Tax-help-live in canada work for u.s. company

[agnelson]

As I said, withholding and final taxes are 2 separate things. Likely you will be withheld "as if" you are only making the US income in US and only the Cdn income in canada. Even when one has 2 jobs in the same country, withholding usually gets balled up, so expect this in your situation.

But, of course, since you will be reporting ALL income in canada, and getting credit for only the low taxarte you will be taxed in US, you may end up owing more to canada. There is little point trying to exactly figure out what your taxes will be. To be certain, take as little exemptions on your W-4 and TD1; don't aggressively try to cut your withholding until you know what you are going to be owing to each jurisdication, then start tailroing it. Or, just make sure you keep a 1/3rd of your overall gross set aside for taxes (including what has been withheld). Your RRSP and other deductions should cushion the shock.


The divvy-up will be quite simple: number of working days spent in each country

[Steven]

Who are the accounting morons forcing these CCPCs on people?!

They're not morons, think about how much money they're making filling in T2s for their clients. And assuming they know what they're doing imagine the windfall when the person gets an EIN for their corporation and starts doing a US payroll, US corporation tax on their US-source income etc. Think about the huge volume of paperwork there, 1120-F, W-2, W-4, 8233, 8833, etc.

-- Tue Sep 15, 2009 6:22 pm --

I'm very confused. Can you help shed some light on what ideally should happen in this case?

Well legally they have two payrolls. From the sounds of it the $10,000 limit doesn't come into play because you're resident in Canada but work for a US employer? Or you earn more than $10,000 in each country anyway so it's not really relevant.

Anyway it can be pretty straighforward as long as their payroll dept. does their work correctly because there are two payrolls and they run both of them. You file a W-4 with the US branch and a TD-1 with the Canadian branch and you get a W-2 and a T4 at the end of the year. You use them to fill in your T1 and you file for a foreign tax credit on T2209 and T2036 based on what it says on your W-2. This is explained in the general guide for the T1.

What you do on the US end depends on what your status is in the US. You said you're a Canadian so I assume you were on TN-1 or something like that (US citizens must file a 1040 every year and form 2555 can come into play if you're not resident there). If you're just a Canadian who has a non-immigrant status in the US, you simply fill in 1040NR with your W-2. If you spend less than 183 days in the US you also file 8840. If it's more than 183 days and you earn more than $100,000 in the US you're supposed to formally make a tax treaty claim on Form 8833 to the effect that you are a resident of Canada for tax purposes, essentially. I don't know how to fill in 8833, it's a very open-ended form.

I don't think T1213 is relevant here because you're a resident of Canada from the sounds of it, not the US. You will owe more taxes on top of what you've paid in withholding as reflected on your W-2, not less. You will calculate this when you do your T1, you file for a foreign tax credit so you avoid dual-taxation but because Canadian taxes are higher you will pay some tax on top. You send in a cheque with your T1.

If it makes it easier to understand, you in essence have two jobs, one in Canada and one in the US because you will be on two payrolls. Just make sure the company you work for does the split correctly.

Note that if you are a US citizen and you spend more than 183 days in the US, the IRS will probably consider you resident for tax purposes which reverses the situation and then T1213 may come in useful. Changes all the other paperwork you have to file as well.

[usagisisa]

Thanks for the advice! Will let you know how it goes.