Income tax for Canadian working for US company
Moderator: Mark T Serbinski CA CPA
Income tax for Canadian working for US company
I’m Canadian and I’m going to start working as a sales rep for commission from a US company. I want to make sure we’re exchanging all the correct tax forms. To the best of my knowledge I’ll be classified as an independent contractor not employee. The company will not withhold any taxes from my commission. I believe the company does not need to give me a 1099 because I’m not working in the US? What about a W-2? And do I need to give them a W-8 BEN-E? I’m going to be honest I don’t know much about any of these forms, I’ve just come across them while searching. Thanks.
Re: Income tax for Canadian working for US company
W-2 is for employers reporting wages. Doesn't apply to you,
W-8BEN i sufficient. If you were occasionally working in US, you would file a form 8233 with the client for that income.
W-8BEN i sufficient. If you were occasionally working in US, you would file a form 8233 with the client for that income.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Re: Income tax for Canadian working for US company
The company needs put you on a T4A or make a T4 arrangement with a Cdn PEO. If instead it issues you 1099-NEC, it's ideal for you to file a NIL 1040NR with IRS explaining why reporting NIL vs the 1099-NEC IRS expects.
Re: Income tax for Canadian working for US company
ND wrote:
> The company needs put you on a T4A or make a T4 arrangement with a Cdn PEO.
> If instead it issues you 1099-NEC, it's ideal for you to file a NIL 1040NR
> with IRS explaining why reporting NIL vs the 1099-NEC IRS expects.
Since I’m not an employee, but an independent contractor, I wouldn’t think they’d need to give me a T4. Everything I’ve read says US companies are not required to give Canadians a 1099, that’s only for work done in the US. I will only be working in Canada. I thought a W-8BEN declares that no taxes are being withheld from my income and I therefore don’t report anything to the IRS. I’ll have to look up the NIL 1040NR. I haven’t come across that.
> The company needs put you on a T4A or make a T4 arrangement with a Cdn PEO.
> If instead it issues you 1099-NEC, it's ideal for you to file a NIL 1040NR
> with IRS explaining why reporting NIL vs the 1099-NEC IRS expects.
Since I’m not an employee, but an independent contractor, I wouldn’t think they’d need to give me a T4. Everything I’ve read says US companies are not required to give Canadians a 1099, that’s only for work done in the US. I will only be working in Canada. I thought a W-8BEN declares that no taxes are being withheld from my income and I therefore don’t report anything to the IRS. I’ll have to look up the NIL 1040NR. I haven’t come across that.
Re: Income tax for Canadian working for US company
A Cdn PEO would make you a proper Cdn employee and then you'd receive T4.
Re: Income tax for Canadian working for US company
Yes, but does our poster want to be an employee? It would appear not.
On the other hand, will CRA accept that he is self-employed under the conditions he describes?
On the other hand, will CRA accept that he is self-employed under the conditions he describes?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: Income tax for Canadian working for US company
Hey there! I'm also Canadian and I've worked as an independent contractor for a US company. You're right, they won't give you a 1099 since you're not based in the US. You don't need a W-2 either because that's for employees. What you do need is a W-8 BEN-E form to certify that you're a foreign entity, which helps you avoid US tax withholding. It's pretty straightforward, just fill it out and give it to the company.
Re: Income tax for Canadian working for US company
nelsona wrote:
> Yes, but does our poster want to be an employee? It would appear not.
> On the other hand, will CRA accept that he is self-employed under the
> conditions he describes?
I believe I’d be classified as an independent contractor because: I’m in charge of how I advertise and interact with the customers; I’m using my own car, phone, and computer for the work; I cover the costs incurred while advertising and making sales; and I get no benefits. I'm planning on advertising through my business and submitting that income on my T2125 along with the rest of my business income. The company decides on the commission rate for the products sold though. Do you think I would classify as an employee or self-employed? I don't know whether it matters if I want to be considered an employee, but rather what the company paying me considers me to be.
> Yes, but does our poster want to be an employee? It would appear not.
> On the other hand, will CRA accept that he is self-employed under the
> conditions he describes?
I believe I’d be classified as an independent contractor because: I’m in charge of how I advertise and interact with the customers; I’m using my own car, phone, and computer for the work; I cover the costs incurred while advertising and making sales; and I get no benefits. I'm planning on advertising through my business and submitting that income on my T2125 along with the rest of my business income. The company decides on the commission rate for the products sold though. Do you think I would classify as an employee or self-employed? I don't know whether it matters if I want to be considered an employee, but rather what the company paying me considers me to be.
Re: Income tax for Canadian working for US company
Fricenaz wrote:
> Hey there! I'm also Canadian and I've worked as an independent contractor
> for a US company. You're right, they won't give you a 1099 since you're not
> based in the US. You don't need a W-2 either because that's for employees.
> What you do need is a W-8 BEN-E form to certify that you're a foreign
> entity, which helps you avoid US tax withholding. It's pretty
> straightforward, just fill it out and give it to the company.
Thank you!
> Hey there! I'm also Canadian and I've worked as an independent contractor
> for a US company. You're right, they won't give you a 1099 since you're not
> based in the US. You don't need a W-2 either because that's for employees.
> What you do need is a W-8 BEN-E form to certify that you're a foreign
> entity, which helps you avoid US tax withholding. It's pretty
> straightforward, just fill it out and give it to the company.
Thank you!
Re: Income tax for Canadian working for US company
hmp111,
You would need to ask a Cdn tax accountant, but generally, if you only have one client -- full-time -- CRA will treat you as an employee. Then you get into payroll taxes, etc. Just a word of caution for you to check out.
You would need to ask a Cdn tax accountant, but generally, if you only have one client -- full-time -- CRA will treat you as an employee. Then you get into payroll taxes, etc. Just a word of caution for you to check out.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: Income tax for Canadian working for US company
nelsona: I will chat with an accountant. I was hoping one might answer here. It is the only client I am working for commission with. But it’s not my only client and it’s not a full time job. I have other clients I provide other services for. This was something I was hoping to add to my small business for a little extra income.
Re: Income tax for Canadian working for US company
Ok. Then you are fine. That had not been specified.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
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lanman2000
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Re: Income tax for Canadian working for US company
ND wrote:
> The company needs put you on a T4A or make a T4 arrangement with a Cdn PEO.
> If instead it issues you 1099-NEC, it's ideal for you to file a NIL 1040NR
> with IRS explaining why reporting NIL vs the 1099-NEC IRS expects.
Hi there would you be able to explain a little more or provide a link that explains why the "NIL 1040NR" is better? I've just been filing a standard 1040 and delcaring the 1099-NEC on it. Somehow i don't ever end up owing much on the US return but rather owe a ton on the canadian one.
Background: Dual national (US/CAN), live in Canada and work as contractor for various facilities in the US.
> The company needs put you on a T4A or make a T4 arrangement with a Cdn PEO.
> If instead it issues you 1099-NEC, it's ideal for you to file a NIL 1040NR
> with IRS explaining why reporting NIL vs the 1099-NEC IRS expects.
Hi there would you be able to explain a little more or provide a link that explains why the "NIL 1040NR" is better? I've just been filing a standard 1040 and delcaring the 1099-NEC on it. Somehow i don't ever end up owing much on the US return but rather owe a ton on the canadian one.
Background: Dual national (US/CAN), live in Canada and work as contractor for various facilities in the US.