I hate you, withholding tax!

In my previous post I spoke about giving advice to the newbie authors who are considering self-publishing and who, like me, live outside the USA.

I was just checking my royalties, and guess what my first advice will be about? Yes, royalties!

Are you ready for the big and scary Withholding Tax? Because if your country does not have that special, magical treaty with the States, you will have to pay 30% (yes, thirty!) of your hard earned royalties.

Now, how nice is that? While the royalties are as tiny as $4 or $15, you don't pay that much attention to that 30%. But what if you have to pay $800?

Someone will say that it's still not bad, you're at least receiving something, but that's not comforting at all. Because it's not 5%, not even 15%. It's freaking 30%!!!

So what can we do about this? A fellow author claims that the money can be returned if you fill out a certain form, but another one claims that's impossible. You can read the discussion here and decide for yourselves: Tax withholding Problem - Non US Publisher.

More on this can be found here:

Taxation of Nonresident Aliens

Claiming Tax Treaty Benefits

My opinion is that those authors whose countries have not signed the treaty, will have to pay. Oh, how I wish I was wrong.

You should find the list of countries HERE. Search for the name of your country. If it's not there, then you'll have to pay the withholding tax.

But wait, I think I started from the middle. This is not all. You also pay to Amazon 30% (or 65%). And I think I should start from the beginning.

How much you might earn with Amazon

When you publish with Amazon, you pay them too. To be honest, I don't mind at all (and you shouldn't mind, too). Amazon is making our dreams come true, it's fine to pay them their share.

If you price your book at least $2.99 (this is considered the golden price for a 50-70.000 word  self-published first book), then you will receive 70% royalties from Amazon (minus delivery costs): $2.04.

If you price your book $0.99 (you can't price lower with Amazon), then you will receive 35% royalties (no delivery costs): $0.35.

And then you will pay the withholding tax from the $2.04 or $0.35. Or rather, Amazon will deduct the tax and send you the remains.
But what remains? Not much, unless you sell thousands and thousands of books.

Still want to try self-publishing with Amazon? Alright then, next time I will tell you how to make your book permanently free.