Self-publishing and Taxes

The topic of self-publishing and taxes is something I recently learned about, as I finally filed my income tax yesterday. First off, note that I’m a Canadian, so this post may not apply if you’re American. Secondly, note that the H&R Block rep I spoke with was absolutely awesome, so much so that I ended up giving him a copy of my book, which he promised to read and tell all his friends about. Yay networking!

Anyway, I’m Canadian, and the assisted publishing company I went through to publish my book — iUniverse — is an American company. Last year, I made approximately $500 in royalties off my book (feel free to gasp in awe or shake your head in pity, depending on your own self-publishing experience). I figured such a small amount would be easy enough to do taxes for. I was wrong.

So I went to H&R Block, which is one of those accounting firms who set up booths in the mall and do basic tax returns for good prices. Fair enough — I have no idea how to do my own taxes, and my return wasn’t particularly complicated this year. Or so I thought. You see, if you’re Canadian, and you need to file foreign income, the rate for the return goes way up. We’re talking double the price. Gah!

Now, I don’t know how this changes if you do your taxes yourself, or go via a professional business accountant (the ones who charge obscene rates by the hour). But it’s something to be aware of!

So the take-away from this post is:

If you’re self-publishing through a foreign company, you’re going to have to claim foreign income on your tax return! Dum dum dummmmmm!

That’s all for today. Have a lovely Wednesday, everyone, and enjoy the unrelated media below!

Unrelated media:

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Categories: Self Publishing | Tags: , , , , , , , | 19 Comments

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19 thoughts on “Self-publishing and Taxes

  1. Would Darth Amish use a lightsaber?

  2. Still laughing with Darth… :D

    Living in Greece, I faced a similar problem to you when first publishing with Amazon. However, I’ve found a simple solution: by allowing my royalties to be taxed in the US (albeit at a hefty 30%), I pay no extra tax in Greece. The two countries have a standard treaty to avoid double taxation, so my royalties arrive tax-free.

    Perhaps something for you to consider?

    • Good idea! I actually have no idea how the whole foreign tax thing works. I’ll have to do some more digging for next year. But that definitely makes sense — no point in getting taxed twice!

      • It is worth checking very carefully as it differs by country. The 30% is technically a withholding against potential US tax liability; so I could not leave the withholding in place and declare the payments as pre-taxed in the UK.

  3. Darth Vader facial expressions. Whoda thunkit? :-)

  4. Great point, thanks for sharing, didn’t even think of that! Great pics too :D

    • Thanks :) It took me completely by surprise too. I mean, obviously I knew I’d have to deal with taxes for self-publishing, but it never occurred to me that the fact that iUniverse is an American company would work against me! Alas.

  5. And Aussie tax is different again. I usualy do my own taxes. There’s something in the Aussie tax system that allows “artists” to claim tax on incoming from selling their “art” differently to regular income, as if you had a real job. Never read it in detail because it never applied before. As I haven’t yet published anything, it doesn’t apply now either. But it could be worth looking into. Especially the part about the beneifits (or not) of being an “artist”. Maybe the Aussie goernment takes pity on artists and gives them a bit of slack, but I doubt it. Fun stuff.

    • A special “artist” tax, hmm? Definitely something to look into for next year. It’s true — you’d think governments would want to encourage their citizens to create art, not penalize them. Then again the world is a mysterious and silly place.

      • I’m sure your H&R Block guy would have mentioned it. Or he might just use that little feature and spare you the details, if Canada has it. Good luck getting a decent return!

  6. Sounds like you’re showing those numbers who’s boss! But these American companies sure don’t make it easy. Because I’m Irish and there’s no amazon.ie, I only get the lower royalty rate for irish customers who have to buy my book (in sterling) on amazon.uk. Go figure :/

    • It actually really surprised me when I found out that if you go through Amazon, you’re going through dot com, not the foreign branch in your country. I guess it makes it easier on them, not dealing with all the taxation stuff … but it sure makes it difficult for us!

  7. Self-publishing in texas? What???

    Sorry. Hearing loss. I’d feel better about paying taxes if I didn’t have to drive through minefields of potholes everyday to get to work. I like Richard’s lower tax rate for artists comment above. Can’t you at least write off your expenses that went into publishing? I’m sure you spend more than $500 on printing. Should be some kind of capital loss loophole for that.

    • I can indeed write off my expenses — except that I only made like $500, so I’m only getting taxed on … what, $70 of that? My accountant advised me to save up my expenses until I actually make a significant amount that needs to be tax deducted :)

  8. Hi Michelle, thanks so much for the advice. I’m Canadian, publishing my first book through an American publisher and also selling through Amazon. I’ll talk to my accountant before I receive any money. ~ Dennis

    • No problem! I can’t remember if I put this in the post, but the other thing to keep in mind is that American companies sometimes withhold 28% of your profits as American tax, and then you can fill out a bunch of forms to reclaim the money if you’re not American. So that’s something to look into as well.

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