canadian working from home for US company

[medtranscan]

I'm hoping that someone can help me.

I will be working as a medical transcriptionist from my home office in canada soon. The majority of companies hiring are mainly US based. I'm under the impression that I will be considered an independent contractor when hired by a US company. What legal and tax obligations do I need to be aware of with both US and Canadian taxation?

Tx,

transcription chick

[agnelson]

None in US. Pay taxes in canada as self-employed.

[Steven]

Ton of threads on here if you do a search, but essentially you treat a US client exactly the same as a Canadian client, except the GST is zero-rated. Where it gets dicey is if you are physically in the US while doing the work.

You may need to file a protective return in the US, the IRS sometimes requires this if your income is over $100,000 and if you're using a corporation you're supposed to do it as well. IRS publication 519 explains how to fill in 1040NR as an individual to do this. If you use a corporation you use 1120-F instead. If you genuinely do all the work in Canada then it's usually virtually blank, the IRS just want to make sure you aren't trying to avoid US income tax and want something in writing to prove it. Form 8833 can come up as well, to claim tax treaty provisions, i.e. you are working in Canada. Once again the IRS doesn't normally care and if they do usually only if you're over $100,000. Below that they just assume you're claiming the treaty benefit.

If you route your money through a US bank account, remember to file W-8BEN with the bank if the account is interest bearing.