this individual book marketing help: http://www.111Publishing.com/Seminars
Or visit http://www.e-book-pr.com/book-promo/ to advertise your new book, specials or your KDP Select Free Days.

Please check out all previous posts of this blog (there are more than 940 of them : ) if you haven’t already. Why not sign up to receive them regularly by email? Just click on “Follow” in the upper line on each page – and then on “LIKE” next to it. There is also the “SHARE” button underneath each article where you can submit the article to Pinterest, Google+, Twitter, Facebook, Tumblr and StumpleUpon.

Thanks a lot for following:

@111publishing

http://www.111publishing.com

http://www.e-Book-PR.com/

http://www.international-ebooks.com/

http://bit.ly/VmtVAS 111Publishing @ Google+

.

.

Hyper Smash

Pingate


Tagged: deduct even more expenses, deduct them from taxes, did you write more books, how to become a publisher, Income tax, IRS.org, practical tips to set up your own publishing company, Publishing business


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