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Permlink Replies: 11 - Pages: 1 - Last Post: Nov 10, 2017 12:14 AM Last Post By: Callum Thirkill Threads: [ Previous | Next ]
Callum Thirkill

Posts: 5
Registered: 07/28/13
Small tax question
Posted: Nov 9, 2017 12:39 AM
 
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Hi guys, hopefully someone can clear something up for me.

Am I correct in saying that for each of the amazon websites, for example de, fr, es, nl, ca, amazon automatically deducts the tax you need to pay on any sales in those countries before giving you your royalties. Am I also correct in saying that this is called withholding tax.

Then you just have to report your royalty earnings when you submit your tax return in the country you live.

Am I missing anything or is this all correct.

Thanks

Callum
blaze99

Posts: 170
Registered: 02/23/12
Re: Small tax question
Posted: Nov 9, 2017 1:40 AM   in response to: Callum Thirkill in response to: Callum Thirkill
 
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Callum, No - that's mistaken in several ways.
You don't need to pay witholding tax (except to India and Brazil) if your country has a tax treaty and you correctly fill in the Amazon interview form.
Then your royalty income is a matter for you and your tax authorities locally.
Best to see a tax adviser if you're unsure.
Notjohn

Posts: 23,018
Registered: 02/27/13
Re: Small tax question
Posted: Nov 9, 2017 2:28 AM   in response to: Callum Thirkill in response to: Callum Thirkill
 
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The answer is No. If Amazon withholds any money, it's because you don't live in the US or in a country with a zero-withholding tax treaty with the US, and that money is remitted to the Internal Revenue Service. In theory you might be able to get some or all of it back, but the process is not easy and most people just let it go.

A bit of money is withheld at the source for Hong Kong (India sales) and Brazil. That money is gone, and it doesn't amount to much.

Otherwise, everything you get is potentially taxable in the country in which you live (and occasionally also in the country where you are a citizen). The US Congress has taken some steps toward a territorial tax system (used by most civilized countries), and if that passes, US citizens may no longer be taxed on foreign earnings. You'll have to ask your national tax authorities about your situation with respect to them. You may not have to pay taxes on income earned outside your country.

But I emphasize the MAY. It all depends on where you live, what citizenship you hold, and how that country or countries tax their residents/citizens.

(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
Callum Thirkill

Posts: 5
Registered: 07/28/13
Re: Small tax question
Posted: Nov 9, 2017 4:57 AM   in response to: Callum Thirkill in response to: Callum Thirkill
 
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Thanks for your replies.

I don't think I explained myself properly, apologies. Basically I've decided KDP isn't for me, I'm moving out of the world of books into a new job that I'll enjoy more. I was never very successful with KDP but I earned some money. Before I close my KDP account Amazon told me they need to send me my pending royalties. I just want to ensure I don't unwittingly commit a crime by not knowing exactly what the tax process is with royalties.

My first question is basically this: Does Amazon take any withholding tax automatically from your royalties before giving them to you or do I need to something for this tax to be taken. I don't care about getting the tax back, I just want to pay it. Ideally it's automatic so I don't have to do anything.

If it is automatic then I'm assuming all I then need to actually do is report whatever royalty money I receive in my next tax assessment (I'm from the UK and self employed).

Is all of this correct?
Donna St Felix

Posts: 5,489
Registered: 09/18/13
Re: Small tax question
Posted: Nov 9, 2017 5:04 AM   in response to: Callum Thirkill in response to: Callum Thirkill
 
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Callum Thirkill wrote:
I don't think I explained myself properly, apologies. Basically I've decided KDP isn't for me, I'm moving out of the world of books into a new job that I'll enjoy more. I was never very successful with KDP but I earned some money. Before I close my KDP account Amazon told me they need to send me my pending royalties. I just want to ensure I don't unwittingly commit a crime by not knowing exactly what the tax process is with royalties.

My first question is basically this: Does Amazon take any withholding tax automatically from your royalties before giving them to you or do I need to something for this tax to be taken. I don't care about getting the tax back, I just want to pay it. Ideally it's automatic so I don't have to do anything.

If it is automatic then I'm assuming all I then need to actually do is report whatever royalty money I receive in my next tax assessment (I'm from the UK and self employed).

Is all of this correct?


It has been a while since I did the paperwork when I signed up here but they do not take any tax out of my royalty payments.
At the end of the year they will send you a tax statement. With that, you handle your taxes as you normally do.
Mrs Julia Evans

Posts: 671
Registered: 05/22/16
Re: Small tax question
Posted: Nov 9, 2017 5:21 AM   in response to: Callum Thirkill in response to: Callum Thirkill
 
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Callum Thirkill wrote:
Thanks for your replies.
I don't think I explained myself properly, apologies. Basically I've decided KDP isn't for me, I'm moving out of the world of books into a new job that I'll enjoy more. I was never very successful with KDP but I earned some money. Before I close my KDP account Amazon told me they need to send me my pending royalties. I just want to ensure I don't unwittingly commit a crime by not knowing exactly what the tax process is with royalties.
My first question is basically this: Does Amazon take any withholding tax automatically from your royalties before giving them to you or do I need to something for this tax to be taken. I don't care about getting the tax back, I just want to pay it. Ideally it's automatic so I don't have to do anything.
If it is automatic then I'm assuming all I then need to actually do is report whatever royalty money I receive in my next tax assessment (I'm from the UK and self employed).
Is all of this correct?

