CreateSpace and Taxation Information

 

CreateSpace logo enhanced with the words "and taxation information"

There is no doubt about it. Self-publishing is a lot of work.

One of the reasons people publish books is to make money. Companies make money from your books, too.

Of course, we all have to pay taxes, but I don’t think we should let companies take more taxes than needed.

Do you? I thought not!

In this article, I will explain the process and reasoning for using CreateSpace to print your self-published book.

Specifically, I will give you some information about CreateSpace and taxation information. I will also explain a few things that you need to know if you are a Canadian, as there are certain laws that Canadians must follow if they become self-published authors.

While the information may not apply to every self-published author in this in world, this article will open your eyes to potential things you may need to do in your country.

Why Use CreateSpace? Answer: Because of “Legal Deposit” (THE LAW!)

After I found out that I need to  submit a copy of my newly published book, Risky Issues, to the Library and Archives Canada as part of the Legal Deposit process, I decided to use CreateSpace (an American company) to print my book.

I will readily admit that I didn’t look into any Canadian POD (Print on Demand) companies, since CreateSpace came highly recommended.

To use CreateSpace to print my book, I first needed to create an account, and then upload the book files, which consist of the both the inner and the exterior of the book.

To do this, I had to hire someone to create a file for me to use as the cover, because I’m graphically challenged.

In true indie fashion, Melissa Bowersock suggested I use Brenda, her cover designer. (When Melissa speaks, I listen! She’s been in this biz for about 30 years, and is an award-winning author who has been through it all.)

You Need to Submit E-Files, too!

After speaking with a very nice lady at the Library and Archives Canada, I found out that Canadian authors need to submit ALL FORMATS of their books as part of the Legal Deposit process.

It is THE LAW that all books with a Canadian ISBN must be submitted to Library and Archives Canada.

To do this, you need to create an account first.

CreateSpace and Taxation Information

When I attempted to fill out my tax information on CreateSpace, this article about tax information opened. It sets forth information for both US publishers and non-US publishers. Here’s one thing it says about Tax Withholding:

If you provide CreateSpace with your valid tax identity information, tax withholding will not be deducted from your royalties. If the tax identity you provide us does not match IRS records, you may be subject to U.S. tax withholding of up to 30%.

Tax Information

According to the information page for ITINs on the IRS website:

What is an ITIN? An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. It is a nine-digit number that always begins with the number 9 and has a range of 70-88 in the fourth and fifth digit.

Effective April 12, 2011, the range was extended to include 900-70-0000 through 999-88-9999, 900-90-0000 through 999-92-9999 and 900-94-0000 through 999-99-9999.

IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA).

ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code.

Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN, unless they meet an exception.

Taxation Steps to follow to Use CreateSpace:

1. To apply for an ITIN, print a copy of Form 7, fill it out using these instructions and submit it to the IRS (via snail mail). Wait for approval, then proceed to Step 2.

Note that the application process may take up to 8 weeks and requires that you submit certain documents to verify your identity.

2. Print a copy of Form W-8BEN, fill it out using these instructions, and submit it to CreateSpace.

(For the most recent edition of the form, visit this page of the IRS website.)

If you have trouble, you might need to contact them internationally.

Of course, if you have received a message from Amazon directing you to send them IRS form W-8BEN with an affidavit of unchanged status, please print it, sign it, and send it to CreateSpace, using the address:

CreateSpace

c/o AP Tax

PO Box 80683

Seattle, WA

98108-0683

Tax Treaties and Royalties

Because CreateSpace will also sell your book to others, it’s a company worth using. 🙂

However, to ensure that you will earn the most money from your book, indie authors – regardless of what country they live in – need to be aware that you can earn more if a tax treaty exists between your country and the United States.

I had to find out if a tax treaty existed between Canada and the US. It does.

I then had to find out what it said. Information about royalties can be found in Article XII of With Respect to Taxes on Income and on Capital, in the Convention Between Canada and the United States of America.

I also had to find out if I needed a SSN (Social Security Number), and referred to Social Security Numbers For Noncitizens to find out, which I accessed via the Noncitizens link on the Social Security website.

It was here that I finally found the IRS toll-free number, 1-800-TAXFORM (1-800-829-3676). Here is some other taxation information I found using this link via CreateSpace:

Tax Reporting Your U.S. source income will be reported annually on IRS Form 1042S. The form is issued on, or before, March 15 each year and is an informational statement of your royalties and any amounts withheld during the prior tax year. For example, royalties paid to you from January 1, 2013 through December 31, 2013 will be reported on Form 1042S, issued in March 2014. You may be responsible for paying taxes in your own country.

Other Information

There has been an update to the tax information interveiw on Amazon. I learned about this from Jo Ann Plante who blogs on Write, Read, Delight, Indeed! and who sent me a link to Tax Withheld on eBook Royalties by Amazon – A Quick Tip Helping International Authors Save. This is a prime example of how wonderful and helpful indie authors are.

(Go, indies!)
David Henderson also made this video for us, which shows how to update your account.

