Posts by Betty Sanchez10

urbanwalker72 said:I wonder how those operating through a registered business or an LLC manage their workflow. Surely there must be a structured way to handle B2B transactions, rather than being limited strictly to the B2C model.

As is typical with these types of contracts, the language remains vague, stating only that I am granting them the rights and licenses necessary to distribute my books and related materials, while explicitly clarifying that I am not an employee. However, when it comes to the actual sales process, there is always room for someone to twist the interpretation to suit their own ends. I recently ran into a headache with a distributor regarding the distinction between an author and a publisher; they attempted to force me into a specific legal category that the contract clearly reserved for corporate entities, all based on their own skewed reading of the fine print.

It is a nuanced distinction, isn't it? I haven't actually sold them my rights or handed over a book that belongs to them forever; rather, I am simply granting them a license. This leads me to wonder if "selling" is even the right term to use, a thought that has always left me somewhat conflicted. In the States, people often struggle with this exact dilemma—whether they should register themselves as active sellers or if they are merely receiving royalty payments, as the two concepts are viewed quite differently by tax authorities. Even though the contract itself is governed by American law, Amazon still maintains distinct protocols for the US, the European Union, and other international markets, which might mean I would eventually need to issue invoices to Amazon Japan. $0.67 I am uncertain regarding the exact amount I managed to earn, but more importantly, I find myself at a loss concerning how to handle the Sales Tax obligations for Amazon within the European Union.

That is often the case when you are dealing with a private individual, or just an ordinary citizen.

If you choose to process those transactions through an established corporation, the invoice essentially becomes a formal business record, which simplifies everything significantly. It really just boils down to a straightforward calculation of revenue versus expenses.

It is a relief that they raised that threshold; otherwise, we would have been in quite a difficult position. 🕺 Well, of course—why wouldn't I just become a millionaire overnight? 😒

The discussion here centered largely on suggestions coming from the European Union; our officials kept the threshold at an absolute minimum, though they have since nudged it up slightly. Even with that adjustment, it remains among the lowest in the European Union. That being said, we shouldn't expect any further hikes anytime soon, especially since the general Sales Tax rate was lowered back in 2020, and when you factor in payroll taxes, Sales Tax remains the most critical pillar of the federal budget.

Perhaps one needs to register the business first before they even offer the option to input a Tax ID, or maybe you have to reach out to Amazon directly to sort it out. From what I gather, Amazon Seller provides that functionality since those users are moving inventory to customers, so it shouldn't be an issue for them. Now, whether you actually need to be incorporated or if they'd just take my Tax ID upon request is something I can't say for certain.

It’s quite possible that my dashboard is only showing me data specific to my personal account, given that I don't see any fields for a Tax ID anywhere. I don't know anyone running a corporation here in the States to ask for advice. Even if Amazon accepts things this way, I'm stuck wondering about the distributors; they aren't concerned with sales tax when they are merely passing a book along, and I won't have a direct relationship with that subsequent company. Or perhaps it doesn't matter if we view it as selling to a distributor outside of the US. 🤔

The contract is likely identical for everyone, though I get the impression that in some countries, people receive royalties through their companies because the option was available and it wasn't categorized as a standard sale.

urbanwalker72 said:Amazon acts as a MOSS registrant when operating within the European Union, but MOSS specifically targets "non-taxable persons"—essentially individuals who aren't registered tax entities, making it a B2C transaction.

If you were to establish a formal business entity, it would shift to a B2B model, and the responsibility for Sales Tax, should it exist, would fall upon you.

Amazon is supposed to differentiate between these categories; if you provide a valid Tax ID, those inflated prices shouldn't be appearing on your end.

You can pore over the contract as much as you like, but its practical value ultimately depends on how your local tax authorities choose to interpret it.

True, but no interpretation is possible without first dissecting the contract itself—determining exactly who is working with whom and under what specific framework. This was precisely the stumbling block for small-scale rental owners; people simply couldn't grasp the nature of their agreements with foreign agencies, such as who is acting on whose behalf, and since Sales Tax treatment hinges entirely on those details, everything becomes complicated.

In your situation, it shouldn't be an issue to establish that your business relationship is directly with Amazon. Once you register a business—say, an LLC or a sole proprietorship—it becomes quite clear that you are issuing invoices to Amazon, provided it follows a standard commercial agreement.

On top of that, I have distributors who then pass the books along to platforms like Apple, Google Play, and similar sites, so the whole thing is incredibly tangled. I can already see the tax officials looking completely lost whenever I try to explain it to them just to get some basic information.

Don't try to explain it to them that way; it’s no wonder they get confused. 😁 You need to emphasize that you are selling to a corporation. What that corporation chooses to do with the book afterward is irrelevant to your specific tax obligations. The people you are speaking with are likely earning around $1,000 a month, whereas a high-level tax consultant might earn that in a single day; naturally, they won't possess the same level of expertise, effort, or dedication.

