Our firm will be sending an employee (Prof. Engineer) to work in the US. We will pay our employee and invoice the US company for his services. The contract is for 6 months.
Does our company have to register or complete documentation with the IRS?
Does our Cdn company have to register with the IRS ?
Moderator: Mark T Serbinski CA CPA
Shouldn't have to. The employee(s) may however end up being taxed in US, and would be required to file a 1040NR, if the work makes them present in over 183 days in ANY 365 day period (not just calendar year).
This can present some tricky situations:
You begin work on November 1st 2010 and return may 15th 2011. Assume you never physically left US during that period, and were not in US at any other time during those years. In neither year do you exceed 183 days, and you do not meet SPT. However because the work (and presence) exceeded 183 days in a 365 day period, you are taxable on the income earned while in US in BOTH 2010 and 2011. The tricky part is that, you do not know that you will be taxable in 2010, until may 1st 2011(!) and are thus required to file a return well past the filing deadline.
This is new since 01/01/10, and I don't know of any preliminary filing that would be needed by either the employee or the Cdn firm with IRS.
This can present some tricky situations:
You begin work on November 1st 2010 and return may 15th 2011. Assume you never physically left US during that period, and were not in US at any other time during those years. In neither year do you exceed 183 days, and you do not meet SPT. However because the work (and presence) exceeded 183 days in a 365 day period, you are taxable on the income earned while in US in BOTH 2010 and 2011. The tricky part is that, you do not know that you will be taxable in 2010, until may 1st 2011(!) and are thus required to file a return well past the filing deadline.
This is new since 01/01/10, and I don't know of any preliminary filing that would be needed by either the employee or the Cdn firm with IRS.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best