Canadian Working in Canada with U.S. Clients – How to File

[mongoldcan]

I’m a Canadian computer consulting sole-proprietor working from home in Canada via the internet, and have a U.S. client. I’ve done work for this U.S. client (from Canada only) for approximately 16 years. I’ve paid all my income taxes quarterly to the CRA based on my world-income.

After doing some research about an unrelated tax topic, I came across some information that suggested that a tax return may need to be filed to the IRS, even if no tax is payable (http://www.bdo.ca/en/Library/Services/T ... the-US.pdf). I was under the impression that as a Canadian sole-proprietor, working in Canada, I was only required to report my world-income to the CRA.

Can someone please help clarify if I am supposed to send a return to the IRS? And if so, why? Why would a Canadian sole-proprietor owe a tax return to the IRS if all work is done solely in Canada, by a Canadian?

Are there penalties involved for not submitting a tax return to the IRS? How would they collect? I’m lost with all this and I am hoping the information I came across was not accurate, but I would like to know for my own peace of mind.

Thank you for your help.

[nelsona]

Any US filing mentioned in the article does not apply to you because 9a) you are not a corporation and (b) you are not even doing bisiness IN the US.

Disregard.