Contracting to a canadian branch of a US company and working

nelsona · Post by **nelsona** » Wed Nov 30, 2011 8:58 am

There is no point becoming non-residnt for such a short period. besides, US and cali tax will be commensurate with cdn tax anyways, plus you avoid any other reporting required for US 'persons'. You can file a 1040NR even if you are in US more than 183 days, by treaty, as long as your Cdn residentail ties remain stronger than in US.

There will be no Cdn tax allowed as a credit, because your income will be US-sourced. But all your US tax will be ceredited on your Cdn return.

JGCA · Post by **JGCA** » Wed Nov 30, 2011 10:48 am

That is the best approach to maintain that you are a CND resident at all times. Given that you could still file 1040 NR even if you are in US over 183 days but show your have stronger ties to Canada but not if you decide to use your CCPC under the new rules once over 183 days the corp is considered to have a perm establishment in US,

nelsona · Post by **nelsona** » Wed Nov 30, 2011 11:46 am

Good point about not using corp-to-corp for CCPC.

JG,

Can a CCPC have a permanent establishment in US, and keep its CCPC status, by having, for example, more business in canada?

nelsona · Post by **nelsona** » Wed Nov 30, 2011 11:49 am

AUTGUY,

Btw, although it looks like you are going to choose a methos in which you do not pay FICA, keep in mind that with as little as $6000 earned spread over 2 years, you would then be eligible for *soem* SS at retirement, so it would not be completely lost.

And FICA would be creditable on your CDn tax return is you were still resident.

nelsona · Post by **nelsona** » Wed Nov 30, 2011 11:49 am

You could work in deceber and January in US as an employee and qualify for SS.

AUTGUY · Post by **AUTGUY** » Wed Nov 30, 2011 1:30 pm

Should I consider using my corporation for the first six months (183 days) and then hire on as an employee for the remainder of the time?

AUTGUY · Post by **AUTGUY** » Wed Nov 30, 2011 1:43 pm

If i file form 1040NR even after 183 days of work in the US would I still only be liable for US source income? Would my investments in Canada be sheltered or any dividends that I pay out from my company?

Or would I be liable for worldwide income to the US after 183 days of employment even if i remain a resident of Canada

nelsona · Post by **nelsona** » Wed Nov 30, 2011 1:47 pm

your 1040NR and cali return would be only on US-source income.

I would not mix employee/contract on this.

JGCA · Post by **JGCA** » Wed Nov 30, 2011 4:17 pm

In response to Nelsona who is right on with the pers tax, a CCPC will not loose its CCPC status unless it is controlled by a non resident shareholder as long as teh majority controll lies within Canada it makes no difference if teh corp has a perm est in the US, the only problem is claiming teh small business deduction this is only available on active business income that is from Canadian sources so its possible to be a CCPC with a per est in the US but the SBD is only available to active business income from Canada.

nelsona · Post by **nelsona** » Wed Nov 30, 2011 6:16 pm

... which in this case may be all in the us.

AUTGUY · Post by **AUTGUY** » Wed Nov 30, 2011 6:23 pm

Would this apply if I had a general services contract with the Canadian branch, was paid by them but worked in the US. My source income would be from the Canadian company then.

nelsona · Post by **nelsona** » Wed Nov 30, 2011 7:49 pm

yes, but the work would be performed in US, for more than 183 days, and would thius be taxable there first, and in canada second because of residence.

You would still be an employee of the cdn firm,. with a US client (for TN purposes).