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Thread: Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com


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Mary Thomson

Posts: 4
Registered: 02/18/17
Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com
Posted: Oct 3, 2017 2:51 PM
 
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I have been selling ebooks on Amazon for past six months but only just taken off in the USA in the last three months. Just noticed this month that 30% has been taken off due to 'withheld tax' - I had however filled in the W-BEN-E form on Amazon as requested with my tax details in February 2017. I went back just now to check the form and it was stating '30% withheld tax' so I filled it in again and it is NOW saying 0% withheld tax.

Is there ANY way to reclaim that withheld tax that has been taken off since February (or even just this last two months)? It is about $600 so worth at least trying.
(I do not have an ITIN but do have a UK corporation tax number.)

Thanks
cdalebrittain

Posts: 11,125
Registered: 03/05/11
Re: Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com
Posted: Oct 3, 2017 3:10 PM   in response to: Mary Thomson in response to: Mary Thomson
 
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Next year, I think in March, you'll get a statement showing how much was withheld in taxes. You can claim the money back by filing form 1040-NR with the Internal Revenue Service. You'll want to wait until after you receive the statement from Amazon to get the form from irs.gov.

I've never had to file this form, but I gather it's pretty complicated (all IRS documents are complicated, they don't specifically target Non-Resident folks). But for $600 it would be worth a try.

Sounds like you're doing very well! Congratulations, and good luck.
Notjohn

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Re: Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com
Posted: Oct 4, 2017 3:19 AM   in response to: Mary Thomson in response to: Mary Thomson
 
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I do not have an ITIN but do have a UK corporation tax number

That presents a difficulty. You are supposed to have a US tax number to file a tax return, though I suppose you could insert APPLIED FOR in the space.

However! The Internal Revenue Service has a little twist in the tax law, that the zero rate applies only to a US business. Individuals are able to slide past that and get zero withholding, but if it's a British corporation that's earning the money, I fear that's different. I'd advise you to use your National Insurance number in all dealings with the IRS.

American tax law is bizarre. We tax "US persons" wherever they live or do business, with the result that thousands of Americans give up their citizenship every year (and pay an exit tax, just like people fleeing the Soviet Union used to do), and corporations have parked $3 trillion overseas because it's too expensive to repatriate it.

See this page for information: https://www.irs.gov/forms-pubs/form-1040nr-us-nonresident-alien-income-tax-return

(Yes! "US Non-Resident Alien" -- that's what you are!)

(Don't trust KDP to publish a print edition. Don't trust CreateSpace to publish an ebook.)

Good luck! -- NJ

Notjohn's Guide to E-Book & Print Formatting

The blog:
http://notjohnkdp.blogspot.com
Mary Thomson

Posts: 4
Registered: 02/18/17
Re: Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com
Posted: Oct 4, 2017 3:46 AM   in response to: cdalebrittain in response to: cdalebrittain
 
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Yes, thank you I am doing very well - KDP has been very kind to me and KULL too!
Many thanks for that advice - I have had a look at the form and it doesn't look too onerous. Glad that I have finally worked out why the income fell short every month!

Best regards

Mary

Edited by: Mary Thomson on Oct 4, 2017 3:46 AM
Mary Thomson

Posts: 4
Registered: 02/18/17
Re: Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com
Posted: Oct 4, 2017 4:23 AM   in response to: Notjohn in response to: Notjohn
 
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I just spoke to the IRS in the USA about the 1040NR form and they said that as a corporation (Ltd company) I would have to fill in a 1120F or 1120 form which dealt with corporations as the 1040NR was for individuals. Also that they did not deal with the 1120F forms and I would therefore have to research it separately to find out about it! (The woman was incredibly condescending and rude - which I very politely called her out on and she apologised but said she could not help me.)

CAN I just use my National Insurance number if the money is paid into my Ltd Company account? If so should I change the Amazon forms to say I am an individual but still use the Ltd Company bank account? (I have now completed the W8-BEN form on Amazon for 0% rate - so registered as a corporation)

Thank you for the help! I am so confused now my head is spinning like the exorcist!

Mary

Joseph M Erhardt

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Registered: 12/21/15
Re: Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com
Posted: Oct 4, 2017 5:40 AM   in response to: Mary Thomson in response to: Mary Thomson
 
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The IRS probably wouldn't care, but I think co-mingling personal and business funds in the same bank account would be frowned on by the Crown's tax folks. It's certainly against best accounting practices.

If you're going to publish as an individual, the funds should go into an individual account.

Depending on the amount of royalties you get, you may need to pay estimated during-the-year taxes, but I'm not familiar with the UK system, so that's just a think-about-it comment.

Best of luck.

Edit: You might re-post your Q in the top Account Issues forum, asking how UK individuals manage their taxes. That forum sees a lot more traffic than this one.

