U.S. Resident working for Canadian Firm (Tax questions)

beje0507 · Post by **beje0507** » Tue Jan 14, 2014 2:22 pm

I have recently been offered a job working for a Canadian
Survey firm. I understand that I will be obligated to pay
Canadian taxes and then provide the IRS with a tax credit
as proof of taxes paid on income earned in Canada, however
I need to know if I can still claim my children (who live in the US)
as dependents, as well as claiming my mortgage interest,
student loans, etc....

I am also wondering if it is possible to provide services as an
entity (I own a survey firm in the U.S.), under a sub-contractor
type of agreement, instead of being a direct employee, and if
so how much more complicated is that?

Thanks in advance for any help, I understand these are specific
questions. I plan to use your consulting services after a do a little
more research.

nelsona · Post by **nelsona** » Tue Jan 14, 2014 2:27 pm

Where are you going to (a) live, and (b) work.

If you are going to continue to live AND work primamrily in US, it does not make sense for you to become an employee. A contractor realtionship would be MUCH simpler.

As a US citizen you will continue to file a US tax return, with all the credits, exemptions and deductions you previously add, plus the new ones like FEIE and FTC which are used by those earning foreign income.

beje0507 · Post by **beje0507** » Tue Jan 14, 2014 8:09 pm

Thank you for the reply.

I will be living in Canada (Northern Alberta, Fort McMurray) for two-weeks and in the US for two weeks on a rotation.

I have looked into becoming a resident so I can start my own
company in Canada; I was told that is the only way I will be able to
do contract work here, which is my ultimate goal.

nelsona · Post by **nelsona** » Wed Jan 15, 2014 7:15 am

You do not need a Cdn company to be a contractor in Canada. Since you will not be establishing Cdn residency, it makes little sense to be an employee, and even ;ess sense to form a Cdn company, since if you contract, you won't even be taxable in Canada.

beje0507 · Post by **beje0507** » Wed Jan 15, 2014 10:03 am

I just want to clarify and make sure we are
talking about the same thing. What I want to do is sub-contract my US Incorporated company to a Canadian survey company and work here in Canada. My term of contract will be more than two years. I have a partner who will
be here for two-weeks while I am home, and I will be here for two weeks while
he is home.

If you are saying this is possible to do without becoming a resident, what do
I need to do next? And does your firm have the capability of helping me
get this done at a reasonable cost?

nelsona · Post by **nelsona** » Wed Jan 15, 2014 10:25 am

Ah, you are adding more and more info as you go. Anyuthing else to add?

Howevr, why do you think that you would have to become residnt in Canad to work in Canada? As long as you are contracting, and maintain a residence in US, and spend less than 183 days a year in Canada, yo uare fine with them paying you as a US contractor.

Now, the fact that you ahave a partner who is also spending a lot of time in Canada, does introduce some Cdn tax issues, but these do not have anything to do with residency, but with the "Permanent Establishment" clause of the treaty. You both -- individually -- will be taxable in Canada for the income you make in Canada, but as non-residents, and not on any other income.

Your US corporation *might* be taxable in canada (depends on what othr worldwide business your firm conducts), but the place of incorpooration wouldn't matter, so no need to establish a Cdn one for these purposes.

nelsona · Post by **nelsona** » Wed Jan 15, 2014 10:28 am

I don't work for thsi firm, but there is nothing special that you need to set up in Canada to do this work. Your Cdn client pays your US corporation. Period. Your corporation pays you and partner in whichever manor that you choose.

Just try to be in Canada les than 1/2 the time to avoid personal taxation as well as consideration as a resident.

Others may chime in, but I see no reason to set up any Cdn entity, nor to become Cdn resident.

beje0507 · Post by **beje0507** » Wed Jan 15, 2014 10:52 am

I can also add that I have been working in Canada for an American company for
the past year and a half (not sure if that matters).

So if I just invoice him for our services, he pays me in Canadian dollars, I exchange
that to US dollars, and let our accountants in the US figure it out, its that simple?

I know this isn't the Immigration board but how does this affect my ability to get a work permit? (I will ask on the other board also)

nelsona · Post by **nelsona** » Wed Jan 15, 2014 11:08 am

Again, more pertinent information being dribbled out.... are you wanting me to read your mind?

So are you already a Cdn tex resident?! What Cdn taxes have you been paying? what was your rlationship with that client?

It is doubtful whether you need a work permit as a contractor living in US, but that would be the through your sponsor, which is your client.

Don't be waiting for a response on the other boards, no one answers there.

beje0507 · Post by **beje0507** » Wed Jan 15, 2014 11:17 am

I am not a Cdn tax resident, all of my taxes are withheld in the US and I have
not had to deal with any Cdn taxes. I am an employee for a US survey firm,
not a contractor.

So when I go to the border I would present the offer letter from the firm that
I want to contract for and hold a work permit under his company and not my own?

nelsona · Post by **nelsona** » Wed Jan 15, 2014 11:50 am

What did you do when you were working for the other US firm? It should be the same process now.

beje0507 · Post by **beje0507** » Wed Jan 15, 2014 11:53 am

yeah but the only difference is I will be working for my own firm, which will
be contracted to a Canadian firm, and I am the owner of said US
company not an employee. I believe from an immigration perspective,
this is a different scenario.

nelsona · Post by **nelsona** » Wed Jan 15, 2014 12:06 pm

That is why I asked what you did before. It has always have been the Cdn client issuing the offer letter. This makes them the sponsor, not the US firm you worked for, nor in this case, your own company.

So, it is the same: a Cdn client is sponsoring YOU. This would be the case if your were (a) a direct hire of the sponsor, (b) the employee of a US firm contracted to do the work, (c), a sub-contractor for a US firm hired to do the work, or (d) a US person directly contracted by the Cdn firm, either paid as a contractor or corp-to-corp.

beje0507 · Post by **beje0507** » Wed Jan 15, 2014 12:27 pm

Okay thanks I appreciate the help. So as far as taxes go I will need to consult
with an international tax attorney such as Serbinski to help us at year-end?

nelsona · Post by **nelsona** » Wed Jan 15, 2014 12:41 pm

Personally, I would be consulting with someone BEFORE then, so that you can plan to minimize tax/reporting issues.

Explain your cirvcumstances FULLY to be sure that there are no surprises come tax time.