And honestly, I have no idea how the tax office will rule. The mere thought of having to register for Sales Tax and filing all that paperwork, only to hope for a favorable outcome, is terrifying. It feels as though I have to pray that I don't become too successful. 🤣

For now, I wouldn't worry about any of that; there doesn't seem to be much substance to those concerns until you actually cross the Sales Tax threshold. To put it plainly, being just slightly over $300k puts you in a rather awkward spot, whereas hitting a million dollars in annual revenue makes finding ways to optimize your situation much more straightforward. 😁

The thing is, there isn't actually an option to input a Sales Tax ID anywhere in the system. According to the contract, they handle all the tax collection based on where the buyer is located, and that’s really all they care about. Until they are legally required to do something else, they aren't going to lift a finger.

urbanwalker72 said:Amazon acts as a MOSS registrant when operating within the European Union, but MOSS specifically targets "non-taxable persons"—essentially individuals who aren't registered tax entities, making it a B2C transaction.

If you were to establish a formal business entity, it would shift to a B2B model, and the responsibility for Sales Tax, should it exist, would fall upon you.

Amazon is supposed to differentiate between these categories; if you provide a valid Tax ID, those inflated prices shouldn't be appearing on your end.

You can pore over the contract as much as you like, but its practical value ultimately depends on how your local tax authorities choose to interpret it.

True, but no interpretation is possible without first dissecting the contract itself—determining exactly who is working with whom and under what specific framework. This was precisely the stumbling block for small-scale rental owners; people simply couldn't grasp the nature of their agreements with foreign agencies, such as who is acting on whose behalf, and since Sales Tax treatment hinges entirely on those details, everything becomes complicated.

In your situation, it shouldn't be an issue to establish that your business relationship is directly with Amazon. Once you register a business—say, an LLC or a sole proprietorship—it becomes quite clear that you are issuing invoices to Amazon, provided it follows a standard commercial agreement.

On top of that, I have distributors who then pass the books along to platforms like Apple, Google Play, and similar sites, so the whole thing is incredibly tangled. I can already see the tax officials looking completely lost whenever I try to explain it to them just to get some basic information.

Don't try to explain it to them that way; it’s no wonder they get confused. 😁 You need to emphasize that you are selling to a corporation. What that corporation chooses to do with the book afterward is irrelevant to your specific tax obligations. The people you are speaking with are likely earning around $1,000 a month, whereas a high-level tax consultant might earn that in a single day; naturally, they won't possess the same level of expertise, effort, or dedication.

And honestly, I have no idea how the tax office will rule. The mere thought of having to register for Sales Tax and filing all that paperwork, only to hope for a favorable outcome, is terrifying. It feels as though I have to pray that I don't become too successful. 🤣

For now, I wouldn't worry about any of that; there doesn't seem to be much substance to those concerns until you actually cross the Sales Tax threshold. To put it plainly, being just slightly over $300k puts you in a rather awkward spot, whereas hitting a million dollars in annual revenue makes finding ways to optimize your situation much more straightforward. 😁

It’s always the same story with these types of contracts; they just stipulate that I'm granting them the rights and a license to distribute my books and everything else tied to that, while making it explicitly clear that I am not an employee. But when it comes to the actual sales, there's always someone out there ready to twist the wording to suit their own agenda. I recently ran into this exact headache with a distributor regarding the distinction between being an author and being the publisher. In their specific case, they weren't even allowed to treat me as the publisher because the contract was strictly written for corporate entities, yet they still attempted to pin that responsibility on me through their own convenient interpretation of the terms.

urbanwalker72 said:Amazon acts as a MOSS registrant when operating within the European Union, but MOSS specifically targets "non-taxable persons"—essentially individuals who aren't registered tax entities, making it a B2C transaction.

If you were to establish a formal business entity, it would shift to a B2B model, and the responsibility for Sales Tax, should it exist, would fall upon you.

Amazon is supposed to differentiate between these categories; if you provide a valid Tax ID, those inflated prices shouldn't be appearing on your end.

You can pore over the contract as much as you like, but its practical value ultimately depends on how your local tax authorities choose to interpret it.

True, but no interpretation is possible without first dissecting the contract itself—determining exactly who is working with whom and under what specific framework. This was precisely the stumbling block for small-scale rental owners; people simply couldn't grasp the nature of their agreements with foreign agencies, such as who is acting on whose behalf, and since Sales Tax treatment hinges entirely on those details, everything becomes complicated.

In your situation, it shouldn't be an issue to establish that your business relationship is directly with Amazon. Once you register a business—say, an LLC or a sole proprietorship—it becomes quite clear that you are issuing invoices to Amazon, provided it follows a standard commercial agreement.

On top of that, I have distributors who then pass the books along to platforms like Apple, Google Play, and similar sites, so the whole thing is incredibly tangled. I can already see the tax officials looking completely lost whenever I try to explain it to them just to get some basic information.

Don't try to explain it to them that way; it’s no wonder they get confused. 😁 You need to emphasize that you are selling to a corporation. What that corporation chooses to do with the book afterward is irrelevant to your specific tax obligations. The people you are speaking with are likely earning around $1,000 a month, whereas a high-level tax consultant might earn that in a single day; naturally, they won't possess the same level of expertise, effort, or dedication.

And honestly, I have no idea how the tax office will rule. The mere thought of having to register for Sales Tax and filing all that paperwork, only to hope for a favorable outcome, is terrifying. It feels as though I have to pray that I don't become too successful. 🤣

For now, I wouldn't worry about any of that; there doesn't seem to be much substance to those concerns until you actually cross the Sales Tax threshold. To put it plainly, being just slightly over $300k puts you in a rather awkward spot, whereas hitting a million dollars in annual revenue makes finding ways to optimize your situation much more straightforward. 😁

It isn't quite as if I’ve handed over my rights entirely or surrendered a book that now belongs to them forever; rather, I am simply granting them a license, which makes me wonder if "selling" is even the right word to use. It has always been a bit of a conceptual muddle for me. Even in the States, people tend to get hung up on this distinction—whether they should be filing their paperwork as actual vendors or just as recipients of royalties—because the two categories feel fundamentally different. Yet, despite the fact that American law governs the contract, Amazon still insists on making these messy distinctions between the US, the European Union, and all the other territories where they operate, which leaves me contemplating whether I might actually have to start issuing invoices to Amazon Japan. $0.67 I’ve managed to pull in some earnings over there, but now I’m sitting here staring at a complete mess regarding how to handle the Sales Tax for the Amazon European market.

urbanwalker72 said:Amazon acts as a MOSS registrant when operating within the European Union, but MOSS specifically targets "non-taxable persons"—essentially individuals who aren't registered tax entities, making it a B2C transaction.

If you were to establish a formal business entity, it would shift to a B2B model, and the responsibility for Sales Tax, should it exist, would fall upon you.

Amazon is supposed to differentiate between these categories; if you provide a valid Tax ID, those inflated prices shouldn't be appearing on your end.

You can pore over the contract as much as you like, but its practical value ultimately depends on how your local tax authorities choose to interpret it.

True, but no interpretation is possible without first dissecting the contract itself—determining exactly who is working with whom and under what specific framework. This was precisely the stumbling block for small-scale rental owners; people simply couldn't grasp the nature of their agreements with foreign agencies, such as who is acting on whose behalf, and since Sales Tax treatment hinges entirely on those details, everything becomes complicated.

In your situation, it shouldn't be an issue to establish that your business relationship is directly with Amazon. Once you register a business—say, an LLC or a sole proprietorship—it becomes quite clear that you are issuing invoices to Amazon, provided it follows a standard commercial agreement.

On top of that, I have distributors who then pass the books along to platforms like Apple, Google Play, and similar sites, so the whole thing is incredibly tangled. I can already see the tax officials looking completely lost whenever I try to explain it to them just to get some basic information.

Don't try to explain it to them that way; it’s no wonder they get confused. 😁 You need to emphasize that you are selling to a corporation. What that corporation chooses to do with the book afterward is irrelevant to your specific tax obligations. The people you are speaking with are likely earning around $1,000 a month, whereas a high-level tax consultant might earn that in a single day; naturally, they won't possess the same level of expertise, effort, or dedication.

And honestly, I have no idea how the tax office will rule. The mere thought of having to register for Sales Tax and filing all that paperwork, only to hope for a favorable outcome, is terrifying. It feels as though I have to pray that I don't become too successful. 🤣

For now, I wouldn't worry about any of that; there doesn't seem to be much substance to those concerns until you actually cross the Sales Tax threshold. To put it plainly, being just slightly over $300k puts you in a rather awkward spot, whereas hitting a million dollars in annual revenue makes finding ways to optimize your situation much more straightforward. 😁

It's a stroke of luck they raised that threshold, otherwise 🕺 And sure, why wouldn't I be a millionaire overnight? 😒

urbanwalker72 said:Yes, that could definitely become an issue.

The whole situation regarding Sales Tax is quite confusing to me. The customer pays the Sales Tax, and then Amazon collects it and remits it to the customer's local government. Wouldn't that mean the Sales Tax is essentially being paid twice for the exact same item?

Since Amazon is headquartered in the US, there is no Sales Tax applied there. Furthermore, the US does not collect or remit taxes on behalf of other nations. There is a similar concept within the European Union regarding specific services known as MOSS. In your particular situation, the Sales Tax would only be applicable here in America.

The reality is that I handle the entire production of the ebook—everything from the cover design to the formatting—so I am performing the same functions as a traditional publisher. It just feels ambiguous whether I am the one selling the product or if Amazon is, given that I don't have direct contact with the buyer. Then again, the customer isn't actually owning a physical object; they are purchasing a license to use the content since they aren't permitted to resell it. I find myself questioning if this is treated like a printed book that a publisher would physically export from the country, or if it is categorized simply as a digital service.

That information is explicitly detailed in your contract with them. It is the fine print that most people bypass by simply clicking "next, next, finish." 🙂 From my perspective, your relationship is with Amazon; you are essentially selling products to them under a specific set of terms.

