Tellecommuting to US Company

Hey guys.

I'm an American who recently got his Canadian Permanent Residency. Originally the plan was for me to continue working for my company in the US remotely. However they just informed me that, in order to keep me on, they need to establish a business entity in Canada and start withholding taxes and such from my check.

Bottom line is they won't keep me on as a full time employee if I'm living in Canada. So my question is, what all is involved in being an independent contractor if I'm working from Canada?

Do I need a visa?

Will I need to pay taxes in both countries?

Is it even worth doing this seeing the only benefits I'll have at the time is OHIP?

This is something that I was just informed of today and now I'm in a bit of a bind as a result, so any help is very much appreciated.

- Peter

Since you are PR, you don't need any special permission to work in canada.

As a US citizen living in Canada, you will always report income in both countries, regardless of your employment status, so I wouldn't sweat that. Most yanks in canada end up paying no tax in US.

Of course, if you are no longer an employee, and work as a contractor, you will be asking for at least 40% more pay, right? since they are not ahaving to pay your benefits, they should have no problem doing this.

If they merely are willing to pay you the same amount as you were getting before, I'd nbe telling them where to jump off.

-- Wed Apr 28, 2010 3:38 pm --

By the way, while it is true that if your fim kept you as an employee, that they would have to payroll you in canada, the setting up of such a "business entity" may not be that much of a concern if none of their business is being conducted in canada.

There are many Cdns working for US firms, using the services of s payroll firm, with minor reporting requiremnts to the firm. It is a myth, for example, that such an arrangement opens the firm up to Cdn corporate tax on their worldwide profits.

Tax/Income: So I guess the way I understand it is if I was to become a contractor I would basically stop my employer from withholding any taxes at all, withhold the taxes myself (and put it into a savings account or something), then the following April just file in Canada and then in the states as you mentioned, and would leave me owing little to no taxes in the US. Does that sound about right?

Job: The problem with just taking off is that I just applied for a mortgage 2 days ago, if I start with another company here then I may have to wait another year before applying again since they will want some kind of history with my current employer. Plus I'm a MySQL Database Admin, which is hard enough to find a job in and I don't know if an employer here would be willing to pay as much as I'm making from that company. Plus... I really do like the company I work for despite their most recent MAJOR shortcoming.

More than anything right now I think I need to consult a Canadian Tax / Employment Lawyer that can help me get my facts straight. Can anyone recommend a good one?

-- Wed Apr 28, 2010 3:02 pm --

I suppose I should have replied with the quote earlier. Sorry about that.

Since you are PR, you don't need any special
permission to work in canada.

As a US citizen living in Canada, you will always report income in both countries, regardless of your employment status, so I wouldn't sweat that. Most yanks in canada end up paying no tax in US.

Of course, if you are no longer an employee, and work as a contractor, you will be asking for at least 40% more pay, right? since they are not ahaving to pay your benefits, they should have no problem doing this.

If they merely are willing to pay you the same amount as you were getting before, I'd nbe telling them where to jump off.

-- Wed Apr 28, 2010 3:38 pm --

By the way, while it is true that if your fim kept you as an employee, that they would have to payroll you in canada, the setting up of such a "business entity" may not be that much of a concern if none of their business is being conducted in canada.

There are many Cdns working for US firms, using the services of s payroll firm, with minor reporting requiremnts to the firm. It is a myth, for example, that such an arrangement opens the firm up to Cdn corporate tax on their worldwide profits.

Quoting my entire response is pretty much a waste of space. I know what I wrote, and it's all there above your post.

You may like the company, but know you will merely be a contractor, and won't be working with anyone there anyways. So, what's to like or not like except you pay and benefits (which you will have none).