self-employment, withholding, CPP/SS, meals

[nelsona]

in fact I'll end up paying more if I file a Canadian return.

You MUST file a Cdn tax return to determine your final cdn tax on this income. If you grossed less than $10,000 Cdn for the year in wages, theyt are exempt from tax (but you have to file to get this back).

does some part of my Canadian tax go toward the Canadian Pension Plan

If you were an employee, money would have been withheld for QPP and EI (Emploment insurance). Both can be used as credits on your US tax return (Form 1116).

If so, I should be exempt from self-employment tax in the U.S. on the money I earned there.

If you were an employee, you were paid wages, and are thus not subject to self-employemnt tax.

I plan to write off my travel expenses while in Montreal

Again, if you were an employee, there is no travel deductions in canada, unless you were asked to travel to some other location while you were working in Montreal.

the IRS website mentions that most nations the U.S. has treaties with offer reduced tax rates for U.S. citizens, due to the disparity in rates between the countries.

Never on wages. The tax break I mentionned earlier is your only relief (along with tax credit on your 1040.

4) is there anything in particular about Quebec to watch out for in my situation?

Quebec has its own tax collection, which, while unique in canada, should be familiar to US taxpayers with state tax returns.

So the issue for you becomes whether or not you were an 'employee' or whether you were self-employed. You talk about taking deductions like a contractor, but you use the term employee: which is it.


It makes a big difference.

[nelsona]

The IRS has different rules for emplyee expenses: they do not coincide with CRA rules. IRS is quite generous in terms of what an employee can claim when he works outside his 'tax home'. CRA doesn't care: an employee's job location is his tax home. Your employer is the one to hit up one this.

CPP (you would have paid QPP in Quebec) is not included in the fed tax. You should be seeing this as an extra deduction on your paystubs, along with EI. Of coures Cdns get nowhere near the CPP/QPP that you would get in SS.

You were not exempt from these unless you were self-employed, so you might get an extra bill when you file your return.

As to the tax rate being low, remember that you will have little or no deductions off this as a non-resident, and you will not get the full benefit of your Cdn taxes against the US taxes you will owe, and your state (and NYC) probably don't give you a credit either. And you are comparing Cdn tax to a high-taxed state.

Believe me, you have not struck the gravy train by working 2 months in Qc. You will likely end up paying about 45% tax on your income, when you add the 6 or 7 levels of taxation.