More questions Canadian working for a US company

Hi again,

I have been reading about Working for a US company from Canada so I want to make sure I understood correctly.

Here is the scenario and the information

I am Canadian and I will be working for a US company from home in Canada.
I will be directly employed by them from the US. They have not offices in Canada. I will get into US for customer visits. Nothing else. I’ve been told I will be paid in US funds.

Now as per comments in this forum:

1) They can pay me in any currency, that's not relevant from a legal standpoint. I need to keep track of the exchange rate to declare my income for the year to Revenue Canada. Correct ?

2) Who does CPP and EI? I couldn’t find this info.

3) Can a US company issue a T4? I read from another post that “If you're in Canada and they're issuing you a T4, you don't need an ITIN, you use your SIN as normal, you fill in your T1 as normal using the T4 they issue you. “

Is this correct? Again, they have not a Canadian office

4) Taxes: It seems I will have to pay taxes proportionally and will have to file a non-resident return in the US to report my US income. So is it means that I will get some money back from US because I don’t live there? Or this just depends on how much I earn per year?


Thanks for your help

Ed

1) I don't think you need to keep track of the exchange rate, I think you would just calculate it when you file your return.

2) No CPP or EI - you will instead get social security and UI deducted from your pay.

3) Only Canadian companies can issue T4s. You would probably get a W-2 from your American employer.

4) You'll have to file a 1040NR return in the US. You might get some money back.

You need to register as self-employed and invoice them basically, you do the EI and CPP withholding yourself. There is no US tax because none of the work is done in the US. You may need to file a 1040NR and/or an 8833 every year but this is merely paperwork, there is no tax, it's just information for the IRS so they know where the money is going for anti-fraud reasons. Usually this only matters if you're receiving over $100,000 but I get a different answer everytime I ask an IRS agent.

They cannot directly employ you because they don't have a Canadian office and no Canadian payroll so there is no way of their doing the withholding.

The only way they can issue a T4 is to register in Canada, get a business number and do the withholding which I assume they wouldn't want to for a one-off employee.

The other option is to set up your own company and issue yourself a T4 but from the sounds of it, registering as self-employed is your best option.