American with PR living in Canada, contracting to US firm

[jaaron]

1) I am an American citizen, now living as a permanent resident in Canada. (my wife is Canadian)

2) I operate as an independent contractor. When in the US, this was under a US sole proprietorship (a schedule C business, no incorporation). I still receive mail and maintain access to the address where my US sole proprietorship is based.

3) I work as an independent contractor for a client in the US (telecommuting). I do not work for any clients in Canada.


I am at a loss for how best to invoice and report income now that I no longer live in the US. I want an approach that is simple for me any my employer, won't result in tax overpayment, minimizes the amount of new tax structures to learn, and won't result in loss of significant social benefits. Specifically, I want to know:

-How should I invoice and how should my employer pay me? Particularly, can I invoice from the US address of my sole proprietorship and treat this as US income, or must I now invoice from my personal Canadian address? If from Canada, what structure would I use in place of the Schedule C sole proprietorship?
-How do I report my income to the US?
-How do I report my income to Canada?


Thanks!

[nelsona]

This is Cdn-source income, since you have no US permanent establishment. It will be exempt from SE tax, and you will pay CPP on this income.

While US will tax this income, you will get credit for Cdn tax paid on your 1040.

[jaaron]

Great - thank you for a very speedy reply!
One more question -
When I lived in America, the companies that used my services issued me a 1099 and also submitted same to IRS.
Now that I live in Canada, what form do they prepare? A 1099, the Canadian equivalent, both, neither? And who do they send it/them to - US, Canada, both neither?


Thanks!
Jon

[nelsona]

They will issue you a 1099 that they will send to IRS. you will report it on both income taxes