What Canadians who sell Kindle e-books need to know

March 27, 2012

This post is for all my Canadian author friends who sell – or are thinking of selling – their books as e-books using Amazon’s Kindle service.

I started selling Kindle books last year. This week, I got a surprise in the mail from Amazon, a “Foreign Person’s U.S. Source Income Subject to Withholding”. Amazon will withhold 30% of the royalties they paid on the Kindle books. They are required to do this by the IRS.

However, those of us living and working in Canada are exempt from royalty tax withholding. As I understand it (and I could be wrong here, but this is what I have been able to ascertain from talking to both the Canada Revenue Agency and the Internal Revenue Service (IRS) in the U.S.), the reason for the exemption is that if you are honest about your royalty income and report it at tax time, the Canadian government will tax you on that income. The level of that tax depends on your total annual income, but it would be reasonable to say that it might be around 30% or so.

When Amazon withholds the tax, you’re essentially taxed twice… 30% on the U.S. side and another 30% by the Canadian side, totaling about 60% tax.

So, the American and Canadian governments came to an agreement that more or less says, “Canadians are exempt from U.S. taxes on royalties because they have to pay tax on their income in Canada.” (Again… I am paraphrasing according to what I understand… and I could be wrong.)

However, a problem arises when Canadians sign up for a Kindle account. Canadian authors must “claim treaty benefits” in order to not be taxed by both the U.S. and Canadian governments. (No one tells you this when you sign up for a Kindle account.) You need to correctly fill out, sign and submit a W8-BEN form in order to claim these “treaty benefits”. You can get a W8-BEN form online form here: http://www.irs.gov/pub/irs-pdf/fw8ben.pdf

Amazon will not process the form without a TIN (Tax Identification Number).

There are two types of TINs:

Steps to follow:

  1. Figure out what type of TIN you need.
  2. Apply for the correct type of TIN with the IRS. You can do this over the phone, by mail or by fax. (Canadians are not eligible to apply for these numbers online.)
  3. Fill out the W8-BEN form. You must include either your ITIN or your EIN on your form or Amazon will not process it.
  4. Send your completed, signed form to Amazon. You can scan your form and e-mail it to them through the e-mail address they provide on their site.

Do all this as soon as you set up your Kindle Direct Publishing (KDP) account. That means, do it before you make your first sale on Amazon. Do not wait! Get it done right away.

If you do not claim the correct treaty benefits using the W8-BEN form, Amazon will withhold tax. (They are just following the rules required by the IRS).

Then, you will need to fill out both a W8-BEN form AND an affidavit form to backtrack. (I am still waiting for confirmation that they will reimburse me for the taxes they withheld for 2011).

Today I spent over three hours on the phone with the IRS (much of the time I was on hold). In total, I spoke with nine different IRS agents to try and figure this all out. (No, I am not kidding).

Most of them could not help. What I can tell you is that there are two different sets of phone numbers to call. Americans can call the toll-free 1-800 number. The folks who answer those lines can’t help foreign nationals much. There are different numbers for foreigners to call. Today I called 1-267-941-1000 and eventually got through to someone who could help.

The best answer I got was “All this e-commerce stuff is new… We’re not trained in it… But basically, if you are a Canadian working and producing your writing in Canada, paying your taxes in Canada and you do not live in the US, you should be able to claim treaty benefits.”

The one question no one was able to answer clearly for me was, “If I have a TIN will I be required to file US taxes?” The best answer that came was, “Probably not, because you are claiming treaty benefits. You may have to fill out a form to claim exemption.” But whether or not this is actually the case remains to be seen…

My big disclaimer: I am not an expert in US taxes, or Canadian taxes either, for that matter. I claim no authority or expertise in these matters. This information is provided for informational and educational purposes only. I am simply sharing my own experience and what I learned as a result of it. It is your responsibility to do your own research and adhere to all the tax laws of your jurisdiction.

