Personal Finance

Working for a US company from Canada

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  • Sep 18th, 2014 1:30 am
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[OP]
Member
User avatar
Nov 4, 2008
295 posts
468 upvotes
Toronto

Working for a US company from Canada

Hey guys,

I read a lot of articles online, but I'm still confused by my current situation..

I got offered a contracting job with a company in Boston and I can work remotely from Toronto. One of the first things I was asked for was a tax form. I just wanted to make sure that the W-8BEN form is the right form to fill out in my situation: http://www.irs.gov/uac/Form-W-8BEN,-Cer ... ithholding

They also asked if it was okay to be paid in USD. Do I need a US bank account for this to happen or can I have it paid to CIBC here?

Lastly, I'm worried about being taxed both here in Canada and in the US. What's the general rule here?

If anyone has any experience with this, I'd love to chat with you. I apologize if I'm asking some very basic questions.

-E
2 replies
Sr. Member
Apr 28, 2014
675 posts
174 upvotes
Oakville, ON
easy-e wrote:
Sep 17th, 2014 10:01 pm
Hey guys,

I read a lot of articles online, but I'm still confused by my current situation..

I got offered a contracting job with a company in Boston and I can work remotely from Toronto. One of the first things I was asked for was a tax form. I just wanted to make sure that the W-8BEN form is the right form to fill out in my situation: http://www.irs.gov/uac/Form-W-8BEN,-Cer ... ithholding

They also asked if it was okay to be paid in USD. Do I need a US bank account for this to happen or can I have it paid to CIBC here?

Lastly, I'm worried about being taxed both here in Canada and in the US. What's the general rule here?

If anyone has any experience with this, I'd love to chat with you. I apologize if I'm asking some very basic questions.

-E
If you are not a US Citizen (and I really hope you aren't, because those guys get screwed over big time re: taxes, i.e. Citizenship Based Taxation), then the W8-BEN is the form you must submit.

If you want to be paid in USD, they have to issue a cheque. Direct deposit is not possible as the routing systems of Canada and the USA are not comparable.

You can deposit your USD cheque in a USD account at CIBC if you wish, or you can simply deposit in your CAD account; the exchange rate is in your favour, so you might as well put it in the CAD account. Unless you intend to make trips to the US at a later date; then put it in the USD account, and withdraw USD cash before you hit the border. Then you don't worry about exchange rate fluctuations.

Canada and the US have a Tax Treaty that covers most issues. As a resident of Canada, you will be expected to report your worldwide income, so this income must be entered on your Canadian tax return.

As for the US side, unless there is some mandatory federal withholding that applies, my gut feeling is that it will be tax exempt. I may be wrong on this point. Hopefully they don't say that because you are a Non-Resident Alien, your wages are subject to a 30% withholding at source (which is how the IRS typically treats US source income paid to foreigners). If that is the case, then what is the point of taking this job?

If you are required to pay US taxes on this employment income, you may be able to offset the taxes you paid to the IRS against any Income Taxes due to the CRA. I suggest you consult a qualified accountant who understands cross-border issues on this point.

You may also be required to obtain an ITIN (Individual Taxpayer Identification Number) from the IRS. Basically, it's used to ID yourself on a US Tax Return (1040) if you are required to file one, or if the employer needs it for source withholding purposes.

http://www.irs.gov/Individuals/Individu ... ber-(ITIN)
Deal Addict
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Aug 12, 2007
2604 posts
309 upvotes
Waterloo
If its a contract, why have it show going to a person as a salary? Why not have a company( incorporated entity ) take the payment in Canada as fees for services rendered and then redistribute the payment? pretty sure if done that way you can send money to any country without the country of origin taking out a chunk for withholding taxes ( General statement not specific to the US tax laws).

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