I may have blogged about this before but it is something that a lot of Aussie authors (including me) struggle with. Tax.
I can thank my friend Angela Castle for there instructions and i hope i can explain it as well as she did.
Do i need an American Tax number?
If you publish over seas, Yes! This includes Smashwords and Amazon.
You will be taxed 30% by the IRS if you don’t supply them with either an EIN or a ITIN. This hurts. I just earnt $41 through smashwords but was only paid $23…that’s why I’m getting on this now.
Whats the difference between an EIN and a ITIN?
An EIN is for a registered business and an ITIN is for an individual. Which one you want is up to you. If you want an EIN you will need to register as an Australian business ie. get an ABN.
Which is better?
OK, they both do the same thing. The difference is how you apply. To get an ITIN you need to fill in this form. Then you need to get your ID (usually a passport) certified by the supplying agency. As my local passport office is 4hrs away this was not ideal for me. You will also need a written, original, letter from your publisher to state that you are ’employed’ by them and need the number. Then you post your forms off to the IRS and in a few months you will get an ITIN.
The other method is to get an ABN. This is a simple online form and you will have your number in like 30mins. Then you ring this number 0011 126 79411099 and answer a few questions, address, name etc and they can issue an EIN. I found this method wayyy easier but it does mean that come tax time i need to submit a business tax return as i am now a registered business. It also means i can claim business expenses back on tax so its a win lose idea.
So, its up to you which method you chose. If you don’t mind getting an ABN i would go with that method as i have found it way easier. If you don’t want one then you need to expect about a 3month wait on getting an ITIN. Go America. But don’t forget, there is no need to do this until you are actually earning/ or going to earn this year some income from your writing. I believe you also only need to do a tax return if you earn over $300 in which case your publisher should automatically send you a letter of royalties for you to use. But this may not be the case for everyone so double check.