Amazon KDP 30% Tax Withholding and Double Taxation.
Summary
TLDRThe video script discusses the 30% tax that Amazon KDP often deducts from authors' earnings, particularly those living outside of the United States. The speaker, who has some accountancy qualifications, advises viewers to consult with an accountant due to the complexity of individual tax situations. They explain the concept of double taxation and how it can affect authors' earnings after Amazon's tax deduction. The video outlines steps to update tax information on Amazon KDP and emphasizes the importance of declaring all earnings, even those that have been taxed. It also touches on the possibility of claiming some taxes back, but highlights the difficulty of dealing with an overseas entity like Amazon. The speaker suggests that authors may be able to claim certain business expenses to offset taxes and recommends against letting Amazon handle tax deductions to avoid complications. The summary underscores the importance of professional accounting advice in navigating the intricacies of taxation for self-published authors.
Takeaways
- 📚 Subscribe to the channel for more informative content.
- 🔔 Hit the notification bell to stay updated with new videos.
- 💰 Amazon KDP takes a 30% tax on earnings, especially for those living outside the United States.
- 🤔 The concept of double taxation can affect how much you owe in taxes, depending on your country's tax laws.
- 🙅♂️ It's advised to consult an accountant for personalized tax advice, as individual circumstances vary.
- 📈 You are not selling books, but earning royalties from your creative work, which is a different financial perspective.
- 📝 When speaking to an accountant, clarify that you are living on royalties, not sales.
- 🔄 Amazon KDP's 30% tax can be modified or avoided, but it requires updating your tax information.
- 🇺🇸 If you have a non-US TIN (Taxpayer Identification Number), you may be able to reduce the tax taken by Amazon KDP.
- 💼 Some countries may not provide relief from the 30% tax, but you might only be taxed on a portion of your earnings.
- 🔋 If you've overpaid in taxes, you might be able to claim some or all of it back, but this can be complex and is best handled by an accountant.
- 🚫 Even if you've been taxed on your earnings, you must still declare them to avoid legal issues.
- 🏦 It's important to understand that tax laws and regulations can differ significantly from one country to another.
- 🧮 Deductible expenses related to your work, like a home office or equipment, might reduce your taxable income.
- ✅ It's generally better to handle taxes yourself rather than letting Amazon deal with it, to avoid potential complications.
Q & A
What is the 30% tax that Amazon KDP takes from authors living outside of the United States?
-The 30% tax refers to the withholding tax that Amazon KDP (Kindle Direct Publishing) deducts from royalties for authors who are not U.S. citizens or residents. This is a standard tax practice for payments made to foreign entities or individuals.
What is double taxation and how does it affect authors receiving royalties from Amazon KDP?
-Double taxation occurs when an individual or entity is taxed on the same income in more than one jurisdiction. For authors, this could mean being taxed by their home country on their worldwide income, including royalties from Amazon KDP, even if those royalties have already been subject to withholding tax in the U.S.
Why is it recommended to consult an accountant when dealing with taxes on Amazon KDP royalties?
-An accountant can provide personalized advice based on an individual's specific circumstances, including their tax bracket, business structure, and potential deductions. They can also help navigate the complexities of international tax laws and double taxation agreements.
How does one's status as a seller of goods versus receiving royalties affect their tax situation?
-Receiving royalties is different from selling goods because royalties are payments for the use of something one has already created. This distinction can affect how income is taxed and what deductions one might be eligible for.
What is an EIN and when would an author need to provide it to Amazon KDP?
-An EIN, or Employer Identification Number, is a tax identification number used in the U.S. Authors who are not U.S. citizens may need to provide a similar identification number from their home country, such as a National Insurance number in the UK, when setting up their tax information with Amazon KDP.
How can authors update their tax information with Amazon KDP?
-Authors can update their tax information by going to their account settings on KDP, clicking on 'View Tax Information', and then following the prompts to complete an interview that will guide them through the process of providing or updating their tax details.
What is the impact of double taxation on an author's income after Amazon KDP has withheld the 30% tax?
-After the 30% tax withholding, the remaining income may still be taxable in the author's home country, depending on their tax laws and any tax treaties between their country and the U.S. This could result in the same income being taxed twice.
Can authors claim back the 30% tax withheld by Amazon KDP?
-It may be possible to claim back some or all of the 30% tax, but this can be a complex process involving international tax laws and often requires the assistance of an accountant. The ability to claim back the tax also depends on the tax laws in the author's country of residence.
What is the advice for authors regarding claiming deductions on business expenses related to their writing?