Perhaps I should only be responsible for paying Sales Tax on Amazon's commission, acting as a publisher who sets the price while Amazon serves as the intermediary? However, since Amazon is based outside of the European Union, I suspect Sales Tax might not even apply, though I am unsure if each individual Amazon storefront is treated differently. I also wonder if incorporating a formal business would offer any relief, or if it would merely result in more entities attempting to shift the tax burden onto my shoulders.

Under European Union regulations, the general rule is that a service is taxable based on the location of the recipient, though various exceptions exist. In your case, unless an exception applies, the recipient of the service is Amazon. Therefore, I believe there is no basis for you to pay Sales Tax on Amazon's commission here in America as a small taxpayer. If you eventually exceed the threshold, you would transition to being a standard taxpayer with the ability to claim input tax credits.

I understand what you mean about the US, but Amazon utilizes that MOSS system—or whatever they call it—where they charge extra because they maintain dedicated storefronts for various countries within the European Union, which means the price there is always inflated by those taxes. Even when I look at my own book on Amazon.com from here in America, the price displayed is higher than the one I actually selected. I haven't tried making a purchase just to see exactly how much they’d tack on, but I'm fairly certain I was hit with Sales Tax when I bought something through Amazon.de. When you suggest that in my specific situation the tax is only owed here in America, are you implying that applies when I'm selling to someone else within the States?

urbanwalker72 said:Yes, that could definitely become an issue.

The whole situation regarding Sales Tax is quite confusing to me. The customer pays the Sales Tax, and then Amazon collects it and remits it to the customer's local government. Wouldn't that mean the Sales Tax is essentially being paid twice for the exact same item?

Since Amazon is headquartered in the US, there is no Sales Tax applied there. Furthermore, the US does not collect or remit taxes on behalf of other nations. There is a similar concept within the European Union regarding specific services known as MOSS. In your particular situation, the Sales Tax would only be applicable here in America.

The reality is that I handle the entire production of the ebook—everything from the cover design to the formatting—so I am performing the same functions as a traditional publisher. It just feels ambiguous whether I am the one selling the product or if Amazon is, given that I don't have direct contact with the buyer. Then again, the customer isn't actually owning a physical object; they are purchasing a license to use the content since they aren't permitted to resell it. I find myself questioning if this is treated like a printed book that a publisher would physically export from the country, or if it is categorized simply as a digital service.

That information is explicitly detailed in your contract with them. It is the fine print that most people bypass by simply clicking "next, next, finish." 🙂 From my perspective, your relationship is with Amazon; you are essentially selling products to them under a specific set of terms.

Perhaps I should only be responsible for paying Sales Tax on Amazon's commission, acting as a publisher who sets the price while Amazon serves as the intermediary? However, since Amazon is based outside of the European Union, I suspect Sales Tax might not even apply, though I am unsure if each individual Amazon storefront is treated differently. I also wonder if incorporating a formal business would offer any relief, or if it would merely result in more entities attempting to shift the tax burden onto my shoulders.

Under European Union regulations, the general rule is that a service is taxable based on the location of the recipient, though various exceptions exist. In your case, unless an exception applies, the recipient of the service is Amazon. Therefore, I believe there is no basis for you to pay Sales Tax on Amazon's commission here in America as a small taxpayer. If you eventually exceed the threshold, you would transition to being a standard taxpayer with the ability to claim input tax credits.

You can pore over your contracts until you’re blue in the face, but at the end of the day, everything just comes down to how the IRS decides to interpret things in your neck of the woods. It isn't exactly a new phenomenon, either; authors in both the US and Canada have dealt with this exact headache before. Even the tax authorities over there were frequently baffled by how to actually execute it, leading to a chaotic mess of conflicting interpretations where people were tossed into completely different tax categories without much rhyme or reason. In Canada, for instance, they would try to force authors to pay local taxes on sales that Amazon had already collected from the customer, simply because the tax officials couldn't wrap their heads around the process. It required constant explaining. Of course, it wasn't universal—some auditors demanded proof, some ignored it entirely, and others would accept your explanation of the contract, though it all really depended on which specific jurisdiction you were dealing with and how the local agent felt that day. To make matters even more convoluted, I deal with distributors who push books out to Apple, Google Play, and various other platforms, turning the whole thing into a tangled web. I can already see the look of pure confusion crossing a tax auditor's face when I attempt to walk them through the logic just to get a straight answer.

urbanwalker72 said:Yes, that could definitely become an issue.

The whole situation regarding Sales Tax is quite confusing to me. The customer pays the Sales Tax, and then Amazon collects it and remits it to the customer's local government. Wouldn't that mean the Sales Tax is essentially being paid twice for the exact same item?

Since Amazon is headquartered in the US, there is no Sales Tax applied there. Furthermore, the US does not collect or remit taxes on behalf of other nations. There is a similar concept within the European Union regarding specific services known as MOSS. In your particular situation, the Sales Tax would only be applicable here in America.

