Entrepreneurship & Small Business

Any Canadian IT contractors working for US clients?

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  • Mar 12th, 2021 3:52 pm
[OP]
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Mar 23, 2008
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Any Canadian IT contractors working for US clients?

Just got a call from a large recruiting company in the US, and they need someone ASAP for a US client. I'm incorporated, and would be contract. Any gotcha's to be concerned about? Just got the call this morning, starting my research now. But they want someone to start early next week. All work would be remote.

C
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Jan 18, 2017
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They'll likely yell at you to fill out a W9, when what you actually need to send them is the W8BEN-E form.

Also, watch GST. Your obligation to report still exists, it's just that US sales are zero-rated. (So no GST actually collected by you from the US client.)
______
Canadian & US tax guy (CPA)
[OP]
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crossborderguy wrote: They'll likely yell at you to fill out a W9, when what you actually need to send them is the W8BEN-E form.

Also, watch GST. Your obligation to report still exists, it's just that US sales are zero-rated. (So no GST actually collected by you from the US client.)
Thanks for that. Noted those two things for consideration.

Is there any need to bump up my rate? And they mentioned getting either US or CAD... Guess that depends on where you think the Canadian dollar is going to go.

C
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Jan 18, 2017
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That's more of a judgement call. My experience with seeing clients undertake these things is to get paid in US dollars. The forex gains mean you make "more money" while the US client only sees you as costing them whatever their regular bill-out rate is for their American people.

As for bumping your rate, I say make your rate as high as you can, without losing the job.

CNeufeld wrote: Thanks for that. Noted those two things for consideration.

Is there any need to bump up my rate? And they mentioned getting either US or CAD... Guess that depends on where you think the Canadian dollar is going to go.

C
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Would OP need to file a US tax return or be subject to U.S. taxes on funds earned through his contract for work performed for a U.S. company? Does the answer to this question depend on whether the job is performed via a corporation versus as a sole proprietor/individual?
[OP]
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choclover wrote: Would OP need to file a US tax return or be subject to U.S. taxes on funds earned through his contract for work performed for a U.S. company? Does the answer to this question depend on whether the job is performed via a corporation versus as a sole proprietor/individual?
I believe that's what the W8BEN-E form is for. Basically declaring that I'm a Canadian entity, and will be responsible for all taxes on my end. If I was working in the US on a visa (like a TN or H1B), then I would need to file a US tax return, even with Canada being my declared residence for taxation purposes.

C
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Oct 28, 2015
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How did you get such a position as contract? All the US agents would not reply any further emails with me after learned that I am Canada based incorporation.... or proposed me a salary based job in the US
[OP]
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xuanzh wrote: How did you get such a position as contract? All the US agents would not reply any further emails with me after learned that I am Canada based incorporation.... or proposed me a salary based job in the US
Haven’t got it yet. Recruiting company reached out to me yesterday morning, interviewed today, waiting to hear back. They know I’m incorporated in Canada, though.

C
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xuanzh wrote: How did you get such a position as contract? All the US agents would not reply any further emails with me after learned that I am Canada based incorporation.... or proposed me a salary based job in the US
Not that unusual or difficult at all. Almost all my consulting clients/projects(90%) are based in the US. Before I would travel to the client site weekly on a TN Visa to deliver the project, the past year had been remote. A lot of my CDN colleagues are also in the same boat, majority have US clients.
Probably depends on your industry and sector.
[OP]
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Just as an update, didn't get this contract, but the company I interviewed with asked if I'd be interested in another one they had, and the recruiting company in the US also has some other contracts that might be possibilities. So still hopeful that something will come of it.

C
[OP]
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Got a different contract with this US company, so we'll see how things go. If anything interesting comes out of the experience (being an incorporated Canadian contractor billing a US client), I'll try to post back. First note: they're paying weekly, which I've never experienced with any Canadian clients. Always invoiced at the end of the month, usually got paid the end of the next month. Also had to get insurance, where I've usually been covered by someone else's policy. Cost was $1400/year, so not outrageous.

C
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Dec 10, 2011
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CNeufeld wrote: Also had to get insurance, where I've usually been covered by someone else's policy. Cost was $1400/year, so not outrageous.

Did you buy the insurance from the recruiting company ???
[OP]
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molie2403 wrote: Did you buy the insurance from the recruiting company ???
No, from a Calgary based insurer.

C
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CNeufeld wrote: Got a different contract with this US company, so we'll see how things go. If anything interesting comes out of the experience (being an incorporated Canadian contractor billing a US client), I'll try to post back. First note: they're paying weekly, which I've never experienced with any Canadian clients. Always invoiced at the end of the month, usually got paid the end of the next month. Also had to get insurance, where I've usually been covered by someone else's policy. Cost was $1400/year, so not outrageous.

C
Interesting that you were asked to get insurance. I have worked as a sole proprietor IT professional (not incorporated) for US clients in past and was never asked to get insurance. Could you please elaborate on what kind of insurance you were asked to buy?

Thanks in advance!!
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Sep 29, 2005
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I worked as an IT contractor in the US (and Canada) for years. I would fly out Sunday night or early Monday morning and fly back Friday night. Over the course of 15 years doing it, I had 3 clients (US and Canada) who required insurance. There were 2 types of insurance I needed. Liability for physical damage and also liability in case I inadvertently propagated a virus into their system. Out of the 3, 1 was included in the policy of the company I subcontracted for, a second was paid by the recruiter, and I paid for the 3rd.

I found huge swings in premiums so it really paid me to shop around. Although I'm in Montreal, I bought my insurance from a company in Calgary who had to involve a Quebec insurer because of provincial laws.

Also, because I sometimes worked on site and sometimes I worked from home, Homeland Security said that because I was taking a job from an American by law I still needed a TN even if I only worked from home. I have no idea how they would have checked it though.
Last edited by Phils on Mar 13th, 2021 6:34 am, edited 1 time in total.
Phils
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Oct 20, 2010
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Phils wrote: I worked as an IT contractor in the US (and Canada) for years. I would fly out Sunday night or early Monday morning and fly back Friday night. Over the course of 15 years doing it, I had 3 clients (US and Canada) who required insurance. There were 2 types of insurance I needed. Liability for physical damage and also liability in case I inadvertently propagated a virus into their system. Out of the 3, 1 was included in the policy of the company I subcontracted for, a second was paid by the recruiter, and I paid for the 3rd.

I found huge swings in premiums so it really paid me to shop around. Although I'm in Montreal, I bought my insurance from a company in Calgary who had to involve a Quebec insurer because of provincial laws.

Also, because I sometimes worked on site and sometimes I worked from home, Homeland Security said that because I was taking a job from an American by law I still needed had to have a TN even if I only worked from home. I have no idea how they would have checked it though.
@Phils, in this case even if you had a TN, you were still taxed in Canada and not in the US, I suppose?
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mr2711 wrote: Interesting that you were asked to get insurance. I have worked as a sole proprietor IT professional (not incorporated) for US clients in past and was never asked to get insurance. Could you please elaborate on what kind of insurance you were asked to buy?

Thanks in advance!!
They want Errors and Omissions, and General Liability, with $1m per occurrence, $2m aggregate. Cost was around $1200/year.

C
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I only ever paid Canadian taxes although, with all the time I spent in the US, I had to keep my days in the US below the threshold where I'd have to file a US income tax return - even if I didn't owe them money. I also needed an EIN #.
Phils

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