-Authors should consult with an accountant to determine what expenses can be claimed as deductions. This may include costs associated with creating their books, such as equipment and home office expenses, but the specifics will depend on individual circumstances and local tax laws.
Why might an author choose to handle their own taxes rather than allowing Amazon KDP to do so?
-Handling taxes independently allows an author to have more control over their financial situation and potentially claim deductions that they might not be able to if taxes were handled by Amazon KDP. It also avoids the complexity of dealing with an overseas entity for tax purposes.
What is the importance of declaring all earnings, even those that have been taxed by Amazon KDP?
-All income, including royalties that have been taxed by Amazon KDP, must be declared to the tax authorities in the author's country of residence. This is important for compliance with local tax laws and to ensure that the author is not inadvertently underreporting their income.
Outlines
📚 Understanding Amazon KDP's 30% Tax and Royalties
The first paragraph discusses the 30% tax that Amazon KDP imposes on authors outside of the United States, and potentially within the U.S. as well. It emphasizes the importance of understanding double taxation and seeking professional accounting advice tailored to the author's specific circumstances. The speaker, despite having some qualifications in accountancy, recommends consulting an accountant to navigate tax brackets, business nature, and the fact that authors receive royalties rather than selling books directly. The paragraph also touches on the print-on-demand model and the distinction between selling and earning royalties, which can impact accounting practices.
💼 Navigating Tax Implications and Potential Refunds
The second paragraph delves into the complexities of claiming tax refunds on earnings from Amazon KDP, especially for those living outside the U.S. It outlines the process of providing tax information through Amazon's system, including the distinction between individuals and businesses, and the use of tax identification numbers like the EIN or the UK's National Insurance number. The paragraph explains the concept of double taxation, where income may be taxed both in the country of source and residence, leading to a potential tax burden on the same income. It also discusses the challenges of claiming a refund on the 30% tax deducted by Amazon, highlighting the need for accounting assistance in dealing with overseas entities and the possibility of claiming the entire 30% back depending on the individual's earnings and tax situation.
Mindmap
Keywords
💡Amazon KDP
💡Tax
💡Double Taxation
💡Royalties
💡Accountant
💡Tax Information
💡Employer Identification Number (EIN)
💡Tax Bracket
💡Print on Demand
💡Claiming Back Tax
💡Tax Allowance
Highlights
Amazon KDP takes a 30% tax on earnings for authors outside the US, and possibly even those within the US.
This tax issue is related to double taxation, where authors may be taxed twice on the same income.
Authors should seek advice from an accountant to understand their specific tax situation and potential deductions.
Authors receive royalties, not income from selling books, which affects how their earnings are taxed.
Amazon KDP allows authors to update their tax information to potentially reduce the 30% tax.
Authors can claim certain business expenses like home office costs to offset their tax liability.
It can be challenging to claim back the 30% tax already deducted by Amazon due to double taxation agreements.
Authors may only have to pay tax on their earnings after a certain threshold, depending on their country's tax laws.
If an author's total earnings are below the tax threshold, they may be able to claim back some or all of the 30% tax paid to Amazon.
Authors need to declare their Amazon KDP earnings to their tax authorities, even if they have been taxed by Amazon.
It is generally recommended to handle tax matters through an accountant rather than letting Amazon deal with it.
Authors should inform their accountant of all their Amazon KDP earnings, even those that have been taxed by Amazon.
Authors may be able to claim deductions for business expenses like office equipment and utilities to reduce their taxable income.
Dealing with tax matters directly with an accountant can be less of a hassle than trying to reclaim the 30% tax from Amazon.
Authors should update their tax information with Amazon KDP if they want to avoid the 30% tax deduction.
It's important for authors to understand the tax implications of their Amazon KDP earnings and seek professional advice.
