GETTING AN ITIN – an Individual Taxpayer Identification Number – in PERSON
NOTE 2020: you no longer need an ITIN to claim tax treaty benefits from the US if, for example, you self-publish on Amazon KDP or publish through US-based publishers. You can use either your Unique Tax Reference (UTR) or your NI number.
I’ve left this information up just in case it’s ever needed again!
If you’re a British author, being paid by an American publisher, the fact that you may get 30% more royalties if you read this will just have to be compensation for the dull subject!
American publishers have to pay American taxes to the IRS (Internal Revenue Service). If you’re receiving royalties from an American firm, then the IRS are legally obliged to take 30% of your royalties in tax. You get what remains. However – and luckily – the USA and the UK have signed a tax treaty which means UK residents should only get taxed by the UK. You can receive your royalties untouched by US tax!
Good news! But it doesn’t happen automatically. It’s up to you, the writer, to prove to the IRS that you qualify under this treaty, and don’t have to pay US tax. And for that, you need to establish yourself as a UK taxpayer.
This used to be done by obtaining a US tax number called an ITIN – Individual Tax Identification Number – and complete a W8-BEN form.
This tells the IRS that you qualify for US tax exemption.
Nowadays if the only contact you have with the US Internal Revenue Service is to seek this tax exemption on royalties, all you need is to complete the W8-BEN form using your National Insurance number as your UK “Tax Number”, and send that to your publisher(s). See my page HERE.
However, there are occasions when you may need to apply for a full US ITIN in person at the American Embassy. For example:
– you have other tax dealings with the US Internal Revenue Service e.g. you are trading in the USA, or
– you’ve been deducted US tax in the past for whatever reason and want to claim for it to be repaid.
If this is the case, the instructions to obtain a full ITIN are below.
PLEASE NOTE that authors have had differing experiences in their dealings with the US Embassy! This route worked for me and others that I know of.
If you are a limited company who is dealing with a US publisher? you cannot use an ITIN or your NI number. You need an EIN, which I cover HERE.
How do I get my ITIN?
You can fill in the application from an online form. Then you have the options:
(1) Take the form, your passport, and evidence of a formal contract with a US publisher to the US Embassy in London and apply there, or
(2) Send your form, passport and copy contract to the Embassy by post, and have them send it all on to the US for processing.
Option (1) is obviously preferable time-wise, plus you keep control of your passport. But that may not be possible for everyone to do.
Step 1 – Application
Complete the application form FW7 from http://www.irs.gov/pub/irs-pdf/fw7.pdf.
– Reason you’re submitting? Use “h” and write UK citizen earning US royalties.
– Question 6(b) Foreign tax ID? Use your NI number.
Print out a current contract with your publisher, which must state you’ll be receiving royalty income OR ask for a letter from your publisher addressed to the IRS, stating that they pay you US royalty income and that you’re claiming exemption under the treaty between the US and the UK. Note: Many of the more established publishers are used to issuing these.
Step 2 – the Embassy Quest
Take your FW7, passport and contract to the American Embassy in London: http://www.usembassy.org.uk/ukaddres.html
Tell them that you want the IRS office, and you’ll have to suffer the paranoid security check that even airports would find a bit OTT, leaving all your electronics, including your watches and even your belts at the door.
The IRS representative can also help you with any bits of the form you have trouble with. They’ll copy your contract and passport, and you’re done and off home again. Then you wait to receive confirmation of your number.
This will arrive as another form – W8-BEN – with your details and ITIN number filled in. Save this carefully! You can scan it, and send a copy to any of your publishers who are in the US.
Step 2b – the Embassy by snail mail
The IRS also accepts a Form W-7 by mail accompanied by ORIGINAL documents or certified copy of the document(s) which establish your identity and foreign status.
A passport is the one single document that will cover all requirements!
Other acceptable documents are listed on the IRS website (link below) e.g. your photo driving licence / birth certificate.
ALERT: If you send COPIES, they’ll have to be notarised by either the passport office OR selected Authorised Acceptance Agents (also listed on the IRS site) and they’ll inevitably charge a fee.
It’s a hassle?!
Yes, but you only need to get an ITIN once. After that you’ll have the same number throughout your writing career, and it’ll save you 30% of your royalties all the way. It may be worth the expense of travelling to London for a day, or even overnight.
Hey, what?? The only reasons to delay getting an ITIN are:
(1) if you anticipate low US earnings, so you may as well pay the tax in the US instead of the UK. Just include the income you actually receive as NET of tax on your UK tax return. Or
(2) you like losing 30% of your earnings! In other words, if you want to make any money from the US at all, get going soon. While you delay, your publisher will deduct tax every quarter. And won’t stop until they have your formal ITIN.
Latest IRS information: http://www.irs.gov/Individuals/International-Taxpayers/Obtaining-an-ITIN-from-Abroad