The reality is that I handle the entire production of the ebook—everything from the cover design to the formatting—so I am performing the same functions as a traditional publisher. It just feels ambiguous whether I am the one selling the product or if Amazon is, given that I don't have direct contact with the buyer. Then again, the customer isn't actually owning a physical object; they are purchasing a license to use the content since they aren't permitted to resell it. I find myself questioning if this is treated like a printed book that a publisher would physically export from the country, or if it is categorized simply as a digital service.

That information is explicitly detailed in your contract with them. It is the fine print that most people bypass by simply clicking "next, next, finish." 🙂 From my perspective, your relationship is with Amazon; you are essentially selling products to them under a specific set of terms.

Perhaps I should only be responsible for paying Sales Tax on Amazon's commission, acting as a publisher who sets the price while Amazon serves as the intermediary? However, since Amazon is based outside of the European Union, I suspect Sales Tax might not even apply, though I am unsure if each individual Amazon storefront is treated differently. I also wonder if incorporating a formal business would offer any relief, or if it would merely result in more entities attempting to shift the tax burden onto my shoulders.

Under European Union regulations, the general rule is that a service is taxable based on the location of the recipient, though various exceptions exist. In your case, unless an exception applies, the recipient of the service is Amazon. Therefore, I believe there is no basis for you to pay Sales Tax on Amazon's commission here in America as a small taxpayer. If you eventually exceed the threshold, you would transition to being a standard taxpayer with the ability to claim input tax credits.

And honestly, I haven't the slightest clue how the IRS is going to interpret my situation, which makes the mere thought of registering for Sales Tax and filing all that endless paperwork absolutely nauseating. It’s a grim sort of paradox where you have to file everything perfectly and just pray to the gods of bureaucracy that it doesn't blow up in your face. It really feels like I have to hope I don't become too successful, lest the whole thing collapses under its own weight. 🤣

urbanwalker72 said:Technically speaking, that is correct. In comparable situations, one might identify activity codes that fall under a related category, such as publishing services. Ultimately, the IRS isn't responsible for defining the nature of the business itself, but rather for determining its specific tax treatment.

Even if it were possible, I find it much simpler to just route everything through JPMorgan Chase rather than dealing with the headache of setting up a full business entity. Besides, I usually end up getting it all back as a tax refund anyway.

Well, even though I suspect you might find it more cost-effective to go that route—especially if you already hold a steady job elsewhere—it shouldn't be too much of a headache. In principle, operating as a sole proprietorship isn't any more administratively taxing than managing the monthly filing of your sales tax forms or whatever frequency your incoming payments require.

Even so, the current arrangement is quite reasonable, particularly if you take advantage of that additional 25% deduction for business expenses by joining a professional guild or an artist's association related to your creative works.

My only lingering concern involves what happens if I happen to cross that Sales Tax threshold. I find myself wondering if those earnings are aggregated regardless of whether the payments come from an entity outside the US, even though technically I shouldn't be liable for such taxes. It feels like I might end up buried under a mountain of bureaucratic paperwork, and I truly hope I won't be hit with unexpected tax liabilities. For instance, if I am required to issue invoices to Amazon as if they were purchasing goods directly from me, I struggle to envision how one would logically justify "selling" something as abstract as four pages of a book through Kindle Unlimited. 🤣 If that is the case, I am truly at a loss as to how the entire situation will unfold.

If the folks over at the IRS actually understood the nuances of this industry, I might be able to navigate toward a more tax-efficient strategy. However, for the time being, I find that simplicity is my greatest ally; the less complexity I have to manage, the better. On a related note, if anyone possesses a deeper understanding of the Sales Tax thresholds regarding publishing contracts and the subsequent obligations once those limits are met, please reach out to me. I would simply like to be prepared should that situation arise. 😁

That is precisely where the complication lies. Treating an author's royalty as standard income means you face the exact same situation we see now, with the added burden of calculating and remitting sales tax. Beyond just filing with JPMorgan Chase, you would be required to submit an additional sales tax return. The threshold is quite straightforward: once you exceed the $300 mark, those obligations trigger. $0.00 Just so you know, starting next month, you'll be subject to Sales Tax.

The fundamental principle of sales tax is that you collect it from your business partner and simply pass it along to the government. However, the real concern lies in whether that works out in practice, or if the weight of the tax ultimately falls on your shoulders, leaving your actual royalty check significantly diminished. ☕

There is another matter of significant importance to consider, particularly if you find yourself responsible for the Sales Tax burden. Generally, the tax rate for book deliveries sits at a modest 5%, whereas the standard rate climbs much higher to 25%. The complexity lies in the technicality of the transaction: strictly speaking, you aren't delivering a finished physical product, but rather an intellectual work in its "raw" state. However, if you go beyond providing the raw content and engage in the technical processing of that material—for instance, formatting an ebook using software like Calibre—it could be interpreted as active publishing, which effectively means you are delivering a completed book. Following recent regulatory shifts aligned with European Union directives, an ebook is now legally classified as a book, making it subject to that lower 5% rate.

