Canadian Corporation Contracting in US Tax

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Canadian Corporation Contracting in US Tax

Post by forebiz » Tue Oct 14, 2014 5:51 pm

I have a Canadian Corporation that is Contracting part time to a US Company. Company is paid in USD via wire transfer to a USD Account at a Canadian bank. US company does not withhold any taxes.

I am a small business doing engineering consulting in Canada and the US for different companies. I have a TN work visa through the US company when working on US projects. I travel to the US for less then 183 days/year. My wife does my bookkeeping and is an employee of my Corporation as am I. We are paid as employees in Canadian dollars.

I make frequent transfers from my Business USD account via Foreign Exchange to my Business CAN account and have been claiming the CAN amount as corporate income and paying taxes on this in Canada.

I know I am mixing some personal and business tax income information into one questions but I'm wondering if what I am doing sounds correct. My Business accountant has explicitly told me that he does not do US Taxes so I am presently going off my limited knowledge and information I've found on this wonderful website.

I've found several post that have been answered by "nelsona" and others in the forums that seem to make me think I have no US reporting obligations but my situation with the Corporation may be different then responses about personal consulting.

Any information would be great or if you could point me in the right direction I'd appreciate it.

Phil Hogan, CA
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Post by Phil Hogan, CA » Tue Oct 14, 2014 6:14 pm

At the very least you should be filing protective 1120-F returns and a treaty position (assuming you don't have a permanent establishment).

Please give me a call and we can chat about your options.


Phil Hogan, CA, CPA (Colorado)
Canadian and US Income Tax
Victoria BC

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Post by nelsona » Tue Oct 14, 2014 9:22 pm

Phil, have you asked mark permission to solicit clients on hos website?
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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Post by forebiz » Wed Oct 15, 2014 12:15 pm


Does that mean you agree with Phil?

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Post by JGCA » Wed Oct 15, 2014 3:19 pm

I can not speak for Nelsona, but yes in all cases we recommend that if you feel you are not subject to US tax then your Corporation should file a treaty based return 1120F along with other required schedules stating that you have no PE in teh US, are not filing tax returns in the US and this way the clock starts ticking on how long the IRS can challenge your position. If you do not file then the IRS can go back indefinietly if the do not agree to your position and have you file without any deductions allowed for expenses. This way you file and they can basically see this and its up to them to cchallenge it within the allowed time frame.

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