How would IRS deal with self-employment income in Canada?

eortlund · Post by **eortlund** » Tue Nov 08, 2011 1:28 am

I'm a US citizen, Canadian permanent resident. I'd like to start working again in the next couple years. I understand how to report employment income to the IRS since my husband has been working here for several years. But if I choose self-employment, is that income simple or complex to report to the IRS? If it's much more of a hassle than reporting employment income, I would likely avoid it.

nelsona · Post by **nelsona** » Tue Nov 08, 2011 8:11 am

It is not much more of a hassle. Of course you need to file an extra form or 2, but SE income is still considered earned income which can be excluded.

As a Cdn resident, you would not be subject to extra SE tax like US residents, because you pay into CPP.

eortlund · Post by **eortlund** » Tue Nov 08, 2011 10:49 am

Thanks. I don't exclude income, I take the foreign tax credit. Still not a big deal?

I assume I'd have to contact CPP and arrange to make contributions from self-employment income?

nelsona · Post by **nelsona** » Tue Nov 08, 2011 11:14 am

Contact CPP? Why?

You will be filing a Cdn tax return, reporting Cdn self-employement income, and that is where you will also be paying CPP.

BNothing to contact CPP about.

nelsona · Post by **nelsona** » Tue Nov 08, 2011 11:39 am

What you will need to do is contact service canada to get your certificate of compliance, a copy of which you will attach to your US retunr every year to show that you are a Cdn resident paying CPP>
http://www.ssa.gov/international/Agreem ... tml#part3a

eortlund · Post by **eortlund** » Tue Nov 08, 2011 11:41 am

Thanks! Lots to think about.

nelsona · Post by **nelsona** » Tue Nov 08, 2011 11:48 am

Unless you are going to make over $80K/yr yourself, I wouldn't be worrying about this...

eortlund · Post by **eortlund** » Tue Nov 08, 2011 12:13 pm

That's hard to imagine!