Resources for Canadian writers and publishers to check out:

W8-BEN Instructions

Article 901 – US Tax Treaties

IRS Publication 515

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Update – January 2018 – This blog has had over 1.8 million views thanks to readers like you. If you enjoyed this post, please “like” it or share it on social media. Thanks!

Sarah Elaine Eaton is a faculty member in the Werklund School of Education, University of Calgary, Canada.


How to Publish your Amazon Kindle e-book (It’s easier than you think!)

March 15, 2012

Are you an author or a writer? Do you have a book in you that is ready to be shared with the world?

I published my first book in 2002. Last year, everything changed. I published 4 of my own e-books as Amazon Kindle books.

In Feburary, I had the privilege of presenting the nuts and bolts of the “how to” at the National Speakers Association 2012 Winter Conference in Dallas, TX on February 4.

A few weeks later, I did the same presentation for the my home chapter of the Canadian Association of Professional Speakers. We taped the Calgary session and I have the highlights here for you. This video details the exact method for you, step-by-step.

My prediction is that teachers, students and writers of all types are soon going to be publishing and sharing their work on line in a variety of formats. Amazon e-books are just one way to do that. It is easier now to be a published writer than it has ever been in history. If you are a writer, this is your time!

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Update – January 2018 – This blog has had over 1.8 million views thanks to readers like you. If you enjoyed this post, please “like” it or share it on social media. Thanks!

Sarah Elaine Eaton is a faculty member in the Werklund School of Education, University of Calgary, Canada.


5 Tips for giving an e-reader to the techno-challenged this Christmas

December 22, 2011

e-ReaderI know, I know, it’s hard to believe… but technology can scare some people.

E-readers are all the rage, but for some people, the joy of reading can be squashed by all the “little things” you need to do when you get a new digital device like an e-reader, iPad or a tablet.

If you are giving an e-reader to someone this holiday season, here are some tips to help the non-tech-savvy enjoy their first e-reading experience more:

  1. Charge the e-reader, so you are giving it with a full battery. That way, the fun of reading can begin right away.
  2. Set the date and time correctly. Fiddling with these types of settings can drive some people up the wall. Pre-setting this information can help your recipient skip the frustration and go right for the reading.
  3. Set up the wireless connection. If you are giving an e-reader to someone in your own household, set up the wireless connection beforehand. That means inputting the security code for the wireless router and testing it to make sure it works.
  4. Install any required software or do a software update. Installing or updating software can be frustrating for some people. Giving a device that is completely up-to-date and ready to use can help the recipient move quickly into using the device, rather than setting it all up.
  5. Create a “discovery experience” by including the gift of your time. Offer to spend an hour with your recipient to help them learn how to use their e-reader. Discover things about the e-reader together such as thow to change the text size, how to turn pages or how to buy a book online. Remember, this time is part of your gift — be patient, keep it light and fun and focus on the discovery of new skills, not what the recipient can’t do.

We have a raging debate in our house as to whether these steps should be taken before or after the gift is given. The other geek in the house thinks that the initial ripping into the packaging that shrouds a piece of virgin technology is a sacred experience and that opening the package beforehand is just sacrilege.

Personally, I think that if the recipient is a techno-phobe, the idea of unwrapping a new piece of technology is accompanied by an often silent and unvoiced, “Oh, crap. More technology.” By ever-so-carefully opening the package with the precision of a surgeon and taking care of the technical details before the recipient opens the gift, you are quietly giving the gift of disarming their trepidation before it becomes a reality.

But I probably think that because I have memories of some of the toys I received as a child at Christmas would magically come with batteries not only included, but installed. I remember how I felt being able to “play” right away. That’s a feeling I want to pass on with the grown-up gift of technology.

Regardless of whether you do these things before or after the gift is given, the point is that the easier and more fun you can make the reader’s initial experience with a new technology like an e-reader, the more likely the recipient is to continue to use the reader on their own.

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Update – January 2018 – This blog has had over 1.8 million views thanks to readers like you. If you enjoyed this post, please “like” it or share it on social media. Thanks!

Sarah Elaine Eaton is a faculty member in the Werklund School of Education, University of Calgary, Canada.


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