While managing smaller amounts from foreign royalties might be relatively straightforward, once you start seeing figures exceeding $300 $0.00 or more, it becomes wise to consider alternative tax strategies, as the best path forward depends heavily on several shifting variables...

I hadn't even considered the publishing angle before. It could certainly be a more lucrative route for some people, particularly those who already have steady employment to fall back on, though I can't help but wonder if things would get complicated if they eventually exceeded the threshold for simplified tax filing.

urbanwalker72 said:Technically speaking, that is correct. In comparable situations, one might identify activity codes that fall under a related category, such as publishing services. Ultimately, the IRS isn't responsible for defining the nature of the business itself, but rather for determining its specific tax treatment.

Even if it were possible, I find it much simpler to just route everything through JPMorgan Chase rather than dealing with the headache of setting up a full business entity. Besides, I usually end up getting it all back as a tax refund anyway.

Well, even though I suspect you might find it more cost-effective to go that route—especially if you already hold a steady job elsewhere—it shouldn't be too much of a headache. In principle, operating as a sole proprietorship isn't any more administratively taxing than managing the monthly filing of your sales tax forms or whatever frequency your incoming payments require.

Even so, the current arrangement is quite reasonable, particularly if you take advantage of that additional 25% deduction for business expenses by joining a professional guild or an artist's association related to your creative works.

My only lingering concern involves what happens if I happen to cross that Sales Tax threshold. I find myself wondering if those earnings are aggregated regardless of whether the payments come from an entity outside the US, even though technically I shouldn't be liable for such taxes. It feels like I might end up buried under a mountain of bureaucratic paperwork, and I truly hope I won't be hit with unexpected tax liabilities. For instance, if I am required to issue invoices to Amazon as if they were purchasing goods directly from me, I struggle to envision how one would logically justify "selling" something as abstract as four pages of a book through Kindle Unlimited. 🤣 If that is the case, I am truly at a loss as to how the entire situation will unfold.

If the folks over at the IRS actually understood the nuances of this industry, I might be able to navigate toward a more tax-efficient strategy. However, for the time being, I find that simplicity is my greatest ally; the less complexity I have to manage, the better. On a related note, if anyone possesses a deeper understanding of the Sales Tax thresholds regarding publishing contracts and the subsequent obligations once those limits are met, please reach out to me. I would simply like to be prepared should that situation arise. 😁

That is precisely where the complication lies. Treating an author's royalty as standard income means you face the exact same situation we see now, with the added burden of calculating and remitting sales tax. Beyond just filing with JPMorgan Chase, you would be required to submit an additional sales tax return. The threshold is quite straightforward: once you exceed the $300 mark, those obligations trigger. $0.00 Just so you know, starting next month, you'll be subject to Sales Tax.

The fundamental principle of sales tax is that you collect it from your business partner and simply pass it along to the government. However, the real concern lies in whether that works out in practice, or if the weight of the tax ultimately falls on your shoulders, leaving your actual royalty check significantly diminished. ☕

There is another matter of significant importance to consider, particularly if you find yourself responsible for the Sales Tax burden. Generally, the tax rate for book deliveries sits at a modest 5%, whereas the standard rate climbs much higher to 25%. The complexity lies in the technicality of the transaction: strictly speaking, you aren't delivering a finished physical product, but rather an intellectual work in its "raw" state. However, if you go beyond providing the raw content and engage in the technical processing of that material—for instance, formatting an ebook using software like Calibre—it could be interpreted as active publishing, which effectively means you are delivering a completed book. Following recent regulatory shifts aligned with European Union directives, an ebook is now legally classified as a book, making it subject to that lower 5% rate.

While managing smaller amounts from foreign royalties might be relatively straightforward, once you start seeing figures exceeding $300 $0.00 or more, it becomes wise to consider alternative tax strategies, as the best path forward depends heavily on several shifting variables...

The whole concept of Sales Tax just leaves me feeling perpetually confused. From what I gather, the customer pays the tax, and then Amazon simply collects it and remits it to whichever state the buyer happens to live in. It feels like we’re circling a drain where the same thing might end up being taxed twice, which seems fundamentally broken. I handle the entire production process myself—everything from designing the cover to the final formatting—so I’m essentially performing the exact same functions as a traditional publishing house. The only real ambiguity lies in the legal nature of the transaction; since there is no direct contact between me and the consumer, one has to wonder if I am actually the seller or if Amazon is. Then again, when you consider that a digital book isn't even true property—the customer is merely purchasing a license to access the content without the right to resell it—the distinction becomes even more blurred. It makes me wonder if this should be treated like a physical book being shipped out by a publisher, or if it falls strictly under the category of an electronic service.

Perhaps I should only be on the hook for sales tax regarding Amazon's actual commission, considering that as a publisher, I’m the one setting the book's price while Amazon simply acts as the middleman. Then again, since Amazon isn't based here in the States, my understanding is that sales tax shouldn't even apply, though I'm still unclear if the tax implications shift depending on which specific Amazon storefront you're dealing with. I can't help but wonder if actually incorporating or setting up a formal business entity would change anything at all, or if it would just result in everyone trying to push even more of the legal and financial burdens onto my shoulders.

urbanwalker72 said:That sounds reasonable, but may I ask why you haven't considered setting up as a sole proprietorship? Wouldn't that be more cost-effective for you?