A Final Note

Now that you know about CreateSpace and are equipped with some taxation information, are you going to apply for a reduced tax withholding rate? I sure hope so! Yes, I know firsthand what a pain in the butt all this work is! But one day, it’ll all be worth it…

Ebook Cover - Risky Issues by Lorraine Reguly

My Book

My book, Risky Issues, is currently being sold  on Amazon and Google Play/Google Books. 

It is now available in print from CreateSpace, too. 🙂 

Author: Lorraine Reguly

Lorraine Reguly, BA/BEd, is an author. She is also an English teacher-turned-freelancer for hire, and offers 4 different services on Wording Well: writing (including blogging and ghostwriting); editing; and mentoring. She also helps others become published authors! Check out her services and see what she can do for you to help you!

16 thoughts on “CreateSpace and Taxation Information

  1. Christy Birmingham

    Lorraine, Thank you!! I just left a comment about 10 minutes ago on a blog saying I wanted to learn more about CreateSpace — your post here came soon after and WOW awesome for Canadian writers such as you and I. Thank YOU!

    Reply
    1. lorraine Post author

      Christy, the world works in mysterious ways, doesn’t it. 😉

      I’m happy I was able to help! I spent three hours one day figuring this all out. Ugh. I wish I had this post to read before starting my research! LOL

      Reply
  2. Jo Ann Plante

    Great article, Lorraine. I’m thinking of going through Createspace.I was adviced that is is the best way to go, but I was unsure. As an American, I won’t have to go through all that you went through, but I really appreciate the way your share your publishing experiences with your readers.

    Reply
    1. lorraine Post author

      Jo Ann, I’d have to say that you are lucky you are an American (in this instance, anyway!) as you already have a SSN and therefore won’t have to go through the process I’m going through. (When it comes to health care, however, I wouldn’t consider you as lucky.)

      Doesn’t Bookbaby have a POD option?

      Reply
    1. Jo Ann Plante

      Collecting/paying taxes is always a pain. Even in the US, every state has different tax laws, so sometimes you pay sales tax and sometimes you don’t. Even when you file you federal taxes, you can write off certain things and lower your tax rate. It’s so confusing.

      Reply
      1. lorraine Post author

        No kidding! I hate having to figure this tax stuff out. What a pain!

        Have you had problems with taxes on your book, Jo Ann?

        Reply
  3. RUFRAN C. FRAGO

    Hi Lorraine,

    Thanks for the information you shared. I am a little too late joining your blog but hopefully you will answer this query.

    I have just completed the proofreading phase of my manuscript and is now deciding what to do with it. I thought of Kindle and Create Space. They are two different things right?

    You discussed about a US SSN (Social Security Number) and investigated if Social Security Numbers For Non US citizens is needed. What did you find out? I am a Canadian citizen, and the only foreseeable activities in the US are the books potentially sold in there. Do I need to file and acquire SSN? Is that consider my business activity there?

    By the way, how much do we save summoning the US/Canada treaty?

    Thanks,

    Rufran

    Reply
    1. Lorraine Post author

      Yes, Kindle and CreateSpace are different. Kindle is for ebooks and CreateSpace is for print books. CreateSpace (CS) is a print-on-demand (POD) company. If you want to make your book available in print, CS is the place to do this. If you need help, let me know, as I offer assistance to people wanting to turn their ebooks into print books. Refer to the Author Assistant section on http://wordingwell.com/services/.

      As far as a SSN goes, it’s really, REALLY hard to obtain one of these if you are like me, a Canadian citizen. I’d suggest contacting the IRS for help and more info.

      The savings is about 20%, as the current withholding rate is 30% and Canada and the US treaty agreement is at 10%. The savings would add up if you sold millions of books, though! 😉

      I hope this helps you, Rufran.

      Reply
  4. RUFRAN C. FRAGO

    Hi Lorraine,

    Do I need to file individual income tax to the IRS every year according to cycle even if sales is zero? or very minimal? or is there a cut off minimum. Or should I file to CCRA only and report IRS withholding tax?

    RCF

    Reply
  5. RUFRAN C. FRAGO

    Hi Lorraine,

    Hope you are doing well.

    Your blog here has helped pave the way to properly setting up my first book. I have successfully set up my Kindle Edition but is struggling to set up my Create Space POD of the same book. By the way, the title of my book is “Risk-based Management in the World of Threats and Opportunities: A Project Controls Perspective.”

    My biggest stumbling block:
    1) Tax information: Right now, I have a certified true copy of my passport and a signed W-8BEN form ready to send to IRS, USA as per address you’ve shared.
    2) Direct deposit banking information

    Did you eventually acquire your SSN? I did not read that you precisely mentioned you did although the insinuation is that you did. You mentioned only two forms to accomplish and submit to get the book published; i.e. W-8BEN and an ITIN Application. Is that all the forms we Canadians need?

    Additional Question: Royalty Profile

    Did you use a Canadian bank? I was not able to set it up because the routing number does not fit. Must be an American routing number needed… Can you please share some tips on how to set up my direct deposit information?

    Cheers,

    Rufran

    Reply
    1. Lorraine Post author

      Rufran, your best bet is to call the IRS directly. Good luck!

      By the way, I did not get a SSN or an ITIN. It was simply too much trouble to do so. 🙁

      So CreateSpace is withholding tax at a rate of 30%.

      Oh, and congratulations on your book!

      Reply

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