Canadian working in the US short time - Exemption possible?

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Annie.L
Posts: 6
Joined: Fri Oct 31, 2014 3:40 pm
Location: Calgary, AB

Canadian working in the US short time - Exemption possible?

Post by Annie.L »

Hello,
we are sending some employees helping our US entity. They will do 1-2 weeks at the time for 3-5 months. They will be paid by the US entity. I was doing some research and I want to confirm some information.

1)[b] CPP vs Social Security and Medicare tax:[/b] If we file and have an approved CPT-56, we will keep deducting CPP in Canada and won't have to pay SS and Medicare tax. Is that correct? Do we have to file anything else?

2) [b]Federal income tax:[/b] Is there any exemption possible for the US Federal Income tax even if the employee earns MORE than $10K and will be paid by a US entity? If positive, what is the form number. If not, to avoid the double tax do we have to file R-102 with CRA? And/or anything else?

3)[b]FUTA:[/b] Is there an exemption possible for the FUTA and keep paying the EI in Canada? If not, do they have to pay FUTA even if they reached the annual maximum in Canada?

4) [b]RRSP[/b]: Does the amount earned in US can be include in the calculation for the RRSP deduction limit?

Thank you,
Annie
nelsona
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Post by nelsona »

1. If you are employed by the US employer, you cannot exempt FICA
2. No, you must earn less than $10 in the calendar year
3. No
4. Sure
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Annie.L
Posts: 6
Joined: Fri Oct 31, 2014 3:40 pm
Location: Calgary, AB

Post by Annie.L »

1. Even if the Canadian company is the Mother Company? We could look into paying them and charging the US company for the labor plus admin fees if that could help.

2.3.4. Thank you for these answers.
nelsona
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Post by nelsona »

1. Then they would be paid by Canadian company, not the US entity.

In such case # 2 becomes any amount as long as they are not in US 6 months.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Annie.L
Posts: 6
Joined: Fri Oct 31, 2014 3:40 pm
Location: Calgary, AB

Post by Annie.L »

We think paying them with the Canadian company and charging our US entity for the Labor would be the easiest way.

What are the document that need to be file?

1. Do we still have to file a CPT-56?
2. Do we have to file something for the US Federal income tax for the exemption while working in the US?
3. Do we have to do anything with the FUTA or only paying EI on the Canadian side?

Do they still have to get a SSN-non resident and file US Tax and received a W-2?
Is there anything that could cause problem in this situation where they work for our US entity and get paid by our Canadian one. After our Canadian charge the US entity for the labor paid to the employee?

Thanks.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

1. no
2. No
3. No.

You are essentially sending him on a trips. There are no tax issues here.

You would ant to look into the immigration isues, whic also should not be a proble, and would have been an issue if he were being transfered to and paid by the US firm.

Why was this 'transfer' even considered? has you firm never sent an employee down to US?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Annie.L
Posts: 6
Joined: Fri Oct 31, 2014 3:40 pm
Location: Calgary, AB

Post by Annie.L »

This is our US entity that have a job in the USA. We don't have enough hourly employees to cover the work than we will send Canadian employee to help out. They have a L1-B VISA.

This is why I'm wondering if paying them from the Canadian company and charging the US entity plus an Admin fee (if needed) will be a problem. The employees will be working in the USA and the USA might request their tax on the earnings made in the US from the Canadian employees.

We did send managers down sometimes but not hourly employee will work on a job and that the customer will be charged for their hours.
nelsona
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Post by nelsona »

Really no difference with manangers or hourly workers.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Annie.L
Posts: 6
Joined: Fri Oct 31, 2014 3:40 pm
Location: Calgary, AB

Post by Annie.L »

Finally you are saying that we don't have to do anything if an employee work in the USA. We keep doing as he was in Canada and we can just charged the US entity.
nelsona
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Post by nelsona »

Yes.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
ND
Posts: 291
Joined: Thu Feb 21, 2013 5:28 pm

Post by ND »

I recommend that you obtain and implement a properly effected secondment agreement. leave your contact info if you'd like me to send you one. Absent that agreement, taxing authorities could more easily be successful in arguing that your employees worked for the US entity.
Annie.L
Posts: 6
Joined: Fri Oct 31, 2014 3:40 pm
Location: Calgary, AB

Post by Annie.L »

If that agreement can assure us to continue paying our employees with our Canadian entity the way we actually do it without having any obligation on the US side that would really helpful. I'm really interested to have a look to this agreement. You can sent it to: annie.lesperance@dsitt.ca
Thank you.
ND
Posts: 291
Joined: Thu Feb 21, 2013 5:28 pm

Post by ND »

The one I had found on google isn't letting me access without paying for it. You may want to try a google search and I'll also give your e-mail to a person who I know sells these agreements.
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