Non-Resident of Canada with Canadian Income - How to file?!

JennKaelle · Post by **JennKaelle** » Tue Feb 28, 2017 11:16 pm

Good evening,

I moved to the US in 2015 and this will be my first year filing both US & Canadian taxes... and I'm lost!

I'm a non-resident of Canada but a self-employed Webmaster and I have a client based in Canada. He paid me in CDN $ in a CDN bank account I kept. I received a T4A with an amount on Box 020 - Self Employed Commissions. Nothing else.

How do I file?! Do I file Canadian or US first? What about the treaty to insure I don't pay taxes twice?

The amount is also under 10K as I only did part-time in 2016...

This all seems so complicated... Thank you in advance!

Jennifer

nelsona · Post by **nelsona** » Wed Mar 01, 2017 10:42 am

First, in future, remaind all your clients that you are non-resident, so that they will withhold accordingly.

Self-employed without aan establishment in Canada are not taxable in Canada. So you would file a non-resident return and report the income, and then excluse it on line 256. If there was any withholding, it will be refunded.

Report the income as self-employed income on your US tax return and pay the income tax and Self-employment tax as anyone else in US with a business.

You di file you proper departure tax return in Canada for 2015? If not you need to fix this first.

JennKaelle · Post by **JennKaelle** » Wed Mar 01, 2017 10:57 am

Hi Nelsona,

Thank you so much for this clarification. Extremely helpful.

As for the departure tax return, I had my taxes done with an accounting cie in the hope they would do what was needed as i became non resident then. I'm afraid this departure tax wasn't done no...

So i would file that for 2015 then do the non resident filling in Canada?

nelsona · Post by **nelsona** » Wed Mar 01, 2017 11:01 am

You need to look at your 2015 return and see if they put a departure date on your return. They would have asked you about your investments at that time. if that is the case, your 2015 return should be fine.

JennKaelle · Post by **JennKaelle** » Wed Mar 01, 2017 11:13 am

Perfect I will check that.

Thanks again for your help.

Jennifer

JennKaelle · Post by **JennKaelle** » Fri Mar 03, 2017 9:23 am

Good morning Nelsona!

I'm done with my taxes thanks to your help. There is just one thing that I'm unsure about : CPP

Do I have to contribute? From my filing, it seems I don't have a choice as I didn't request to stop it in the previous year...

So I owe the CRA an amount for this CPP.

Before I send it, I want to make that's normal. And if I can use your expertise, should I stop it if I can or keep contributing?

I don't currently have a US income so I assume I'm not contributing to any retirement here in the US yet.

Thanks in advance.

Jennifer

nelsona · Post by **nelsona** » Fri Mar 03, 2017 1:56 pm

As a US resident filing and paying SE tax on your 1040, you are exempt from CPP, but you need a certificate from US social security as proof:

https://www.ssa.gov/international/Agree ... rtificate2

But since you aren't taxable in Canada anyways, how are you going to pay CPP since you have no income.

This applies only to the self-employment income from after your departure from Canada, so why would you owe on this year's return?

JennKaelle · Post by **JennKaelle** » Fri Mar 03, 2017 2:23 pm

Thanks again for you response. I actually used TurboTax to check if what I had previously done manually was right.

It filled the Schedule 8 for CPP with the amount that I earned from self-employment that was on my T4A.

I can't delete those entries on the Schedule 8.

nelsona · Post by **nelsona** » Fri Mar 03, 2017 3:24 pm

What other income are your reporting on your return? there shouldn't be any. Is it accepting that the self-employed income is exempt from tax?
Then you shoud just file a paper return.

JennKaelle · Post by **JennKaelle** » Fri Mar 03, 2017 3:32 pm

No other income no.

It does accept it because as exempt on the return but on the Schedule 8, it uses the line 139 of the return instead of the amount at line 260 "Taxable Income"...

I will do it manually and send in paper version.

Thank you so much!

nelsona · Post by **nelsona** » Fri Mar 03, 2017 3:34 pm

You might want to get in touch with Intuit and ask them how you enter self-employed income that is exempt from tax by treaty, (that should be easy line 256) and CPP by the totalization agreement since you are resident of US (i'm pretty sure they would have faced this siutaion before).

But, like I said, you should really be filinga simply no tax paaper return, just to cover why you got a T4A. You should be getting an NR-4 in future, because you are going to remind your clients that you are a US resident, correct?

JennKaelle · Post by **JennKaelle** » Fri Mar 03, 2017 3:52 pm

I will give them a call, that would make things simpler to file via internet.

And yes, they already knew I was a non-resident. I'll make sure they correct the paper for next year.

nelsona · Post by **nelsona** » Fri Mar 03, 2017 8:09 pm

the key though is getting the letter from SSA

JennKaelle · Post by **JennKaelle** » Sat Mar 04, 2017 10:11 am

Can I get that letter before filing my US return?

nelsona · Post by **nelsona** » Sat Mar 04, 2017 4:23 pm

Its not the US return you need it for, it is the Canadian one. But you should file Cdn one anyways, with no tax owing, and then send them the letter once they ask for it.