1099 for work performed in Canada

[jessica_f]

Hi all,

I have a question regarding 1099s. I’m on a TN in the US and is considered a resident alien for tax purposes. I get a W2 every year from my TN employer. I’m about to take on a short term contracting job from an American company that I will be performing in Canada. The contract will be written to my Canadian address and it will be paid to my Canadian account. Since I have a US presence due to my TN, I assume I would get a 1099 from this work? I’ve never done something like this before. Is this a form I have to ask for or is it just something that gets sent to me during tax season? And I assume that I will have to report this income in both Canada and the US right?

Thank you so much!!

[jessica_f]

I just read that through a Google search that “If the foreign contractor is not a U.S. taxpayer, and all of the contracted services were performed outside the U.S., a Form 1099 is not required.” but since I have a US presence, am I still subject to reporting this income? And do I have to request any specific forms from the company that contracted me for US taxes?

Thanks so much again. This is all new territory for me…

[ND]

If you are a 'US person', as you describe in your facts, you'll need to report worldwide income on your 1040 but may claim foreign tax credit for taxes paid to Canada for Cdn source income, i.e., work physically performed in Canada. For contract work of the latter category, payer s/b issuing you a T4A with CRA (had you instead physically worked inside the USA, 1099-NEC would have been appropriate).

[wilkinsonwilfrid]

From what I can tell from my Google search, "a Form 1099 is not required" if "all of the contracted services were performed outside the U.S. and the foreign contractor is not a U.S. taxpayer." Would it be necessary for me to declare this income, nevertheless, because I am physically located in the US? Additionally, is there anything particular I need to ask the business that hired me to fill out for my US tax return?

[ND]

RE: Would it be necessary for me to declare this income, nevertheless, because I am physically located in the US?
If you are a 'US person', which includes meeting the SPT you declare worldwide income on 1040. If you are a NOT 'US person', you first determine whether or not you're required to file 1040NR. Then determine treaty disclosure requirements. Then determine whether treaty exempts taxation. If you ARE subject to graduated tax rates it will be only on effectively connected income that is US source (work performed in Canada is NOT US source regardless of US payer). You are subject to flat 30% w/h tax on NEC (rate may be treaty reduced) and if correctly w/h at source, you needn't report on Sch NEC.

Also, get your facts straight - either you're working in Canada OR you're physically located in the US or a mix but you presented the first two options (which contradict each other) and not the last option.

[ND]

meaning there's no 'in the US' significance. the significance is where you're working. that will determine the source. It will also determine if you have the 183 days over the 3 year SPT. From a tax analysis, if you're not a USC or GCH and instead only on a visa, you can't be both 'in the US' and working in Canada.

[sarahlly]

ND wrote:
> If you are a 'US person', as you describe in your facts, you'll need to
> report worldwide income on your 1040 but may claim foreign tax credit for
> taxes paid to Canada for Cdn source income, i.e., work physically performed
> in Canada. For contract work of the latter category, payer s/b issuing you
> a T4A with CRA (had you instead physically worked inside the USA, 1099-NEC
> would have been appropriate).
Exactly, it needs to be transparent and clear. You can do it step by step and wherever the problem is, it will be resolved there.

[ND]

thank you my parrot sarahlly unless you're a chatbot