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

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worryfreeinvestor
Posts: 145
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 »

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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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

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

Post by nelsona »

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. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
worryfreeinvestor
Posts: 145
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 »

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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