Edited by: Joseph M Erhardt on Oct 4, 2017 5:41 AM
Mrs Julia Evans

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Registered: 05/22/16
Re: Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com
Posted: Oct 4, 2017 12:08 PM   in response to: Mary Thomson in response to: Mary Thomson
 
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Hi Mary,

Firstly, I would try contacting Amazon and asking them if they can apply the double taxation agreement retrospectively to all payments within this current tax/financial year. There's no reason why they can't.

The problems with claiming it back from HMRC are that it firstly has to be the same legal entity. So, if your payments go to a company, then you have to claim it back against the company profits.

Secondly, and I think, more importantly, if you've had tax deducted in a foreign country in error, or unnecessarily, which would seem to be the case here, as your income should have been covered under the double taxation agreement, HMRC will tell you to go back to the IRS and claim it back off them.

HMRC aren't going to give you credit for money the US authorities have wrongly got in their coffers.

Your best bet is to get Amazon to agree to pay it back now, rather than trying to get it back from the IRS later.

Either way, It's going to take a bit of effort, so I wish you much luck. J
Mrs Julia Evans

Posts: 641
Registered: 05/22/16
Re: Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com
Posted: Oct 4, 2017 12:16 PM   in response to: Joseph M Erhardt in response to: Joseph M Erhardt
 
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Surprisingly, HMRC doesn't frown on you using the same bank account for your personal and self-employed business income and expenditure as long as you can easily see which is which.

Using a Limited company bank account for private or individual business purposes would imho be a step too far. I suspect there is some regulation somewhere which you would fall foul of.

Self-employed UK authors may well need to make payments on account after their first trading year, if their profits are high enough (used to be £1000pa of tax) but that applies to individuals, not companies, who have different rules.

Hope that helps. J
Mary Thomson

Posts: 4
Registered: 02/18/17
Re: Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com
Posted: Oct 4, 2017 4:59 PM   in response to: Mrs Julia Evans in response to: Mrs Julia Evans
 
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Hi Julia,

I have asked Amazon and they stated that I have to wait until I get their statement in March and then apply to IRS for refund. The debate is whether I can apply to the IRS under the 1040NR or the 1120F form. I think it is probably the 1120F form because I trade under a Ltd Company name (and all income goes into that account). The IRS have told me that they don't provide advice on the 1120F form as it is corporation tax. All rather complicaated but it is a good sum of money so probably worth the effort.

Thanks for the advice!

Mary
Mrs Julia Evans

Posts: 641
Registered: 05/22/16
Re: Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com
Posted: Oct 4, 2017 8:33 PM   in response to: Mary Thomson in response to: Mary Thomson
 
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Complicated indeed. Considering the tax form I had from them this year contained absolute nonsense, I don't envy you.

Good luck sorting it out

Best wishes. J
Margot Maurice

Posts: 4
Registered: 09/05/14
Re: Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com
Posted: Oct 8, 2017 10:02 PM   in response to: Mary Thomson in response to: Mary Thomson
 
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You are well ahead of me with Tax as I am still trying to work out how to update my Tax details. I have spent the best part of 3 weeks trying to get it sorted. I ticked that I would have paperless but then I could not find how I could sign the form online nor could I see where I could send th forms to Tax office in USA.

For the amount of money I make with my books by the time i deduct my costs I am not paying much tax anyway. Every time I contact Amazon obviously I have a different operator so there is no consistency in instructions & I am completely lost now & on the verge of ofting out of the whole business. It started as a pleasant trouble free hobby but now puzzling & it is not pleasant. I can work on doing this correctly & spend a few hours working on it all but when I finish it is still telling me my last update was done in 2014 so I don't know where all my work has gone. I am throwing up my hands ^ wondering what is going on,I am in Australia,
Any bright ideas anyone?
Donna St Felix

Posts: 5,444
Registered: 09/18/13
Re: Reclaiming Withheld Tax - UK Citizen selling ebooks on Amazon.com
Posted: Oct 9, 2017 1:50 AM   in response to: Margot Maurice in response to: Margot Maurice
 
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Margot Maurice wrote:
You are well ahead of me with Tax as I am still trying to work out how to update my Tax details. I have spent the best part of 3 weeks trying to get it sorted. I ticked that I would have paperless but then I could not find how I could sign the form online nor could I see where I could send th forms to Tax office in USA.

For the amount of money I make with my books by the time i deduct my costs I am not paying much tax anyway. Every time I contact Amazon obviously I have a different operator so there is no consistency in instructions & I am completely lost now & on the verge of ofting out of the whole business. It started as a pleasant trouble free hobby but now puzzling & it is not pleasant. I can work on doing this correctly & spend a few hours working on it all but when I finish it is still telling me my last update was done in 2014 so I don't know where all my work has gone. I am throwing up my hands ^ wondering what is going on,I am in Australia,
Any bright ideas anyone?

If you signed up for your country of Australia, at the end of the year you will be sent what you need to do your taxes in YOUR country. You do not need to worry about anything else.

It sounds like you have TWO accounts open. If so, you need to ID them and ask Customer Service to merge them, telling them you goofed.
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