A recent conversation via Twitter made me realise I knew precisely NOTHING about how to sort out my tax with regards to the US, so when I came across Scarlett’s post on her own blog, I asked if I could post it on Erotica For All so it’d be of use to others, too. She kindly consented.
So, without further ado, find out everything you need to know on getting an ITIN (this is for UK authors only – it may well differ in other countries).
The elusive ITIN (Individual Taxpayer Identification Number) by Scarlett Parrish.
So. Back in August I sold By the Book to Loose Id and thought all I had to do was send them a polished manuscript and wait for les munniez to roll in. Ha!
Due to the way this particular publisher works when it comes to coughing up said munniez, I needed to prove to the IRS that I was a non-resident alien, specifically a permanent resident of the United Kingdom, even though I’m technically employed by an American publisher. If I didn’t, my publisher would be required to act as a ‘withholding agent’ and withhold 30% of my royalties, pay it to the American tax man, and send me the remaining 70%. An American publisher pays my royalties, so until I prove my residency abroad, Uncle Sam takes his cut.
As if that wasn’t enough, when the cheque eventually made it overseas to yours truly, I’d be taxed on 100% of my earnings – not 70%.
Reason enough to search out the elusive ITIN.
And this is how I did it.
Firstly, I had to let my publisher know I required a supporting letter. This is nothing more than a letter from them confirming that this person is contracted to Loose Id, and is a non-resident alien. You need the original letter, no photocopies or printed-out emails. Remember to ask them to send the letter snail mail.
The accounting department of Loose Id emailed me with a photocopy of the letter they’d be sending, along with .PDF files of forms W7 and W-8BEN from the IRS, with instructions for both. Bear with me; they come into play later.
After a week or so, the hard copy of the supporting letter arrived. Then comes the confusing part – filling out form W7. The .PDF file I received was ‘editable’ if that’s a word, meaning I could type most of my details into the file and re-save it under another file name.
This is how I went about it, but remember the following is only applicable to UK residents. If you are from another part of the world, double check all details, especially the treaty number.
1. Tick box a: Nonresident alien required to get ITIN to claim tax treaty benefit.
2. Tick box h and write/type: ‘exception 1 (d) royalty income’ in the space provided.
3. Directly underneath this, remember to type in the treaty country: United Kingdom (I always spell it out just to be on the safe side) and the treaty article number: 12. Note this only applies to the United Kingdom. Different country, different treaty article number.
4. I filled in part 1a, my birth name. 1b didn’t apply as my name has never changed.
5. Part 2, my address, is self-explanatory.
6. Part 3 I left blank, as I’d already filled in my address in part 2. My postal address is no different to my resident address.
7. Part 4, birth information: Remember to fill this in, in the American style. MM/DD/YYYY. Country of birth? Yes, the UK has individual countries, but don’t put Scotland, Wales, England, Northern Ireland, whatever. You write what’s on your passport – United Kingdom. You can be more specific where it asks for city/state/province if you so desire. I typed my specific country of birth and residence here.
8. Part 5? Are you male or female? Hopefully you know the answer to this one.
9. Part 6a: Country of residence? Again, United Kingdom. 6b Foreign tax I.D. number (if any): here I typed my National Insurance number. 6c I left blank. For 6d I ticked ‘passport’. This comes into play later, so pay attention. 6e, I ticked ‘no’. 6f and 6g I left blank.
10. I then printed out the entire document and signed it in the (amazing, this part) SIGN HERE space, added the date – again, remember, American style – and added my mobile phone number, as I don’t have a landline. The code for the United Kingdom is +44. This counts as the first ’07′ of your mobile number, so if your number starts off 07123, you’d put +44 in the area code space, followed by 123, then the other six digits of your phone number.
That’s form W7 dealt with.
I sent it, my supporting letter and my passport special delivery to this address:
Internal Revenue Service
24 Grosvenor Square
London W1A 1AE
Why special delivery? It costs about £5 but the contents of the envelope are insured up to a value of roughly £100, and with my passport going walkabout, it was well worth it. It just wasn’t possible or cost effective for me to travel all the way down to the American Embassy in London, so I had to do everything by post.
The envelope needs to be signed for at the other end, and you can track delivery online. There’s no need for a covering letter; the presence of the W7 makes it clear why you’re contacting them.
After around a fortnight, my passport was sent back, also special delivery, meaning I had to sign for it at my end.
Then I waited…
A few days ago I received a letter from the IRS Headquarters in Texas confirming they’d assigned me an ITIN. (The American Embassy send your passport back to you after confirming you’re a UK citizen and resident, then forward the letter and W7 to the IRS). It took nearly three months, but was worth it in the end. Remember – this is all to ensure I get 100% of my royalties, instead of 70%.
Take a deep breath. We’re nearly done.
I then had to fill out form W-8BEN, which the accounting department of Loose Id also kindly sought out for me and emailed me.
1. Part 1: Name. Self-explanatory.
2. Part 2: I left blank.
3. Part 3: I ticked the box marked ‘individual’.
4. Part 4: My address. Easy.
5. Part 5: Mailing address, if different from above. I left this blank.
6. Part 6: U.S. taxpayer identification number: Here I typed the ITIN exactly as it appeared in the letter from the IRS: three digits, dash, two digits, dash, four digits. I ticked the box marked ‘SSN or ITIN’.
7. Part 7: I left this blank.
8. Part 8: This asks for a reference number. Your publisher may or may not have one for you; it’s okay to leave this blank as they can later add any reference or code they use for your files/details. This is what I did.
9. Part 9: I ticked ‘a’ and typed that I was a resident of the United Kingdom. I also ticked ‘b’ to confirm I had detailed my ITIN, above.
10. Part 10: Special rates and conditions. In the first blank space I typed 12 for the treaty article number applying to the UK. In the second blank space I typed 0 to indicate there should be a 0% withholding of my royalties. In the third blank space I typed royalties to confirm the type of income I’m referring to. In the fourth, where it asks for a reason, I typed Permanent resident of the United Kingdom.
I then printed out the form, signed it at the bottom and dated it, again, MM/DD/YYYY.
Actually I printed out two copies because I’m paranoid about one being damaged in transit or having coffee spilled over it or somesuch…and posted it (them) airmail to the accounting department of Loose Id.
And that is how I went about getting an ITIN and saving myself 30% of every royalty cheque from Loose Id.
And I have to give full credit to Ash Penn, fellow LI author and British national, who talked me through all of the above, in detail. It’s not for nothing that I mention her in the acknowledgements of By the Book. I’d have gone mad trying to figure all of the above out myself, so again, Ash, thank you.
Find out more about Scarlett on her Author Profile.
By the Book is available from all good retailers, including: