Best way to receive consulting income in Canada for U.S. citizen?

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worryfreeinvestor
Posts: 144
Joined: Thu Mar 24, 2005 6:17 pm
Location: Seattle, WA

Best way to receive consulting income in Canada for U.S. citizen?

Post by worryfreeinvestor » Tue Oct 13, 2020 9:45 pm

Sort of a "blue-sky" question here: I am a citizen of both Canada and the U.S. I intend to return to Canada in 2021 and become a taxable resident of Canada. I intend to earn consulting income from both Canadian and U.S. clients. (Work product will be written reports, no goods being shipped.) I will not need the U.S. income to pay for my household expenses in Canada. I can save it. Would it be best to earn the U.S. income as a sole proprietor, S Corp, C Corp, or?

nelsona
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Re: Best way to receive consulting income in Canada for U.S. citizen?

Post by nelsona » Wed Oct 14, 2020 12:56 pm

Do you need Social Security credits? if you have less than 40 quarters, or if you are very close to 30 years (120 credits), you may wish to recieve it as wages, thuse earning SS credits. You would pay SS and Medicare.

If yoy take it as consulting fees, then you would be exeempt from SE tax, because of living in Canada.

This would all be taxed in canada as well as US, but Canada would not give you credit, unless the wages were greater than 10K Cdn from any employer. Cdn consultants are not taxable in US, so you would be doing the "re-sourced by treaty" 1116 to get any credit for taxes on the wages or the self-employed income.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

worryfreeinvestor
Posts: 144
Joined: Thu Mar 24, 2005 6:17 pm
Location: Seattle, WA

Re: Best way to receive consulting income in Canada for U.S. citizen?

Post by worryfreeinvestor » Tue Oct 20, 2020 2:15 pm

Thank you. I am fully paid up into Social Security and Medicare, having been a salaried employee in U.S. for over fifteen years. The other information you shared is very valuable. I am sort of trying not to bring the money income into Canada and instead having it taxed as corporate income in U.S. at lower rate than personal income tax in Canada. I may move back to the U.S. in a few years so would perhaps like to avoid reporting it in Canada at all. However, I want to stay on the right side of the law and we are talking about thousands not millions of dollars so do not want to get tangled in complexity either.

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