ITIN FROM THE IRS

Five of us gathered Wednesday night to honour The Muse and also to learn from Margaret about acquiring an ITIN (Individual Taxpayer Identification Number) from the American IRS (Internal Revenue Service). This is required of Canadian authors who do not want to be paying both Canadian and American income tax on royalties due them from work being published and/or distributed by an American company. Without this number, an American publisher/distributor is required by law to withhold 30% of earnings for American taxes. At the end of this blog, I will outline the steps needed to acquire this magical number.

Jim’s news is that the publisher Loose ID rejected his romance novel as it was, but said they would reconsider it if he rewrites it. So of course that’s what he’s doing. He did read for us Chapter 25 from “Coventry Ghosts, Book 2”. Cheri opens the coffee shop and then tells the ghosts that she has something for them. She has bought them a laptop that she sets up in the coffee shop and tells the ghosts she will leave it on for them to learn new things. The ghosts are able to enter the laptop and move around at will. Laurie enters the laptop and looks out at an old man looking in at her. He tells her he would like to know what life was like a thousand years ago and she promises to tell him. He will come back the next day.

Jason read Chapter 31, “Prophecy” from his novel. Gregg is tempted to follow a vision he has of Jody, but Sam, his dead mother, comes to him in an alternate realm and warns him about following an illusion. She tells him to follow Damianos to find Jody.

Wendy read a new poem she wrote, “Burst Of Spring”, which tells of a deep yearning and expectation of Spring. And in meeting Spring, she questions her own life and wonders if she’s learned its lessons and is ready to embrace Spring again?

I’ve started re-writing my “Honey” stories, getting them ready for self-publishing. I read a re-write of the first one I had written, “Clueless”, where I list a few of Honey’s funny traits.

Self-publishing ebooks with Kobo may become more enticing in the future. I filled out a survey they were asking their published authors about further services we would like them to provide. I did tick print-on-demand, and marketing help. I’ll let you know if their service is upgraded.

Margaret didn’t read anything of her own, but did spend time explaining the ITIN to us and showing us the paperwork. I took copious notes and later went to the IRS website to clarify my own understanding. Royalties paid to Canadian authors by American companies are considered to be passive earnings, subject to American income tax. Supplying an ITIN number to those American companies (as per treaty between Canada and the U.S.) means that you only have to pay Canadian income tax on those royalties, which you must declare as self-earned income when you file your taxes in Canada.

The steps to follow are:

1. Get a Canadian passport. There is a passport office at Surrey Central Mall in behind Shoppers, Margaret said.

2. Get a certified copy of that passport from the passport office. Margaret said a copy is about $20.00.

3. Download and print out a copy of the FORM W-7(Application for IRS Individual Taxpayer Identification Number). To get it, go to the IRS website: www.irs.gov/Individuals/General-ITN-Information

4. Fill out the form. At the top, under Reason you are submitting Form W-7, tick box a and also box h. Beside box h, write in “Exception 1(d) Royalties ”. Beside Enter treaty country write “Canada”. Then beside and treaty article number write “XII”. Finish filling out the form and sign it.

5. To the W-7, attach your certified copy of passport and a Letter of Commitment from the U.S. publisher/distributor handling your work and collecting royalties on it.

6. Mail these three items to the IRS or take them to the IRS office. There is one at 114 W. Magnolia, Bellingham, WA 98225 Phone 360-752-4361.

7. It will take 8 to 10 weeks for the IRS to send you an ITIN.

8. When you receive your ITIN, then download FORM W-8BEN. Fill it out with your new ITIN and send it to your American publisher/distributor so they do not have to withhold taxes on your royalties.

I hope that explains things for you, but if you have any questions, I am not the expert. Go to the IRS website or phone them for clarity. Margaret said if you don’t fill out the W-7 correctly, not to worry. They will just send it back to you explaining what they want.

Next Meeting will be Wednesday, March 6th at 7:00 p.m. here at my place. I look forward to seeing you then.

Lisa