As a follow up to my previous post on the KDP/CreateSpace tax interview, I will now answer a question that often arises regarding one’s options for recovering U.S. tax withheld: Can I get any of it back, and if so, how?

If you are a non-U.S. author who had tax withheld prior to sorting out your U.S. tax ID, you can apply to the IRS for recovery within three years of the date the tax return was originally due for the tax paid, plus any extensions you may be entitled to.

(Previously I had been told that the limitation was the same year the tax was paid; this is incorrect.) Assuming you are not entitled to any extensions, this means you have until 15 April 2015 to apply for recovery of tax paid as far back as 2011, the earliest year for which you would be entitled to a refund. Anything paid prior to 2011 is gone to the IRS forever.

If you want to apply for recovery of previous tax paid, your country’s tax treaty with the U.S. must have been in place in the year for which you are applying for the refund. Assuming your tax treaty was implemented prior to 2011, you can go that far back. If the tax treaty was not implemented until, for example, 2013, you can only go back as far as 2013.

To apply for a refund, you must fill out a U.S. tax return using Form 1040-NR, U.S. Nonresident Alien Income Tax Return. You must use the 1040-NR for the year for which you are applying for the refund; the link I gave you lists all 1040-NRs going back to 2002. You must produce a Form 1040-NR for each year where tax was deducted and for which you are applying for a refund; you cannot produce one form for accumulative tax withheld. You must attach to the tax return the relevant Form 1042-S you would have received from Amazon (or anyone else who paid you royalties and withheld tax) for the year the royalties were paid and the tax deducted.

Once you have submitted your Form 1040-NR, the IRS has up to six months after the regular U.S. tax refund deadline to process your return and send you a cheque. In other words, it’ll probably take around nine months before you’ll see anything.

All of the above only applies to those who have a U.S. tax ID. If you do not have one, you are out of luck with the IRS. Your money is gone. If so, do you have any other options? The answer is likely yes.

Many countries have a tax option whereby you can receive a corresponding tax credit for tax withheld in another country. In Canada, for example, you can file a Form T2209 on which you declare the tax withheld abroad, and on line 405 of your return you indicate the credit applied as a result of calculations on Form T2209. This is another way to avoid double taxation. (Whether the math works out equally advantageously is another matter altogether.)

Many countries also allow its citizens to redo previous tax returns if new information applies; therefore, you can redo your previous tax returns if you did not know about the tax credit. It is often sufficient to write a letter to your tax authority with the relevant credit form filled out and attached, and requesting that your previous tax return be amended accordingly. Check with your tax office as to what they require to recalculate past tax returns and how far back you can go. In Canada it is a generous ten years; that is, 2005 or later.

All of the above makes the assumption that you followed the rules and declared 100% of your royalty income on your national tax return. If you cheated and only declared the 70% you were paid, you will have a problem if your own government finds out the IRS gave you a refund of tax paid on income you never declared in your own country and that you therefore underreported in the first place.