Working for a Canadian company from home in the US

I just have a quick question,
I am considering working from home for a company that is located in Canada however, I do not know how that would affect me tax wise considering that I have never done this before. Do you know if the company in Canada would contact the IRS here in the US about my income and if so, how would I file taxes on money earned from another country? I know this is probably a silly question but I have never done this before.

Thanks,
Mona

What is your status in the US? Are you Canadian in the US, or a US citizen, or or or?

If you are a US citizen/PR doing work for and being paid by a Canadian company located in Canada, you will be issued a T4 which is the Canadian equivalent of a W-2. You will then have to file a Canadian non-resident tax return AND a US resident tax return.

If you are a Canadian working for and being paid by a Canadian company, but living in the US, you would just file your normal Canadian tax return. This is not an entirely legal situation though, as you are not supposed to be working in the US as a tourist.

I do not know how that would affect me tax wise considering that I have never done this before. Do you know if the company in Canada would contact the IRS here in the US about my income and if so, how would I file taxes on money earned from another country? I know this is probably a silly question but I have never done this before.

It wouldn't affect you at all, it would affect them because you are a US employee so they must have a US payroll to pay you, i.e. an EIN, do FICA withholding etc. and issue you a W-2.

Or alternatively you could get an EIN yourself as a self-employed person and invoice them.

However this all depends to a very great degree on your immigration status in the US. If you're not an LPR or US citizen it's legally very difficult to do it, although you can say if you're L-2 or E-2 Spouse or some of the other obscure work authorized categories.

-- Tue May 05, 2009 11:33 am --

If you are a US citizen/PR doing work for and being paid by a Canadian company located in Canada, you will be issued a T4 which is the Canadian equivalent of a W-2.

No he won't because he's doing the work in the US - they'd have to issue him a W-2.