QUESTION: Hi David,
I am a Permanent Resident in Canada and recently I have a job offer from an
american company to work in Canada as their representative. Can I take up
this assignment? Will there be any problems in doing so?.
Thanks,
---------------------------------------------------------------------------
david ingram replies:
You can take the job in Canada with no restrictions if you are a permanent
resident.
However, your wording and syntax indicates that you are likely a US citizen.
Make sure that you are NOT paid on a W-2 basis.
The US company has to either:
1. Set up a Canadian Payroll Account (using a payroll service like the CIBC
payroll service would work).
or
2. Pay you as a self employed contractor and issue a 1099.
Number 2 is the likely the easiest for everybody if you are the only
Canadian person involved.
---------------------
The following older question is not specific to you if you are a US citizen
because you will still have to file a US return (but not likely be taxable
because of foreign tax credits). However the 1099 part does apply to your
situation
----------------------------------------
My_question_is: Applicable to both US and Canada
Subject: Dual Tax
Expert: taxman at centa.com
Date: Sunday January 28, 2007
Time: 09:01 PM -0500
QUESTION:
Hi
I am permanent resident of Canada. I am getting a job offer from a US based
company. As I am not from US and just completed my 6 years of stay in US on
H1 visa, I will have to work from Canada. However, the company will be able
to pay me in US only. Given this situation, my questions are:
1) Is it legal that I am working from Canada while being paid in US?
2) What are the tax implications ?
Based on these, I will make a decision.
Thanks
-----------------------------------------
david ingram replies:
First - do NOT expect replies this fast. I was just sitting down to answer
a couple while watching the news and yours came up on top as it arrived.
the answers:
When it comes tax time, there is NO US tax reporting (although the IRS could
ask you to submit a return, if you did it would exempt all income under
Article XIV of the US Canada Tax Treaty).
In Canada, you will pay Federal and provincial taxes and both halves of the
Canada Pension Plan.
specifically
1. I have over 100 clients doing what you are doing. It is perfectly legal.
2. You only want to be paid on a 1099 basis. They should not deduct any US
Federal, State, or other employment taxes such as Social Security and
Medicare. Because of this, your contract pay should include the cash
equivalent of anything they would pay you if you were in the US. That is,
it should pay you your salary PLUS anything that they might be putting into
a 401(K) PLUS their half of Social Security and Medicare (you have to pay
both halves of the equivalent in Canada) and they should pay the cash
equivalent of any payroll benefits such as life insurance and extended
medical and they should build in the equivalent of holiday pay.
Other expenses such as internet, computer, photocopier, supplies and other
expendables can be billed separately.
I leave it to you to ascertain whether car expenses or car allowance should
be included and there should maybe be a payment to you for the use of your
home as an office.
I, of course would be happy to look after your tax returns at that point by
email (PDF files only), snail mail, fax or courier.
Phone consultations are $400 for 15 minutes to 50 minutes (professional
hour). Please note that GST is added if product remains in Canada or a phone
consultation is in Canada.
This is not intended to be definitive but in general I am quoting $800 to
$2,400 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you
lived in one country only - no self employment or rentals or capital gains -
you did not move into or out of the country in this year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no rental
$1,200 would be the minimum with a move in or out of the country. These are
complicated because of the back and forth foreign tax credits. - The IRS
says a foreign tax credit takes 1 hour and 53 minutes.
$1,500 would be the minimum with a rental or two in the country you do not
live in or a rental and a business and foreign tax credits no move in or
out
$2,400 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection
period) with two or three slips and no capital gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely $450
And an American only (lives in the US with no Canadian income or filing
period) with about the same things in the same range with a little bit more
if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS
be $800 and up.
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part
of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales) are likely $50.00 for the first and $20.00 each after
that.
Just a guideline not etched in stone.
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
My Home office is at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time -
(please do not fax or phone outside of those hours as this is a home office)
email to taxman at centa.com <mailto:taxman at centa.com>
www.centa.com <http://www.centa.com/> www.david-ingram.com
<http://www.david-ingram.com/>
Disclaimer: This question has been answered without detailed information or
consultation and is to be regarded only as general comment. Nothing in
this message is or should be construed as advice in any particular
circumstances. No contract exists between the reader and the author and any
and all non-contractual duties are expressly denied. All readers should
obtain formal advice from a competent and appropriately qualified legal
practitioner or tax specialist for expert help, assistance, preparation, or
consultation in connection with personal or business affairs such as at
www.centa.com <http://www.centa.com> . If you forward this message, this
disclaimer must be included."
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