Hello, this forum is very helpful to us Thank you.
I have a question. I am a Canadian citizen will start working at home for a US company. They are planning to setup a Canadian payroll for me (with deductions such as cpp , etc).
Here is my problem, I will be required to go to US and perform some jobs there for approximately 40-50 days per calendar year. Will I owe taxes to US? Can I claim a tax credit in CRA for the taxes I need to pay in US? Do I need to pay taxes in US such as medicare?
I have the option to chose whether to work for them as a contractor or as an employee with canadian payroll. Do you think a contractor is the best choice for me?
Salary is 65k or approximately 84-85k CAD per YEAR.
Thank you
Canadian working for US company. Help please.
Moderator: Mark T Serbinski CA CPA
First, to go and work as an employee of a US company, on US soil, even for a few days, requires some sort of work status. You better check that they can do this. meetings are one thing, but 'performing some jobs' is work.
As such, work done in US is US-sourced and subject to US tax. It may also be subject to state tax. Your form will have to withhold some US taxes on that portion. All of this would be credited on your Cdn tax return once you file your US tax for the year.
As to becoming a contractor instead, this is usually a better solution, as long as the firm pays you accordingly MORE than as an employee, since now they are not paying for any benefits for you, and you are taking on more expenses (deductible by the way). Unless the company is giving you "gold-plated" benefits package like full paid pension, etc., most in your situation (US form Cdn resident) are better off as contractors. You would not have any US tax or immigration issues under that arrangement, as contract work performed occasionally in US is done by simple B1 visitor status and is not subject to US tax.
As such, work done in US is US-sourced and subject to US tax. It may also be subject to state tax. Your form will have to withhold some US taxes on that portion. All of this would be credited on your Cdn tax return once you file your US tax for the year.
As to becoming a contractor instead, this is usually a better solution, as long as the firm pays you accordingly MORE than as an employee, since now they are not paying for any benefits for you, and you are taking on more expenses (deductible by the way). Unless the company is giving you "gold-plated" benefits package like full paid pension, etc., most in your situation (US form Cdn resident) are better off as contractors. You would not have any US tax or immigration issues under that arrangement, as contract work performed occasionally in US is done by simple B1 visitor status and is not subject to US tax.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Thank you for your help Nelsona! Is B1 visa better than TN visa?
[quote="nelsona"]First, to go and work as an employee of a US company, on US soil, even for a few days, requires some sort of work status. You better check that they can do this. meetings are one thing, but 'performing some jobs' is work.
As such, work done in US is US-sourced and subject to US tax. It may also be subject to state tax. Your form will have to withhold some US taxes on that portion. All of this would be credited on your Cdn tax return once you file your US tax for the year.
As to becoming a contractor instead, this is usually a better solution, as long as the firm pays you accordingly MORE than as an employee, since now they are not paying for any benefits for you, and you are taking on more expenses (deductible by the way). Unless the company is giving you "gold-plated" benefits package like full paid pension, etc., most in your situation (US form Cdn resident) are better off as contractors. You would not have any US tax or immigration issues under that arrangement, as contract work performed occasionally in US is done by simple B1 visitor status and is not subject to US tax.[/quote]
[quote="nelsona"]First, to go and work as an employee of a US company, on US soil, even for a few days, requires some sort of work status. You better check that they can do this. meetings are one thing, but 'performing some jobs' is work.
As such, work done in US is US-sourced and subject to US tax. It may also be subject to state tax. Your form will have to withhold some US taxes on that portion. All of this would be credited on your Cdn tax return once you file your US tax for the year.
As to becoming a contractor instead, this is usually a better solution, as long as the firm pays you accordingly MORE than as an employee, since now they are not paying for any benefits for you, and you are taking on more expenses (deductible by the way). Unless the company is giving you "gold-plated" benefits package like full paid pension, etc., most in your situation (US form Cdn resident) are better off as contractors. You would not have any US tax or immigration issues under that arrangement, as contract work performed occasionally in US is done by simple B1 visitor status and is not subject to US tax.[/quote]
Please don't use quotes, it clutters up the thread. And I already know what I wrote.
In my opinion contractor is better than employee. It's not necessarily a cut-and-dried TN vs B1 question.
As an employee of a US firm, you cannot use B1. Sometimes a TN is not available for your type of work, and as I said, employee status makes you taxable in US for most work done there, other than meetings. The US firm may even have to set up a Cdn entity -- unlikely just for you for this too work smoothly
You may be able to enter US as a contractor on either TN or B1 depending again on the type of work. It either case you would not be taxable in US.
You need to discuss this with the employer along with perhaps their legal counsel.
In my opinion contractor is better than employee. It's not necessarily a cut-and-dried TN vs B1 question.
As an employee of a US firm, you cannot use B1. Sometimes a TN is not available for your type of work, and as I said, employee status makes you taxable in US for most work done there, other than meetings. The US firm may even have to set up a Cdn entity -- unlikely just for you for this too work smoothly
You may be able to enter US as a contractor on either TN or B1 depending again on the type of work. It either case you would not be taxable in US.
You need to discuss this with the employer along with perhaps their legal counsel.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
I have one more question please, In case they've agreed to put me under Canadian payroll, How would I get the tax credit when I file my US tax at the end of the year?
I will be required to visit US atl east 40 days a year. Therefore I will owe taxes . Will I be penalized by the IRS if I file my US tax at the end of each year ?
You have been very helpful to us. Thanks
I will be required to visit US atl east 40 days a year. Therefore I will owe taxes . Will I be penalized by the IRS if I file my US tax at the end of each year ?
You have been very helpful to us. Thanks
Hi Nelsona,
Sorry. I have a nother question. The company is not willing to put me under Canadian payroll, they will put me under US payroll instead with company matched 401k.
Here are my questions :
1. Am I qualified to collect an unemployment insurance in the future since I will be required to pay social security?
2. Would it be wiser not to avail of their medical insurance since, I will be staying only in the US for about 5 days per visit? (multiple visits in a year ). I am planning to get an annual plan - traveler's insurance for medical emergency.
Thank you so much for helping us here in the forum.
Sorry. I have a nother question. The company is not willing to put me under Canadian payroll, they will put me under US payroll instead with company matched 401k.
Here are my questions :
1. Am I qualified to collect an unemployment insurance in the future since I will be required to pay social security?
2. Would it be wiser not to avail of their medical insurance since, I will be staying only in the US for about 5 days per visit? (multiple visits in a year ). I am planning to get an annual plan - traveler's insurance for medical emergency.
Thank you so much for helping us here in the forum.
1. Social security has nothing to do with EI. And since you are working IN Canada, and will not have paid EI premiums, and company will not have paid EI premiums, I would hope Service Canada would not pay you EI. In my opinion they are acting illegally.
And before they put you on payroll, make sure they can get a TN for you, as you would not be allowed to work in US without one.
2. Of course you don't need their medical coverage, nor any of their other benefits, including 401(k) match.. As you can see, your benefits are meaningless to you. You should go contractor, both to be legal, as well as to avoid US taxation for no reason.
And before they put you on payroll, make sure they can get a TN for you, as you would not be allowed to work in US without one.
2. Of course you don't need their medical coverage, nor any of their other benefits, including 401(k) match.. As you can see, your benefits are meaningless to you. You should go contractor, both to be legal, as well as to avoid US taxation for no reason.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing