[boliweaver]

I am an Australian citizen but am considered a non-resident for taxation purposes because I have been residing in South America for 17 years. I have written a book which is sold on a US website on which I earn royalties. Sales commenced in April this year.
A 30% withholding tax is applied to all my earnings because my country of residence, Bolivia, has no treaty with the US.

What am I supposed to do when it comes time to file a tax return in order to receive refund of part or all of the withheld amount? I am confused by what I have read so far regarding the lodgement of W-7 and when exactly I am/was supposed to do this. The same applies to the W8-BEN and the SS-4 .

Can I expect to receive a refund of the tax amounts that are being withheld? Am I supposed to apply for a tax ID number? If so, when and how? Is there anything I should be doing right now which will make my application for a tax ID number successful? I have heard of many cases where applications have been rejected and no one seems to be able to tell me why.

[AtlantaTaxExpert]

You ARE considered to be a Bolivia resident, so the tax law as it applies to Bolivian citizens also applies to you.

That being the case, you need NOT FILE any tax return at all.

The reason is simple: the tax on royalties is a flat 30% if there is no tax treaty that adjusts the tax rate. Because the taxes were withheld at the 30% rate, the tax has been paid; nothing further is required.

The tax return, if filed, would just be submission of paperwork which would result in no tax refund, so there is NO NEED to bother.

[IntlTax]

Agreed.

[boliweaver]

Thanks for the quick responses and for clearing this up.

Bummer that we get penalized for living in the developing world... 30% tax as opposed to only 5% if I were living in my developed country of citizenship. I can't see our President Morales signing any treaties with the US any time soon. Sigh!

[AtlantaTaxExpert]

Such is life in a politicized world!