How do you guys deal with Tax as TN visa worker?

[rikardo76]

Hi all,

My situation is bit odd here.

I assume I will be paid by cash from my employer and that means

my tax deduction is not recorded, and I wonder if this will cause

any problem in the future both in Canada and U.S.

How should I report my income tax in Canada side as income from

foreign country? Anyone has an idea? Or is it illegal to get paid

by cash without tax deduction?

Thanks so much for your answer.

[Steven]

It's illegal for your employer not to perform payroll deductions. If they don't do it then there's a good chance they may not be legally qualified to even hire you as TN-1 as they presumably don't have (or don't use) an EIN so they're not recognized as being an employer.

You have to file a tax return, 1040NR, together with a Form 8840, read this: http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html

However as there were no deductions performed you will have to pay all your tax, presumably you won't receive a W-2 either (also illegal) so I suspect the IRS is going to have some interesting questions for your employer.

As TN-1 you must be directly employed, so they cannot get out of it by saying you were an independent contractor. Even then, as a non-resident alien they have to perform NRA withholding unless you've informed them of your treaty status on Form 8233. It's illegal for them not to perform NRA withholding without notification that you are exempt from it.

So methinks they're in a lot of trouble for various reasons. The one thing the IRS always goes after is employers when people file without a W-2.

Without a W-2 it's also going to be tricky to claim a foreign tax credit for the US tax when you file your T1, because the CRA want proof of how much you were paid and how much tax went to the IRS. You can probably sweet talk the CRA by filing your 1040NR first so you have some evidence of the payment, but it's a messy situation.