If my memory serves, the agent at the IRS told my wife that an author can't qualify for that specific simplified status; they insisted it had to be categorized as some other kind of independent business activity. 🤔 Regulations might have shifted since then, but even if it were an option, it’s much easier for me to just submit my paperwork to JPMorgan Chase and avoid the headache of managing a full-blown small business. Besides, I end up getting a tax refund anyway.

The only thing weighing on my mind is what happens if I cross that Sales Tax threshold—assuming that applies to all revenue regardless of whether the US firm issued the payment or if I should technically be exempt from collecting it. It feels like once I hit that limit, I'll be buried in endless bureaucracy, and I honestly hope they don't try to come after me for Sales Tax either. If I'm supposed to issue invoices to Amazon as if they were purchasing something directly from me—and I'm genuinely curious how one would even justify "selling" something like four pages of a book via Kindle Unlimited on an 🤣 account—then I have no idea how that would play out.

If the people running the tax offices actually understood the nature of this work, I might actually find a more advantageous setup, but for now, I'm sticking with whatever is simplest. Also, if anyone here knows more about that Sales Tax threshold regarding publishing contracts and what follows once you hit it, please reach out; I'd rather be prepared before it becomes an issue. 😁

steelowl26 said:Betty Sanchez10, thanks a million for such a deep dive and for being willing to help me out with more info if I need it... Honestly, it’s just depressing how much disappears by the time everything's tallied up... leaving the author with maybe 36% at most...

That’s exactly why I don't bother looking at any of those individual line items before checking what actually hits my bank account. If I had to sit there adding up the Amazonian cut, then the US sales tax, and then factoring in whatever fees the banks bleed out along the way... 😲 I'm just waiting for them to finally sign that double taxation treaty, though I have my doubts it'll happen anytime soon.

steelowl26 said:Reading your post seriously made my day. On the other subforum, nobody has said a single word regarding self-publishing on Kindle (it's been over a month now)... nothing.

I would be so incredibly grateful if you could help me out with a few things. I haven't opened my Kindle publishing account yet (just a reading account), so right now I'm just deep in the rabbit hole, reading everything, studying everything... trying to make sure I don't screw anything up.

I went to the IRS office and totally met my own expectations within two seconds—so next time I'm planning to show up way better prepared so they don't toss me into some "tax nightmare" category.

I'm curious—like, I want to know everything... but I really don't want to be a total nuisance to 🙂

So, basically... taxes.
1. How do we even classify ourselves? (Under the laws from 2019, certain digital sales have lower tax rates, but I bet the IRS doesn't view Kindle books the same way. Are we looking at being independent contractors or something else entirely?)

2. How do you actually pay? (Which forms, how many times a year, what's the actual percentage...) I'm sure I'm missing something obvious, so please shout if there's something important I didn't ask.

3. Can the Kindle payouts go straight to a standard bank account?

If you're feeling generous, I'd love to hear your whole story regarding all the technicalities, not just my direct questions.
Anyway, thanks a million to you and/or whoever else is brave enough to answer.

When I received my first payout, I took the necessary paperwork to the local tax office, reported it as foreign income, and filed the appropriate quarterly estimated tax forms. Every time money hits my account, I file those forms and treat the income as royalties from an independent contractor agreement. I use this site to run the numbers: https://www.isplate.info/kalkulator-...jelu-2018.aspx

So far, they haven't asked me to provide any proof, but if they do, I don't see why it would be an issue. This is a legitimate creative work in the truest sense, and I can simply present the Amazonian terms of service, which functions as a binding contract. At least, that's what people in similar situations told me; they were dealing with a different foreign firm rather than Amazon, but the tax office accepted it and stopped asking for a localized version of the contract.

Getting information at the tax office is an uphill battle because most of them don't have a clue what they're looking at. You mention the internet or international transactions, and they look at you like they've seen a ghost.

The sales tax on books doesn't apply here unless you're planning to physically sell books in person in the US without a publisher or middleman, but I don't know much about that since it was never my concern.

Regarding payments, you have to use PayPal or a similar service that allows you to receive funds from Amazon, because Amazon still doesn't offer direct transfers to US banks in certain setups. It isn't complicated, though. Once the money lands in my PayPal, I just transfer it to my checking account and that's that.

If there is anything else you need to know, feel free to reach out via private message.

Michelle Davis15 said:One option is setting up a company in a third country and presenting yourself to Amazon as a corporate entity. The company owns the revenue, and then the founder, living in America, pays their corporate taxes at the end of the year if they turn a profit. You'd want to pick a country with favorable laws for non-resident companies. Here is a list:

https://kindlepreneur.com/remove-30-...lf-publishers/

Another route is registering an offshore publishing company in Delaware, US, which wouldn't be subject to those specific withholdings. However, the owner—being a resident of America—would still be on the hook for taxes on the net profit.

