Smashwords for non-Americans

[spaze]

I read the stuff about the tax for the sales at Smashwords but did not quite understand how it goes for EU citizens. Are we required to pay US tax or how does it exactly go for us euroheads?

[altworld]

I think this is a question that can only really be answered by reading the Smashwords very comprehensive FAQ on this subject.

Good luck, the US IRS is going to gouge you on this.
Arigato,
Nick Davis

[spaze]

Nah, I just have the automatically withold the 30%, less problematic for me

[BrentKnowles]

I don't know how it works for EU but in Canada we just fill in a few (albeit complicated) forms. I haven't filled in these for Smashwords yet but I've had to do so for my work in the game dev career so I think I'll be able to stumble my way through them.

[mr ploppy]

On the UK tax return form there is a section for foreign income that has already been taxed at source, so you don't need to pay it twice. American tax is a bit higher, but not really enough to make it worth the bother of getting it back unless you're selling millions. But you can do it if you really want to, and your country has a trade/tax agreement with America.

[DMSmillie]

spaze - I posted a load of detailed info on the tax issues for non-US authors in your thread about self-publishing with Amazon - it applies just as much to self-publishing with Smashwords.

[Tony_A20]

Here is another long, detailed explanation and information on the 30% US tax withholding problem for non-US residents. I'm pretty sure that cub 06H is an Amazon shill.

"http://forums.kindledirectpublishing.com/kdpforums/thread.jspa?messageID=19585&#19585"

[neilmarr]

In a nut shell, Spaze, Smashwords must now tax at US source.

The only way around this is either to have someone with US tax and SS numbers upload to Smashwords for you and deal with your returns or to go through the heavy-duty work of claiming exemption. It's a bloody nightmare, mate.

Either way, it's a bind on the indie author because that 30% does count (add in Smashwords regular 18%) and you're almost splitting 50-50, BEFORE any third-party retail claims its 35%-70% sales commission (stores now cleverly and dishonesty call it 'royalty') off the top.

And your Smashwords income is likely to be so low anyway that hard work on the complex tax-exemption proof is all for nothing because the return is not at taxable level on home ground.

Not Smashwords' fault, just the wheels of governent that need your oiling to keep them all in cushy fully-paid and superanuated working order.

My own wee (Canadian-registered) house spent a small fortune on legal and admin fees to gain additional US registration last year to deal direct with the major online ebook stores. But we're dealing well over 120 titles at any given moment, so it was worth it.

For the indie author with just one or a handful of titles? Not so sure. Depends on your personal long-term plan for writing.

Good luck and very best wishes. Neil

[mr ploppy]

Originally Posted by neilmarr

The only way around this is either to have someone with US tax and SS numbers upload to Smashwords for you and deal with your returns

Wouldn't they then have to pay tax on your writing income? Or would their tax on it be a lot less than 30% to make that worth doing?

[Fbone]

Originally Posted by mr ploppy

Wouldn't they then have to pay tax on your writing income? Or would their tax on it be a lot less than 30% to make that worth doing?

I wonder if the Federal IRS considers author's royalties as "ordinary income" and taxed at the personal standard rate. If so, the tax rate can be anywhere between 0 - 39%. Choose a lower income individual as you would pay no tax at all.

There may be state income taxes as well although these are usu much less.

[neilmarr]

Sadly, earnings from a Smashwords ebook -- unless you're particularly tireless in self-promotion and have a tad of viral luck -- are likely to be low enough to limbo-dance under the tax bar. As I say, it all depends on your long-term plans and income projection whether it's worth the official hassles to cleam tax local ememption by treaty (not sure that Finland, through its '95 entry to the EU, and US has one) or just to let it ride. If your main aim right now is exposure of early work, Spaze, counting the pennies is unrealistic. Good luck. Neil

[spaze]

Thanks for the extensive help guys, but as I mentioned before, I will just give out my ebooks for free.

I get much more enjoyment knowing someone reads and perhaps likes my stories than those couple bucks.

[mr ploppy]

Originally Posted by spaze

I get much more enjoyment knowing someone reads and perhaps likes my stories than those couple bucks.

I get a lot more downloads on pirate sites than I do on Smashwords. No real way of knowing how many people read them from either though.

[neilmarr]

***I get much more enjoyment knowing someone reads and perhaps likes my stories than those couple bucks***

A healthy and realistic outlook -- at least in the early stages, Spaze. Luck and best wishes. Neil

[mr ploppy]

Originally Posted by mr ploppy

I get a lot more downloads on pirate sites than I do on Smashwords. No real way of knowing how many people read them from either though.

Should probably add that's other people downloading my stories, not an admission from the parrot on my shoulder