Friday, June 22, 2012

Royalties and taxes

Money, money, money

If your novel still hasn't appeared a day after you trimphantly hit "Save and Publish," the chances are that you are new to Amazon, and were not asked for your address and account details when you signed up for Kindle Direct Publishing.

To remedy that ... and make sure that your royalties get to you ... go back to your Kindle Publishing page. Up at the top right in the ribbon menu, you will see a label for your account. (Mine says "Joan's Account.") Hit this, and a screen that you have to fill in arrives.

Put your name in the first box -- your real name, not your penname, if you used one. Then scroll down the "country" menu until you come to where you live, and click that. In Address line one, put your house number and your street, and your suburb in line two. (Don't use a post office box number, and don't abbreviate.) Then your city and your zip code. And after that, insert your phone number, with country and area code.

At this stage, US residents can fill in their tax information. (Foreign residents have a more daunting task ahead.)

Then go down to Your Royalty Payments. This is where you register your bank account details if you have a US bank account. Royalties from other Amazon marketplaces will be converted into US dollars and deposited at the same time.

If you don't have a US bank acount, leave this part blank, and you will be paid by check. It is a slower process than an electronic deposit, but you will eventually get your money.

Hit Save.

Taxes, taxes, taxes ....

It's a tricky business for foreign writers.

Amazon/Kindle automatically withholds 30% of your royalties for tax purposes unless you have a tax number, and your country has a tax treaty with the United States. For details of this complicated situation, go to this very helpful page

You can find out if your country does have a tax arrangement with the IRS by going to page 36 of this IRS document (In the page-number box at the top, replace the number 1 with 36, and hit enter.) Don't worry about the letters and numbers; the important part is whether your country is there or not. If not, you will have to pay the 30% tax, and live with it.

If your country is listed as having a tax treaty with the United States, get going right now on getting a tax number, as it takes ages ... and your home country tax number isn't any kind of substitute. The IRS simply does not recognize foreign tax numbers.

There are three kinds of tax numbers they do recognize: a TIN (temporary tax number), an EIN (empoyer identification number), or an ITIN (individual taxpayer identification number). As you are an individual author, and not an employer or a business, the one that you need is an ITIN.

To apply for one of these, you have to fill in a Form W-7. Download and print this.

The instructions for filling it out can be found HERE

Then you have to prove that you are who you are . . .

The Quest for an Apostille

I didn't have this problem, because a university in Indiana obtained an ITIN on my behalf many years ago, but New Zealand Indie author Desiree Jury was kind enough to share her quest with me. While what she has to tell us applies to New Zealand, the process should be very similar in whatever tax treaty country is yours.

Attached to your W-7 you will require duly authorized copies of identification documents such as passport and driver’s licence. In most cases this requires you to obtain an Apostille. This is an internationally-recognised certificate under the Hague Convention, which “provides for the simplified certification of public (including notarized) documents to be used in countries that have joined the Convention.” (I quote from IRS instructions for form W-7).

To obtain an Apostille you need to take your passport, driver’s licence or similar to a Notary Public. I had to ask my lawyer, who found me a pleasant gentleman, who charged $50 for a splendid two-page certificate on cartridge paper, in English and French, with red seals and blue ribbon. Talleyrand would have loved it.

The completed Apostille must then be taken to the [New Zealand] Department of Internal Affairs to be duly authorized and entered on their website. This is done at the DIA Authenitication Unit, level 13, DIA 86-90 Lambton Quay, Wellington (another $32).

At this point you assemble your completed W-7 (ALL of it, not just the top page. Remember to fill in Exception #1, Third Party Withholding on Passive Income, on page 6; exception 1(d)). Attach your publisher’s form letter, your cover letter, and the apostille. Send it to the address given in the form. (Note: You can’t send this Express Courier unless it is addressed to a specific individual with a nominated phone number. You will have to settle for Economy Courier).

Sit back and wait. Once you receive your ITIN you can complete the W8-BEN.

The address where you send all this material -- including the required letter from Amazon, which can be downloaded HERE, is:

Internal Revenue Service
ITIN operation
PO Box 149342
Austin, TX 78714-9342, USA

Then, as Desiree says, you sit back and wait, for about two months. But finally, with luck, you will have your ITIN, and you will be able to fill in a form W-8BEN and send it to Amazon.

Download the W-8BEN

An example of how an individual author should fill it in

Once filled in and signed according to instructions, send it to:

Amazon Digital Services
Attn.: Vendor Maintenance
PO Box 80683
Seattle, WA 98108-0683, USA

And whew! ... that's it.


  1. This comment has been removed by the author.

  2. Hi Joan,
    I decided to send you an email instead. Cheers.

  3. Hi Joan,

    Many thanks for this, but one question: If you are a NZ resident how do you get paid? I have filled in the other account information (name address etc.) but it won't let me save and keeps rejecting my application...

    1. That's puzzling. If you don't have a US bank account, Amazon should send you a physical cheque once your royalties are over $100. They won't accept your NZ bank account number. Maybe you are trying to register it, and that is the hitch?

      Another option is an internet conflict. Are you using internet explorer? Amazon has issues with that engine. Try filling in the form on your tablet, if you have one -- iPad uses Safari, which works well. Otherwise, download Google Chrome, and try filling in the form through that.

      Another ploy is to go to KDP community (link at the top of your bookshelf) and asking if anyone else has had this glitch. Let me know if the problem persists, and I'll ask about for you, if you like.

  4. Thank you. I don't know what I would have done without this blog -- all your work really helped me out. Wishing you all the best.

  5. OH MY GOODNESS! I followed your steps and everything worked perfectly. I have published 3 other novels with no problems. This time I had nothing but problems and could find no fixes!! I followed your steps and it fixed everything. You have no idea just how helpful you were to me!! Thank you a million times over!!

    1. Brilliant! You are so welcome, and thank you for the appreciative comment.

  6. Hi Joan,
    Great walkthroughs. Quick question, as someone who has never used Amazon or Kindle, how does their royalties system work? Do you choose an amount for your book to be worth and it can then be downloaded from a Kindle Store, with you receiving a percentage of this purchase? Or is it a different procedure?
    Thanks again!

    1. In your publish page there should be a link to the payment system. Everytime your book is downloaded, you get your portion of what you have agreed with KDP. It is paid to you every month (unless it is under $100, and you have opted for checks, in which case you won't get a check until the total is over $100). That sounds complicated, but it is a helluva lot better than traditional publisher payments, which come twice a year, and are very much backdated.

      Now then, choosing how much to charge for each book. If you choose an amount under $9.99 you get 70% royalties in certain territories (not all). If you choose more than $9.99, it all turns to custard. The same happens if you choose an amount under $2.99. So you pick a price between $2.99 and $9.99. Which one you choose is up to you, but my impression is that if you make it too low, it looks as if you don't give a great rating to your own work -- and that if you make it too high, then you look arrogant!

      Go figure.

      Cheers, and thanks for your comment

  7. Concerning payment. Fee for cashing in $100 checks will be prohibitively high for overseas authors. Can I use the US bank account of a friend to receive royalty payments? Or does the payee's name has to be the same as the author?

  8. That's a puzzling question, Paul. I don't see how using a friend's US bank account will work, as your friend will have to send you the money as a check, which leaves you with the same problem. And I strongly suspect that the Amazon robot will reject your form if the payee's name doesn't match yours. It might pay to shop around your banks at home, and find out what they charge for depositing a US check. That's what I did here, and found that while one bank charged $19, another charged nothing. Guess which bank gets the checks!

  9. Dear Joan Druett,
    I am writing my book following your detailed advice and I have a question. It's about the symbols you can insert to separate parts of your book. I would like to create and use a symbol of my own to reflect the theme of my book. This will be a tiny head of Lenin or something similar. In Word I have found no information about this kind of thing but my research is probably not as thorough as yours and I don't know the situation from the Kindle end. Any advice or suggestions would be most helpful. Thanks in advance. George P-Smith.

  10. That's an interesting question. You can insert a symbol or special character using an inbuilt menu:

    If you google "glyphs" there are other sites that may help, and you might even find a stock image that suits.

    Otherwise, you can click on the part of the document where you want the symbol, go up to "insert" then hit the "insert picture" option, and go to the picture file where you have placed the symbol you want. Then click to insert it. You will probably find it is too big and in the wrong place. If you are in word 97-2003 (.doc), you can go to format, and tinker with the size and position of the symbol. In later version (.docx) it is more complicated. The program will want to wrap your text around it, so you have to make sure that it does not.

    I would also add that any kind of embellishment like this makes the book file much bigger. Amazon charges a download fee based on file size that is taken off your royalties, and with a heavily illustrated book (like my "Eleanor's Odyssey") this can be as much as fifty cents, so you have to allow for it when pricing. Good luck! Let me know how you get on.

