(I publish with CreateSpace, and I am getting 30% taken out of my royalty checks because I’m a foreign author. I’m in Canada, which has a tax treaty with the US. How am I being taxed? What percentage?)
Canada has a very good tax treaty with the US. Your royalties will be taxed at either 5% or 10% max. In reality, it’s less than that, because you get an exemption on the first few thousand dollars of income.
However, without an ITIN, any money that you earn on US soil will be automatically withheld at 30%. You must file an application for the ITIN (Form W-7) in order to stop the automatic withholding. Your other option is to just let CreateSpace withhold, and then file a tax return (Form 1040NR, Nonresident US Tax Return) and file the application for the ITIN at the same time.
You only need to file for an ITIN once. After that, you are pretty much done. You will not even have a filing requirement if your royalties do not exceed the exemption amount (which is $3,700 in 2011 and goes up every year). That is assuming that your country has a tax treaty with the US.