Welcome to the GWN blog! Today we have author Joan Leacott talking about something important to non U.S. authors. The ITIN.
What is an ITIN or TIN?
An International Taxpayer Identification Number (ITIN or TIN) is an identification number used by the Internal Revenue Service (IRS) in the administration of the US tax laws.
Why Should You Get an ITIN?
To avoid a 30% withholding tax on book sales made on through an American publisher (e.g. HarperCollins, Simon & Schuster) or distributor (e.g. Amazon, Smashwords). You will also need an ITIN to complete any W-8 BEN forms which may come your way.
When Should You Get an ITIN?
Preferably before you have any book sales. Then you won’t have to complete an American tax return, with accompanying ITIN application, to get a refund of the withheld amount. Life is so much simpler when the papers are in order.
Before We Begin, a Caveat
I am not a lawyer or an Acceptance Agent. These instructions are based on my personal experience and the procedures as I knew them in January 2013. Your experience may differ. Anything I say here is superseded by the information on the IRS website at http://www.irs.gov/Individuals/International-Taxpayers/Taxpayer-Identification-Numbers-(TIN).
How Do You Get an ITIN?
The IRS revamped their process in January 2013. Three forms must be completed and sent to the IRS offices currently located in Texas.
- A completed W-7 Application Form accompanied by
- Documentation proving your identity, and
- A signed letter from the withholding agent (e.g. publisher or distributor), on official letterhead, showing that an ITIN is required to pay you.
You can use an Acceptance Agent, a person who’s had IRS training at a cost of $250 or so, but it’s not a requirement. If you follow instructions carefully, you shouldn’t need to.
1) Form W-7: Application for IRS Individual Taxpayer Identification Number
You can get a pdf version of the form at http://www.irs.gov/pub/irs-pdf/fw7.pdf and complete instructions at http://www.irs.gov/pub/irs-pdf/iw7.pdf.
It’s fairly straightforward if you follow the instructions, except for one detail, the Tax Treaty number. The spot where you type this is tucked away under item H in the Reason you are submitting for W-7 section. Here’s a snippet of my W-7 form showing the Tax Treaty number for Canada highlighted in yellow.
If you’re reading this article from a country other than Canada, you can find your Tax Treaty number in Table 3, starting on the second last page, here: http://www.irs.gov/publications/p901/ar02.html#en_US_2013_publink1000219601.
If you’d rather read a printed booklet, there’s a pdf available at http://www.irs.gov/pub/irs-pdf/p1915.pdf.
Don’t forget to date and sign the W-7 after you’ve printed it.
2) Proving Your Identity
A list of acceptable forms of identification is provided in the instructions linked above. The easiest one to use is a valid passport, which is what I did. If you don’t have a passport, the instructions state which other documents, used in combination, are acceptable.
You can submit your actual passport (not the best idea), have your passport certified at a US Consulate or Embassy (if you don’t mind standing in line), or submit a certified copy of your passport.
A certified copy is NOT the same as a notarized copy. Notarized copies are no longer accepted by the IRS.
To get a certified copy of a Canadian passport, you need to two forms:
a) A letter requesting a certified copy of your passport
b) A completed PPTC 516 Request for Certified True Copy of Canadian Travel Document
Both are available here: http://www.mnptax.ca/media/documents/pdfs/Questionnaires/ITIN/Passport_Canada_Certified_Copy_Request.pdf
Take, or mail, both forms to your nearest Passport Canada Office. You can either pick up the copy and the original or have both mailed back to you. You will have to leave your passport with them, but you’ll get a receipt for it.
For the Passport Canada Office nearest you, go to http://www.ppt.gc.ca/service/index.aspx?lang=eng.
If you’re reading this article from another country, please refer to your passport office procedures to get a certified copy. The Passport Canada staff will also let you know when the copy will be ready for pickup or delivery.
3) A signed letter from the withholding agent
The withholding agent is the publisher (Penguin, Harlequin) or distributor (Amazon) of your book.
If you’re working through a publisher, get the letter from them.
If you’re working through Amazon, go to https://images-na.ssl-images-amazon.com/images/G/01/opt/general/test/AmazonDigitalServices_ITIN_Letter. You can get it with only a partially completed author account. Fill out the form with the current date and the name exactly as completed on the W-7 form, print it, and you’re ready to go.
Sending Your Completed Forms to the IRS
You should now have your three pieces of paper ready to go.
1) A completed and signed W-7 form with the correct Tax Treaty number,
2) A certified copy of your passport, and
3) A dated letter addressed to you from your publisher or Amazon Digital Services.
Only US embassies in Beijing, Frankfurt, London, and Paris can process a W-7 on site. So fold the three papers into an envelope, affix sufficient postage (two regular stamps in Canada) and send it to:
Internal Revenue Service
Mail Stop 6090-AUSC
3651 S. Interregional, Hwy 35
Austin, TX 78741-0000
The IRS will return the certified copy of your passport under separate cover from the ITIN certificate.
It took three months almost to the day to get my ITIN certificate in the mail. It’s expected to take less time out of tax season (January 15 through April 30).
Using your ITIN
Once you get your ITIN certificate, you can record the information at your various author accounts.
The number has the format 123-45-6789. Some websites want the hyphens, others don’t. If you fail with one format, just try the other.
The Legal Entity Name is the full name as shown on the ITIN certificate.
One last warning. You will be expected to report earnings and pay income taxes in Canada, or wherever else you live. Honesty is always the best policy.
Author Bio: Joan Leacott writes authentic multi-generational stories of people living and loving in today’s world. She is currently working on the second book of the Clarence Bay Chronicles set in a small town on the eastern shores of Georgian Bay, Canada. Read more about Joan and her books at http://joanleacott/ca.
Copyright © 2013 Woven Red Productions. Feel free to distribute this article, but please do so in its entirety including author credit.
Cindy here again!
Thanks so much for being here, Joan! I need to go through this process right now so this is perfect timing.
August 16, 2013 at 6:15 am
You can also do this with an EIN, which you can get over the phone. I just wrote about doing this on my blog recently.
August 16, 2013 at 9:53 am
That’s true but I discussed with my accountant (who spoke with the CPA in her office) and they recommended an ITIN since I am not an employer.
August 20, 2013 at 1:20 pm
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