This article will only be useful to self-employed workers resident outside the USA (called “non-resident aliens”) who may find themselves dealing with US business concerns and/or earning money from affairs in the USA.
Perhaps you are a writer living and working in the Scotland, England or France, and you have just had the spectacular news that your book is to be published in America, or that your sales base is set to expand to the States. Congratulations.
It might be an idea to think about the tax situation. Businesses in the United States are required to deduct 30% for tax automatically, from every cent they send to overseas authors, unless that author has already obtained an ITIN, an Individual Tax Identification Number. Through a process of registration with the IRS, an ITIN then allows an American business concern to send a UK resident the whole amount of their fees and gains without keeping back 30%. The author then accounts and pays tax as they would for their other (domestic) income. So obtaining an ITIN is a very good idea.
Sorry. This sounds like a tax seminar, which was not the idea.
To obtain an ITIN, first go to the IRS website and print off the most up-to-date application form, which is called a W-7 form and complete it. Before sending it anywhere, remember to sign and date it. With the W-7 form, also send certified copy ID and a letter from the US business confirming the basics of the deal.
Based in Edinburgh, I am fortunate. I took my passport to the American consulate here, based near Calton Hill. They provided me with a formal copy of my passport ID page, which copy included an embossed seal and a signature. On returning home, I immediately put my passport back in its safe place and resisted all suggestions, however tempting, to send it to Austin.
I sent the original certified copy to the London Embassy at: Internal Revenue Service, 24 Grosvenor Square, London, W1K 6AH, along with the completed and signed W-7 and an original letter from my publisher. I took several good copies of both supporting documents so that, if the post got lost, I would not have to go back to the US Embassy or ask my publisher for another letter. (What? You forgot to take a copy?)(How embarrassing).
In my covering letter to London, I wish I had asked them to send the ORIGINAL certified copy of my passport on to Austin, Texas. As it was, someone in the London office returned the original certified copy to me and forwarded a bad photocopy to Austin. Six weeks later I got a letter which meant, “We need to see the original certified passport ID” though it took me four hours of telephone calls to confirm that.
For these purposes, a US Consulate is treated as equivalent to a department of the US government, and is not merely an “acceptance agency”. Therefore, no further proof is required, provided Austin see the original certified copy passport.
It is worth mentioning that while an ITIN covers all earnings in the US for five years, each separate transaction with a different company (for example, receiving an advance of royalties with a publisher, negotiating audio fees or appearance fees with other entities) requires you to complete a separate W-8BEN form. We keep hold of our ITIN papers, but we have to send off W-8BEN forms for each instance, and often, the US business will ask to see an original, inked copy of the form, which can be downloaded from the IRS website, but which may take two weeks to arrive in the US. If your fees are slow in coming, check whether accounts payable is still waiting for an original W-8BEN form, and send it asap.
I hope that is helpful. I apologise that this sounds a bit dry and formal. I am not a lawyer any more, but if anyone would like clarification, please just ask, and I will do my best to help.