Hi, OK here is a complex one. Thanks for offering this forum.
I am a dual Canadian/US citizen, married to a Canadian citizen living in Montreal, Canada, where we own a house, have health cards, etc. I telecommute with 4 US companies, and have a small Canadian business income from my own business. My wife also has a very small Canadian business income from her own business.
I originally filled out my W4 for these US companies with a US address across the border where we often visit, collect mail, etc., and have a bank account (we used to live and work in the US from 2000-03). I was under the impression that that was sufficient enough for them to withold tax on my income, given that I am a US citizen. I would then claim the tax back in my tax claims to both countries. This I have done in my 2003, 04 and 05 tax forms and tax was returned to me as asked. In my US tax forms I noted that I live permanently in Canada, filing Form 2555 each year, and form 90-22.1. In my Canadian tax forms I note the income as foreign.
I have not informed US social security that I live in Canada, and only learned recently that that should have been done. SS is withheld on my US pay stubs, however I typically get all social security fees back when I submit my tax forms to the US.
I am NOW of the understanding that the US employers may be subject to fines for hiring me as a Canadian resident, and I may be subject to fines for filling out the W4 incorrectly. My employers have no provisions for hiring Canadian residents, and were I to fill out my W4 with a Canadian address, they would probably cancel my employment.
How do I make this situation normal and legal? Did I, in fact, fill out the W4 incorrectly? If it was incorrect, as I see it, I have two options:
1. Inform my employers I live in Canada and thus lose my work. Prepare for criminal charges, getting fined and/or sued by the employers for an incorrect W4 statement of residence. Perhaps re-submit previous tax forms, but I am not sure why. I probably should tell US social security where I am officially too.
2. Move to the US right away. Dispose of all Canadian assets (house, bank accounts, RRSPs). Still be prepared for fines, however, my W4 would now be "correct" and, hopefully, my work secure. And yet even with this option I fear that 3 years of incorrect W4s will net me fines, and perhaps my employers will get fines, and I still may lose my job.
Thanks for your help with this tricky situation. There are other complications, but I think this is the biggest one for now.
Worried ...
W4? Dual Citizen Living in Canada, telecommuting to US
Moderator: Mark T Serbinski CA CPA
Follwing up on my previous post above...
The problem is that I have gently "tested the waters" with the accounting departments of my employers, and all of them have strict orders not to hire non-Americans, and they seem to have NO interest in issuing anything other than a W2.
Although the Canadian government gets its tax share every year, I fear the Canadian Revunue Dept. will ask the IRA to demand my employers pay me on a 1099 not a W2--since I reside in Canada. At that point my employers will find out I am resident in Canada and I will lose my jobs. Is this likely?
As a result, I am considering the following:
Put my Montreal house in my Canadian wife's name and she remains in Canada. Revoke my provincial health insurance and driver's license. Move permanently across the border to the US, spend 183+ there, have my driver's license and health in that state. Tell Candian Revenue I have moved, and complete all my tax forms as a resident of the USA (married living separately) , with my wife doing hers as a Canadian. I think that would give me enough ties to the US not to have me lose my jobs.
Would this be prudent? My main concern is not losing my work. Thanks again.
Still worried....
The problem is that I have gently "tested the waters" with the accounting departments of my employers, and all of them have strict orders not to hire non-Americans, and they seem to have NO interest in issuing anything other than a W2.
Although the Canadian government gets its tax share every year, I fear the Canadian Revunue Dept. will ask the IRA to demand my employers pay me on a 1099 not a W2--since I reside in Canada. At that point my employers will find out I am resident in Canada and I will lose my jobs. Is this likely?
As a result, I am considering the following:
Put my Montreal house in my Canadian wife's name and she remains in Canada. Revoke my provincial health insurance and driver's license. Move permanently across the border to the US, spend 183+ there, have my driver's license and health in that state. Tell Candian Revenue I have moved, and complete all my tax forms as a resident of the USA (married living separately) , with my wife doing hers as a Canadian. I think that would give me enough ties to the US not to have me lose my jobs.
Would this be prudent? My main concern is not losing my work. Thanks again.
Still worried....