World, Writing, Wealth discussion

Hi friends,
I'm distributing through Amazon KDP. It shows my royalties at being over $100 from the last year, however including my upcoming payment I'm only being paid $67. I am enrolled in KDP Select but I have only had 10 pages read through that platform. Does KDP withhold payments? I see the payment schedule here: https://kdp.amazon.com/en_US/help/top... but I still don't see how my revenue matches my payments.

Could it be tax?

That's what I'm wondering, although at 13% tax, I should still be getting paid more than $67 for over $100 in sales. Maybe it's a tax-withholding thing?

Obviously, there is some withholding applied. Haven’t communicated with Amazon for a while, but when I did, they were replying. They should explain

Is that $100 your share of the earning, or what the book earned. If you publish through Kindle I know there are a few different program models that lay out what your percentage is from the book's price and what percentage Amazon gets. If the book earned $100 and you got $67, that sounds like a 2/3 to 1/3 author/publisher split.

The $100+ is my revenue. I think I earn $6.56 a book, and I was charging $15 a book, so the other money goes to printing costs and to Amazon. I can add up my sales from each month to get the revenue I'm quoted, but my payments are just lower.

Did you contact Amazon on this?

Yes, I'm waiting for their response.

Comparing my royalties to my payments, my first payment was about 70% of my royalty, my second payment was 75% of that month's royalty, and my third payment was 70% of the month's royalty. The variables might be Canadian vs. US markets, but it seems my payments are averaging about 70% of the royalty. Perhaps this is standard? I'll wait and see what they say.

My research has led me to this answer from Amazon:

Royalty payments for eBook sales on Amazon.com and print book sales on all available marketplaces are subject to 30% US tax withholding, including payments from the KDP Select Global Fund. You may be eligible for a reduced rate of US tax withholding if your country of permanent residence has an income tax treaty with the United States. See the IRS website for a list of countries the US has tax treaties with and for a table of tax treaty rates.

I suppose I'll earn the other 30% back when I file my income taxes next year?

Yes, you’ll probably be eligible for a tax credit in your place of residence to avoid double taxation. Maybe you are eligible for a reduced initial withholding rate, if a bilateral tax treaty envisages it . Let’s also see what Amazon replies

Julia, many countries have tax treaties with the US, and you probably live in one of them. (Places like North Korea, surprise, don't.)

However, the procedure for getting tax relief is not necessarily simple. Your first problem is to contact the IRS and app;ly for what they call a tax identification number (TIN). This can only be done through one centre, and I found they were most uncooperative. It was a bureaucratic process more like Kafka than anything else - they rejected if anything was wrong with the application, and wouldn't say what it was.

Then, several years ago, I found you could go around it another way and get an EIN (employer identification number). I got mine with nothing more than a phone call to the right IRS branch - and for once a really helpful person. You have to answer a number of questions, but they are hardly onerous. I also had to assure them I would not drive a truck from where I live into the US - not difficult for me as there are not many road bridges crossing the Pacific. Oh, an employer can be someone who employs themselves!

If you go that way, your next problem is you have to fill in a different form with Amazon, and the forms may change every year. You have to re-fill every three years, from memory, and it is a while since I did it. The key is to use the IRS website and really do your homework on it. The process can be convoluted, but it gets to be worth it.

Wow, that sounds like a long process. I'm in Canada and I had to verify myself with the Canada Revenue Agency on Amazon when I set up my account... maybe they will help straighten out the tax situation?

I just checked my KDP account, where it shows I agreed to the 30% with-holding when I inputted my tax information back in March. Hopefully I earn it back when I file my 2022 taxes.

Julia, Amazon will change your tax status if you go through the process for claiming the tax exemption - they would break US tax law if they didn't and they are not going to do that over your income.

It would be tax deductible in Canada but only fully if your income qualifies for Canadian tax at 30% (assuming Canada has tax law like we do.) So it is worth going through the process unless you qualify for a fairly high tax rate in Canada.

I'll see what tax season brings. Thanks for all the help!

Good luck.

I've filed my income taxes and hopefully I get refunded the amount; I filled in the info from my 1042-S form. I recently retook the tax interview and put in my social insurance number for the TIN, so hopefully as a Canadian they won't withhold my taxes for this next fiscal year.

Wow, so I'm back. I just contacted KDP Amazon directly, and the representative looked into the withholding detail for me. There is no way to recover the 30% that was withheld! Luckily I won't have withholding anymore since I included my SIN this year, but that money I earned last year is gone altogether.