Hi Callum,

The most important part here is not whether Amazon have witheld tax or not, the important part is that you have to declare your royalties and any tax witheld from them.

I can't speak for the rest of the worlld, but in the UK if you have income from book royalties, regardless of whether it's taxed at source or not, you're classed as being self-employed. That requires you to register with HMRC, and complete a tax return. (Of course, if you're a Brit, you should have completed the double taxation details, and won't have had any tax deducted already, except possibly for a few places (Hong Kong comes to mind). )

As you're already self-employed, you just need to complete a second self-employment page (don't lump the two together) with your return.

The mistake that many people make is by assuming that if US tax is withheld, the UK tax authorities will give credit for it. That's not the case. You have to minimise your liability in the foreign country first, before HMRC will consider giving Foreign Tax Credit Relief. If a Double Taxation agreement exists and you fail to take advantage of it, they'll send you back to the country where the tax was deducted, and tell you to reclaim the money back off them. Needless to say that doing so after the event is far more difficult than filling in the DT details in the first place.

Hope that helps. J
Callum Thirkill

Posts: 5
Registered: 07/28/13
Re: Small tax question
Posted: Nov 9, 2017 5:45 AM   in response to: Callum Thirkill in response to: Callum Thirkill
 
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Sorry for struggling to understand this, tax is not a strong point for me. I honestly don't care how much tax I pay. The whole thing is just a hassle and I'd rather not receive any royalties just so I don't have to deal with all of this.

I am registered as self-employed and fill out a self assessment tax return every year.

Am I understanding correctly then that all I need to do is mention the royalty earnings when I complete my next self assessment tax return? Do I also have to
declare any tax that's withheld or is that optional?

If I don't care about reclaiming any of the money is this all I have to do?
cdalebrittain

Posts: 11,132
Registered: 03/05/11
Re: Small tax question
Posted: Nov 9, 2017 6:43 AM   in response to: Callum Thirkill in response to: Callum Thirkill
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Callum--

Yes, all you have to do in the UK is declare your royalty earnings on your self-employment form and pay any tax that might be due, just as you would for any self-employment income.

You don't have to pay US tax. You don't have to pay German/French/Canadian tax etc. Good luck with your new job.
Callum Thirkill

Posts: 5
Registered: 07/28/13
Re: Small tax question
Posted: Nov 9, 2017 8:12 AM   in response to: cdalebrittain in response to: cdalebrittain
 
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Are you sure about this? I'm really scared of getting in trouble with the police for breaking some tax law. I'd hire an accountant if I had the money. I know I'm probably being paranoid.
Mrs Julia Evans

Posts: 671
Registered: 05/22/16
Re: Small tax question
Posted: Nov 9, 2017 8:54 AM   in response to: Callum Thirkill in response to: Callum Thirkill
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Callum,

As long as you declare a second self employment page with your A'zon income on it, you should be fine.

Tecnically, if you had Zon income in 2016/17 you should have notified HMRC of the new source by Oct 17, so it wouldn't hurt to give them a quick call now. But as long as you declare the income in your on-line return by 31/01/2018, you should have no problems.

The worst thing that could happen is if you have already had tax witheld by the US, HMRC could say they're not giving you credit for it, and to go back to the IRS to get your money back from them.

However if the tax is negligible, and you're not bothered about it, then that's not going to be the end of the world.

Just for a final bit of reassurance - the police don't get involved in cases like this. Omission of a source of income from your return would be a civil offense, and once you've made that phone call, they couldn't even have you for 'failing to notify'. The local constabulary won't be knocking on your door any time soon.

Of course, if you're a serial defaulter already, and your name appears in the Paradise papers, you might want to put the door on the latch and get the kettle on ready!

(That was a joke! Honestly!)

Best wishes. J
Salamander Mall...

Posts: 379
Registered: 10/16/17
Re: Small tax question
Posted: Nov 9, 2017 9:25 AM   in response to: Callum Thirkill in response to: Callum Thirkill
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Callum Thirkill wrote:
Are you sure about this? I'm really scared of getting in trouble with the police for breaking some tax law. I'd hire an accountant if I had the money. I know I'm probably being paranoid.

You are liable for taxes in your own country. Any monies wanted elsewhere (U.S., Brazil, Singapore) have already been taken, never to be seen again. And, yes, you are.
Callum Thirkill

Posts: 5
Registered: 07/28/13
Re: Small tax question
Posted: Nov 10, 2017 12:14 AM   in response to: Callum Thirkill in response to: Callum Thirkill
 
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Thank you all for your responses! I now understand what needs to be done.
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