  11. Thank you for your reply. I don't want to make my file any bigger and my policy up until now has been to keep everything simple, owing to a lack of confidence in my ability to upload into Kindle. So I don't know if I will go in for elaborate space holders after all. But I will keep your info for future reference. If I understand your blog properly there's a proofreading opportunity after you've uploaded for the first time. If this is true, I find it reassuring, like a second chance, as it were.

  12. I think it is an excellent idea to keep your file as simple as possible. Yes, once you have gone through the publishing process, there is a file previewer you can download, so you can read your book the way it would be viewed on a selection of devices, from smartphone to pc. I always use the Kindle Fire, as any glitches seem to show up more clearly.

    And if you want to tinker with your book after publication (after gaining confidence, perhaps) you can always unpublish and then publish again once you have renovated the file.

  13. Dear Joan Druett, Thank you for your continuing amazing help. What is your view on signing up for Kindle Select, resulting, I think, in publishing only in Kindle? And what about other options like Kindle Prime?

  14. I'm glad my thoughts are proving useful. If you check the Kindle Select button on your publishing page, your book must be available on Amazon only for 90 days. This gives you some good marketing opportunities, a major one being able to make the book free for up to a week. Most people split this up into two or three day segments, spread out. Having it for just one day doesn't work because of the world's time zones, and three is probably ideal, particularly if it starts on a Friday in the eastern United States. It has to be accompanied by a lot of pre-publicity -- facebook is good, along with posting an announcement with any groups you belong to, like writing or reading or special interest groups. It's a bit galling watching hundreds flying away for no return whatsoever, but it builds up interest in your book, and is often followed by a spike in "real" sales.

    Something to watch, though. In the Kindle Select box there is a check for "renew automatically" that you must remove once the book is published -- just go to your bookshelf and hit the editing option to bring up your publishing page again. Otherwise you will never get back control of your market. Once the Select period is over you can look at other markets, like Kobo and Nook.

  15. It's now November 2016. Has Amazon Kindle Publishing taken any measures to make royalty payments and tax for publishers living in the UK any simpler?

    The procedure as outlined above is off-putting – forcing me to consider pursuing other digital publication avenues. Why do they make it so difficult?

    In the UK we declare and pay our own tax. Would the submission of my National Insurance Number suffice? I have read on other blogs that it will.

    Receipt of a cheque through the post from the US would mean paying really hefty bank charges over here upon paying in, so that is out of the question.

  16. Unfortunately, the IRS is the body responsible for the clumsy process, and Amazon can do nothing about it. You could try other digital publication avenues, but you will find that they will also ask for a W-8BEN. In NZ we declare and pay our own tax, too. With KDP earnings, I declare the income and also the 5% that has been paid to the IRS by Amazon, so this can (hopefully) be credited. So, unfortunately, you have to go through the process, whatever American digital publisher you use. Perhaps there are British digital publishers? It might be worth asking around.

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  18. Hi I live in New Zealand. Would that mean that I would have to pay 30% to IRS and then another 15% to my government?

    1. Sorry, I have only just noticed this, as I don't check this blog as often as I should -- and have been without internet for two weeks, due to a Vodfone glitch. But to get to your question. If you don't go through the process of getting a US tax number (ITIN) Amazon will pay 30% of your royalties to the IRS. However, you can claim this back from the New Zealand IRD when you file your annual tax return. It is a bit complicated, but it works in the end. It is easier in the long run, though, to go through the process of getting an apostile and applying for an ITIN.

  19. Wow! I cannot believe someone would take the time that you have taken to share all this knowledge and information without cost. I could not have done this without you. Thank you so much!

  20. Is there a way to put in sub titles? My chapters have titles with an underneath sub title. Such as: Chapter 1 Getting Along With People or Would you rather be happy or be correct?

    1. Yes, Toni. Just follow the instructions for chapter titles, but give the style sheet a different name -- "heading 2" would work. Then use it for your subtitle. You might have to adjust the line spacing in your style sheet for "heading 1" as if you have too many spaces in the "after" box, the chapter heading and chapter subtitle might be too far apart. I hope this makes sense! Good luck.

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    1. Hi there. For some strange reason your question was published twice! You can try using your friend's account,
      but I wouldn't recommend it, as I suspect it could lead to questions about copyright ownership and so forth. Your friend will also face a tax bill from the Canadian government. Is there no other solution? If you are not normally resident in Nigeria, it could be a better idea to use your home address, or that of a close relative.

  22. Hi, thanks for this helpful information. I am doing my first publication from Nigeria and left with no option than to use a friends account who is resident in Canada. Hope that wouldn't be any problem?