Transcripts
thank you for subscribing to the channel
it's much appreciated and for those who
haven't subscribed yet it would be much
appreciated thank you let me tell you a
second hit the notification Bell as well
um right what we want to talk to you
about today is that 30 tax that Amazon
KDP likes to take off most people living
outside of the United States
and maybe even those people in the
United States and what we can do about
it do we have to pay it
let's talk about it
[Applause]
well there's a thing called the double
taxation
and it's an unfortunate kind of thing
really now I've got a couple of
qualifications in accountancy but uh my
advice to you is that you seek an
accountant because I don't know your
circumstances I can only give you some
information on how I see it
and the rest is down to you I don't know
what your tax bracket is what uh before
you actually start paying tax
um what your business actually is
and while we're on that subject you
don't sell books
you actually get royalties from things
you've already made
so that's the way to look at it so when
you're talking to an accountant you're
not a box seller you're not a book
publisher you're living on royalties
you've made something you've created
something
but there's been no outlay well unless
you want there to be outlayed unless you
want to say well okay look you know it's
cost me this much I want to claim back
my computer
um or whether you do that or not you've
only got so many things you can actually
um claim for because everything's print
on demand while you're self-publishing
and if you give your book to a a
publisher to publish it for you again
you're living on royalties you've not
actually
you're not actually selling anything
and that makes a difference to your
accounts so bear that in mind when you
speak to your accountant say they're not
sell anything
I live on my royalties and I get
royalties from things I've already done
but again that's the choice is yours
um so all about this 30 tax
well you if you've already agreed to
that and you don't want that anymore so
we go to your account
you go to your tax information click on
that view provide tax information
continue without saving take the
interview now you have to do this again
you see your tax information has been
validated if you need to provide updated
information please click take interview
all right okay we go through here
individual yeah
whether I'm a business or not I'm going
to click individual that's just my
preference
are you a US citizen no are you acting
as an intermediary agent or other person
receiving payment on behalf of another
person or as a flow through entity no I
have non-us10 or I have a us10
well I have a non-us 10. now an e i n is
an employer identification number
and individual tax identification number
is the tin if you're in the UK you can
add or if you have a National Insurance
number or whatever tax code you have
from another country
um it could be your
benefits tax code or whatever it is uh
sorry you might have that in Australia
for instance enter it here so for
National Insurance number put it in
there that's your tin value and then
continue it's time to sign and submit
now a lot of countries don't have that
relief they don't give you the 30 off
they don't make allowances for that but
it could be you may only get taxed 10 or
5 depending on which country you're in
now I've been asked can I claim that 30
back
or do I have to pay tax on what's left
unfortunately
it can be a bit of a job trying to claim
that 30 back and there's a thing called
double taxation
and what that means is let's say for
instance you're in the UK or Australia
whatever country you're in
and you're allowed to learn so much
before tax so that it may be 10 or 12
000 of whatever it is
and anything after that you get taxed on
so let's say for instance you've got a
job or a part-time job and you earn that
10
000 let's keep it at ten thousand you
earn that ten thousand
the tax
and then on top of that
you've now got another five thousand
which you earned through Amazon KDP for
that year let's just say
after they've taken the 30 tax off that
five thousand
now you've already had your 10 000
allowance at 5 000 is now taxable
it's unfortunate being taxed twice
basically and that's what they say at
Double taxation
now on the other side of things
if
um you can claim tax back so let's say
for instance you're not earning
up to the allowance before tax
and you've just paid 3 000 in tax to
Amazon
now you could claim that back your
accountant will have to deal with that
because you're now dealing with an
overseas entity and it's not going to be
easy for you
to try to claim some of that back if not
all of it depending on how much you have
earned besides that if anything if
you've not owned anything you may be
able to claim the Whole 30 back
and but that's down to your accountant
to deal with
so it's not gone completely
but like I say you have to declare it
you can't just say okay I've been taxed
on that let's forget about it to go into
my account doesn't work that out
unfortunately
um if I have a ten thousand pound here
and that's my limit before tax and I
earn another 10 or 20 000 pound on top
of that
that 10 or 20 000 pounds is taxable
even if I've paid
even if it was um thirty thousand on
Earth and they've taken 33 off or 30 off
and I'm now down to twenty thousand
that's still taxable and it's
unfortunate it's um it's just the way it
is but that's business and that's the
way things work so there's not a lot you
can do about that unfortunately
but leave it to your accountant speak to
your accountant about it so whatever
earnings you've had
let him know you do have to declare
these earnings even if they've been
taxed unfortunately and
um yeah I hope that helps
it's not it's not the best sort of
situation is it better to just
um
let your accountant deal with the whole
thing yeah I think so
so if you can do away with that 30 if
you can stop Amazon taking that 30 you
may as well let your account reveal with
all of it maybe let's add a few things
you may be able to say okay I'm putting
this computer down I'm putting this
table down I'm putting these chairs down
I'm putting this whole office down
um my gas and electric at home my uh
Power in an office if I'm renting one
there may be things you can claim and
then you've not got to really mess about
having to try and get that money back
from the US uh before doing all that
uh it can be a bit of a nuisance you
might not get it back
this these things can happen it might be
too much of an argument
so yeah I would recommend dealing with
the tax yourself and not letting Amazon
deal with it so I hope that helps as
well and that's it
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