Canadian, TN, cross border daily, can I telecommute?

[MerrittR]

Here is my situation:
* Canadian citizen and resident
* TN Visa Holder
* Submit a 1040NR and Canadian T1 yearly
* daily commuter to US
* US Employee (W2)

Is there a reason my employer says that an employee is a tax liability to their corporation if they telecommute from Canada through their vpn less than 50 times a year?

I live on a border town, and it's very common for US employees to have cottages in Canada and telecommute to the US, or Canadian employees telecommuting on bad weather days.

[nelsona]

If you are a Cdn resident, working in Canada, then for those days you (and your employer) are subject to Cdn payroll taxes (EI, CPP, fed/prov withholding).

Technically, US residents fall into the same category, but there are sufficient income tax treaty (and social security treaty) measures that absolve both the employee/employer of any "liability", as you put it.

So, this is why your firm may be balking at having to set up a second payroll for you. The situation may also cause them to need to produce a corporate tax report, which thet may not wish to go through for one or two employee.

This situation is faces by US employees wishing to return to Canada and live, but still work for their US employer. In such cases, the solution is to become a contractor. This usually satisfies both parties, since the contractor gets the favorable remuneration and taxability of being self-employed (or incorporated), giving up only marginally useful US employee benefits, and the firm is absolved of any taxation issues whatsoever.