Living in Canada, working in US remotely with some trips

blwatt · Post by **blwatt** » Sun Jan 23, 2011 4:40 pm

I am receiving 2 year severance continuance from a Canadian company, leading to pension in 2013. Essentially being paid as usual with CPP, UI and income tax withhead.
I am also now working essentially full time by a US consulting agency at an hourly rate plus expenses doing consulting work. I work remotely from home in Canada most of the time with several expected trips to the US - total this year should be < 100 days on TN status. I invoice the US company for hours and expenses weekly.

The US firm is not withholding anything, and will issue a W2.

Do I just pay tax in Canada and file 1040NR, or do I need to pay US income tax? I do not have a US SSN.
Do I have to pay Canadian income tax on the additional income quarterly?

nelsona · Post by **nelsona** » Mon Jan 24, 2011 6:08 am

You are not taxable in US according to what you have said.

I'm guessing, since the US firm is not withholding Social security, you are going to be paid on a 1099, not a w-2, basis. You would have had to have an SSN.

If they are withholding, and consider you an employeee, I would be asking then to stop. Otherwise, yes, you will need to report the US income on a 1040NR and pay US tax on that.

InTown · Post by **InTown** » Tue Jan 25, 2011 12:49 am

[quote="nelsona"]You are not taxable in US according to what you have said.

Can I add that as you fill out your 1040NR, you will be asked for the number of days you where in the USA from which they will determine your substantial presence test. In your case, you will have been in USA less than 183 days
thus you will not owe tax to IRS.

blwatt · Post by **blwatt** » Tue Jan 25, 2011 4:43 pm

Thanks for the reply. I'm finding this a little confusing. Let's see if I understand:

I should ask the employer not to issue a W2 and not to withhold anything, and since I don't have a US SSN they wouldn't be able to do that anyways.

They should issue a 1099.
Should the 1099 be only for payment for work done in the US, or all payments?
Should it include other payments that are strictly reimbursement for travel expenses?

You said I shouldn't be taxable in the US.
Does that mean I don't have to file a 1040NR?

If I do have to file a 1040NR, do I have to pay tax on income while in the US (i.e. is there some income level above which I have to pay US tax)?

If I do have to pay US tax I assume I claim that on my Canadian taxes as a credit or deduction? And do I need to get a US SSN?

nelsona · Post by **nelsona** » Tue Jan 25, 2011 5:57 pm

It shouldn't be taxable in US. You may have to file an 8233 with the client to avoid any withholding on 1099.

You won't get an SSN. You should not have to file 1040NR unless they goof up and withhold tax from you.

blwatt · Post by **blwatt** » Wed Jan 26, 2011 12:28 pm

They are not withholding.

I will specify 1099 vs W-2 to them.

So I don't have to file anything with the IRS?

nelsona · Post by **nelsona** » Wed Jan 26, 2011 1:36 pm

No. But you client is supposed to withhold tax from all compensation unless they have in theior hand an 8233, so then they are not doing what they are supposed to do.

I would be preparing an 8233 and giving it to your client.

nelsona · Post by **nelsona** » Wed Jan 26, 2011 1:37 pm

Their other choice is to merely pay you corp-to-corp by cutting a check.