US citizen with a new job in Canada

[helidrvr]

I am a US citizen that will be starting to work in Canada as a bush pilot for a company in Manitoba. I will be working a 6 on/3 off (weeks) schedule for a total of 243 days in Canada. On my days off I will be leaving the country as I don't have a residence there. I will be working as a contractor to the company.

1.) Would I owe Canada taxes (>183days)?

2.) If so, would I be exempt from Social Security tax (Canadian)?

3.) Should any taxes be taken from what I'm seeing on my paycheck?

3.) If don't return to the US on my days off (pass physical presence test)...
Would I owe taxes in the US?

4.) Would it benefit me to form an LLC or Corp in US?

5.) Is it possible to be paid tax free in Canada and US?


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Thanks for any help!

-JWM

[helidrvr]

Sorry about the two number "3's".... I got a little excited apparently.

-JWM

[nelsona]

The 183 day rule really only applies to residnts of non-treaty countries.

If you live in US, and only temporarily work in canada, then you will continuw to be considered a non-resident of canada,

But, your Cdn-source, if you are an employee of this firm, will be taxed in Canada, regardless of where you live. You would also pay into the Cdn SS and UI system.

If as are a contractor, then you should not, in the end, owe any Cdn taxes. You wuld report the Cdn income on a non-resident return, and then exclude it, getting any withheld tax back.

so.
1) No, if you maintion stronger residential ties in US AND you don't have fixed base in canada.
2) See 1
3) Canada usu. insists that 15% be withheld. You would get it back if you meet 1 above.
3) This would impact your residency determination, since you would then be living in Canada.
4) Not for this discussion. For othr reasons it might.
5) No. You will be resident in one place or the other, and will owe your tax there (at least).

[helidrvr]

Nelsona,

So it sounds like...

It is definitely more beneficial to be a CONTRACTOR not an EMPLOYEE...

IF I am paid directly as a [u]contractor:[/u]

I should only have the 15% deducted (which I will be able to reclaim at the end of the year) from a paycheck...

At the end of the year I report the Cnd income on a NR form and exclude it from taxation...
having no tax liability in Canada (regardless of how many days I've worked in the country)!

THEN

I report taxes normally in the US and pay applicable Fed and State taxes here... (this is where the LLC or Corp would come in I imagine).

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Do i have that right?

-JWM

ps Thanks for taking the time to help an impoverished pilot out!

[nelsona]

Generally correct. You may have to file returns for residents of the particular provinces you work in, but in the end the income will be excludable.