Or, you could just go the simple route: get an Employer Identification Number from the IRS and enter it into the Amazon US tax Identification Number field.

From what I recall, it didn't even give me the choice to use an EIN; it only offered the option to enter an ITIN or an SSN.

I’ve been hunting for an answer to this myself, but I haven't come up with anything useful. It feels like we're stuck until there's actually a double taxation treaty in place; at this point, our only real options would be to relocate entirely or set up a business entity in a state that actually has one of those agreements. Honestly, I've just accepted that they're going to take their 30% cut of my American earnings. I suppose I should be grateful that there isn't withholding for the other countries with their own local Amazons, though I think India might be an exception.
If anyone happens to stumble upon a workaround, please post it here. It would be a massive relief if there were some way to handle this.

I was planning on heading down to the local Social Security office to pick up that hardware token for accessing my digital government accounts and the IRS, but I’ve been staring at this application form and I am completely lost on which boxes to check. I recognize the section regarding the crypto e-card/USB device—though I can't tell if they mean a physical card that plugs into a USB port or if I should be checking something else entirely 😵—but then there is this whole business with selecting a certificate. I honestly have no clue what the difference is between QCP+ and the Democratic Party+ options. Am I actually supposed to select one of those, or just leave it alone? Thanks!

Has anyone actually figured out the process for signing up for Social Security if you’ve never been officially enrolled before, but now need to start paying into the system because of a freelance contract?😁

Thanks for all the info. I have a few more questions brewing. Is there any way to file that RPO report and those JOPPD forms online or via some kind of digital submission? I’ve heard people mention things like the IRS website or various government portals, but I have no clue if anyone can just access them or how the whole process actually works. Alternatively, could someone else just handle the filing on my behalf? Getting down to the local IRS office isn't really in the cards for me right now, so I'm trying to figure out how to navigate this without the hassle. 😵

The whole licensing aspect hadn't even crossed my mind, but then again, this isn't some custom commission where someone pays you once and the transaction is dead and buried. Though, I'm honestly not sure if that distinction actually changes anything legally. I'll have to do some digging online regarding those specific regulatory agencies.

I already tried reaching out to the IRS for some clarity, but all I got were these useless, non-committal answers. I have zero desire to let them trip me up just because it's easier for their bureaucracy to squeeze more money out of me. 🤣 From what I've gathered, some people haven't been asked for proof when reporting foreign royalties, though I can't tell if that's because the amounts were negligible or if they were just treating it as minor side income that didn't trigger any red flags.

The more I read into this, the more confused I get. Does anyone know if registering as a sole proprietor or a freelancer means there’s no formal copyright contract involved, forcing me to issue dummy invoices? And if I somehow manage to file this strictly under copyright income, can I keep doing that every month regardless of the amount without being forced to register a formal business? I'm also curious if that 30% expense deduction is actually going to stick after these tax reforms. If it doesn't, I'll probably end up paying those new contributions for nothing since I'd still be classified as unemployed. 😵 It's enough to make anyone lose the will to work. 🙏

Hello there. I apologize if this isn't quite the right forum for this discussion, but since I’m nearing the end of my degree, I’m eager to jump into the workforce as soon as possible. I find myself somewhat lost regarding how tax filings work for those in Freelancing, specifically when all income is sourced internationally via the internet. My plan involves uploading files to platforms that specialize in selling digital goods; they handle the sales and then pay me a monthly fee, which they refer to as royalties. I realize this essentially functions as a type of copyright agreement, but since my "agreement" consists merely of clicking through their terms of service, I am unsure how to substantiate this to the IRS without a formal signed contract. Would I be expected to generate some sort of manufactured invoices to satisfy them? 😵

In many cases, these companies don't even send payments directly to the US, so I would likely receive funds through PayPal or similar services before transferring them to my local bank account. This brings up another complication: how do I prove to the authorities that I'm not somehow receiving double income, when in reality, the discrepancies in amounts are simply due to the transaction fees these third-party services strip away? Should I just report the final amount that actually hits my bank account and ignore the rest? Since these transactions involve companies based in the US, they will likely withhold their own taxes, and I am sincerely hoping I won't be forced to pay taxes on money that never even reaches my hands in the first place. 🤦

The recent shifts in tax reform have left me feeling increasingly muddled. If we assume my situation is treated as a copyright agreement subject to specific contributions, and I were to register as a small business or a sole proprietorship, would I be paying contributions based on the standard business coefficients or those tied to the specific nature of the contract? 🤔

If anyone here has navigated a similar path or possesses any clarity on these matters, please leave a comment or reach out via private message. Most of the information I can find seems tailored toward people with side hustles or those working directly with clients, whereas I have absolutely no direct relationship with the actual buyers. I am simply trying to figure out the most efficient way to structure this so that I actually have something left after the heavy tax burden, rather than ending up in the red. 🤣

Thanks.