Telecommuting from US & Taxes

I am a Canadian citizen who moved in March of this year to the US under a fiance visa which then gives you the provision to apply and obtain your permanent residence, which I just obtained in November.

I co-own a Canadian corporation which offers software services and products within Canada. I have been performing contract work through my company for a Canadian firm via telecommute. Originally I was telecommuting within Canada, and once I moved to the US, I restarted the work after several weeks. My company has been withholding Canadian taxes from the wages I have been drawing. I am in Washington state, which has no state tax. I was originally under the impression I would owe Canadian taxes and be subject to US taxes following this, but restricted by the tax treaty so that I would likely end up paying nothing in the US. I've recently gotten some info that leads me to believe I am only subject to tax in the US though and I am unsure as to how I need to proceed. The tax accountants who deal with cross-border issues are very expensive. I'm also worried since my T4 will show a lot of income and taxes and if I don't actually owe them, how will I file and get my money back if my T4 contradicts it?

Has anyone done something similar to this? I do know that I am deemed a non-resident for tax purposes in Canada since I am deemed a resident in the US since I received my green card.

You will have to file a tax return to both Canada and the US, and as you're paying income taxes in Canada, it is unlikely that you'll have to pay more in the US because of the tax treaty.

I would strongly suggest you find yourself an experienced tax accountant in the US to prepare your US tax return. It'll cost you more than going to H&R Block for sure, but well worth it IMO.

In my own experience, an H&R Block franchise in Canada was able to help me with cross border issues, but H&R Block here in the US had no clue what to do with me. They had our (mine & my husband's) return ready so that we'd have to pay the IRS about $3000, but when we took it to a proper tax accountant, we actually got money back. So the extra money we spent on the guy who had a clue actually saved us some money. Not much, but we had some change left over.

Thanks Reba. I've gotten in touch with someone willing to prepare my returns for both countries, as well as assist with the required US filings for my Canadian company.

A word of advice to anyone who might do work in the US for a Canadian company they own - it's probably not worth it! The burden of filing US tax returns is usually not worth it and can be extremely expensive.

Yep, it really is better to just sever all ties if you plan on staying in the US indefinitely or permanently. The IRS can be a real pain in the ass.

It's better to pay tax in Washington, it's a lot less, there's some form you have to file with the CRA, have a look on the non-resident's page, you claim closer association with the US so there is no tax payable in Canada and you pay the tax in the US.

I have a similar question if I can just piggyback on this thread. I was born in Canada but have grown up in the US and have dual citizenship. I'm currently an employee of a company here in MD and I work from home. I want to move to Canada in September for grad school. Can I keep my job? How does it all work? Could I just maintain that I live in MD since I still have access to this address since my mom lives here while going to school in Canada as a Canadian?

But if I did have to tell my job that I was moving to Canada, what are the drawbacks for them, letting me work from Canada?

Thank you so much for your help.