Canadian living in US and working for Cdn employer

Globetrotter · Post by **Globetrotter** » Mon Feb 27, 2012 7:25 pm

Hello,

I have been employed by the same Cdn company for several years. It has no activities or representation in the US: I have been working from their offices in Canada, but I can also work from wherever I am using Skype and my laptop. My employer is ok with me working remotely.

I recently moved to the US and am awaiting my GC. I have been on leave (since I'm not authorized to work) but wish to resume employment as soon as I receive my GC. Since I have severed all ties with Canada I want to tell my employer not to withhold anything from my paycheck because I'm no longer a resident. This way I can file in the US at the end of the year - that would be fantastic.

[b]However [/b]I know Canadian employers are obligated to withhold US taxes from US employees' paychecks. What's the process for doing that? Is it fairly simple? Or is it me who has to pay my US taxes?

If I asked my employer to pay me as a consultant (gross amounts, nothing withheld) it would suit me but might get them into trouble since based on the facts I'm an employee and don't fit the criteria of a consultant.

At any rate if they do accept and I enter into a consultancy contract with them whereby they pay me without withholding anything, would I then have to file as self-employed/contractor in the US? (which I understand can be a pain)

Please help...Thank you!

nelsona · Post by **nelsona** » Mon Feb 27, 2012 7:29 pm

They simply need to set up a US payroll for you and deduct taxes.

Wouldn't you be better off as a contractor? The way to not be an employee is to not be an employee. Its a chicken-and-egg thing.

It would not get THEM into trouble.

Its no more pain than in Canada. Threy would of course have to pay you more ,and your spouse better have health insurance. This is true in any event, because I'm sure if you stayed as an employee, you would have no covergae fromn them either, because you cannot maintain your provincial healthcare.

Globetrotter · Post by **Globetrotter** » Mon Feb 27, 2012 7:37 pm

Thank you so much, just to clarify am I right in thinking my employer must withhold US taxes from my paycheck?

nelsona · Post by **nelsona** » Mon Feb 27, 2012 7:48 pm

Yes. From your US paycheck. Otherwise, it is a Cdn paycheck, for which they must withhold Cdn taxes.

But unless they are going to provide you with US healthcare, pension covergae, etc, you do not want to be their employee, US or Cdn.

Globetrotter · Post by **Globetrotter** » Mon Feb 27, 2012 7:59 pm

Spouse will be providing me with health care coverage and my employer does not provide pension coverage or anything else...and right, I no longer have any provincial health coverage since I'm no longer a Cdn resident.

So I gather it would be simpler to become a consultant, have my employer send me checks that I can deposit myself into my account? Then would I have to make quarterly installments to the IRS?

nelsona · Post by **nelsona** » Mon Feb 27, 2012 9:44 pm

Yes. You would be self-employed.

Globetrotter · Post by **Globetrotter** » Mon Feb 27, 2012 11:33 pm

And as self-employed I would pay less taxes than being employed? Or is it only better because it saves me the trouble of asking my employer to get a US payroll?

nelsona · Post by **nelsona** » Tue Feb 28, 2012 11:07 am

As self-employed, you will have more deductions, but will pay a hiher tax rate (both sides of Social security).

That is whey you need to have them pay you more than as an employee. That is almost universal in US, bnecause of the high employee benefit costs that they will not be incurring.