Personal Finance

Seeking advice: Working remotely in Canada for US employer

  • Last Updated:
  • May 22nd, 2019 11:14 pm
[OP]
Newbie
Apr 18, 2019
11 posts
1 upvote

Seeking advice: Working remotely in Canada for US employer

Hello!

I've been doing some reading on RFD to try and glean enough information, but I couldn't seem to find a posted scenario close enough to mine. Would really appreciate some tips, tricks, corrections and caveats please :)

I've just accepted an offer from a US-based employer to work remotely whilst living in Canada (my username gives away location). The position is considered independent contract work, though it's essentially evergreen full time employment.

It's been almost 10 years since I've last been a contractor, and this'd be the first time I've done it across borders so I'm completely foreign to what is going to happen.

  1. Incorporate? Sole proprietor?: I think the jist of the tax implications is that it's not that advantageous anymore (unless I'm totally wrong), but is the extra work (and costs) involved with this worth the entity separation it'd create, protecting my personal assets? I don't think I'd be super-aggressive in writing things off (maybe %age of mortgage, property taxes, utilities, telco) to be fair, but I absolutely don't want anything affecting my home/family if things were to go South
  2. Insurance: Again, I'm only doing work for one company, no interaction with any outside organizations (eg. cloud ops guy). Would it still be wise to get some sort of liability insurance or is that a waste of money in my scenario?
  3. Accountant: A future colleague has stated that it'd be wise to let someone take care of everything for me. Problem is, it's apparently ~$110-$150/month for this if they do all the remits. I'm not shy doing personal taxes, but this seems like an entirely different beast.
  4. USD account: I'll be paid in $US (yay, I think?). What would be the best setup to accept the $US, while saving on some of the exchange rate fees the bank shaves off when I convert to $CAD?
  5. Taxation: Aside from the Canadian side of taxes which I've indirectly asked about above, do I need to submit anything, tax or not, to the US gov't/IRS?

Thanks very much!
31 replies
Deal Guru
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May 8, 2009
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Definitely get a US based bank account and credit cards. Get ITIN, declare taxes to the IRS. You'll get the amount paid to the IRS deducted from what's owed to the CRA, then pay the difference to the CRA.

If you he the time to travel to Niagara Falls, NY to open a bank account locally, that,d be best. Else, get a cross-border US bank account at TD, BMO, or from a US bank such as TIAA Bank or Banner Bank.
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[OP]
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Apr 18, 2019
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titaniumtux wrote:
Apr 19th, 2019 12:46 pm
Definitely get a US based bank account and credit cards. Get ITIN, declare taxes to the IRS. You'll get the amount paid to the IRS deducted from what's owed to the CRA, then pay the difference to the CRA.

If you he the time to travel to Niagara Falls, NY to open a bank account locally, that,d be best. Else, get a cross-border US bank account at TD, BMO, or from a US bank such as TIAA Bank or Banner Bank.
Great pointers, thanks! Sort of chicken-before-the-egg question here, should I incorporate if I'm going to be getting a US-based bank account and credit card?

I'm not far from the border so not a huge issue there, just curious as to why having a US-bank account in the US is better than a cross border US bank account?
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ClosetedBramptonite wrote:
Apr 19th, 2019 1:10 pm
Great pointers, thanks! Sort of chicken-before-the-egg question here, should I incorporate if I'm going to be getting a US-based bank account and credit card?

I'm not far from the border so not a huge issue there, just curious as to why having a US-bank account in the US is better than a cross border US bank account?
Your ITIN would allow you to run a business in the US afaik. There are bigger experts on the topic in the US banking and CC megathread.
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Feb 2, 2007
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titaniumtux wrote:
Apr 19th, 2019 12:46 pm
Definitely get a US based bank account and credit cards. Get ITIN, declare taxes to the IRS. You'll get the amount paid to the IRS deducted from what's owed to the CRA, then pay the difference to the CRA.
Not so fast!

If the work is done remotely in Canada, there's a good chance nothing is owed to the IRS. Better check with the company about the setup and its consequences.
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adrian2 wrote:
Apr 19th, 2019 2:34 pm
Not so fast!

If the work is done remotely in Canada, there's a good chance nothing is owed to the IRS. Better check with the company about the setup and its consequences.
OP's income tax would be the same regardless (all to CRA, OR some to IRS, difference to CRA). ITIN is definitely a boost for access to more awesome US products. It'll definitely depend on the way things are processed with the employer.
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Jr. Member
Apr 7, 2019
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I work as a remote independent contractor from Canada for a US company. File W8BEN and no money will be deducted at source and entire sum will be deposited in US account. I have not registered as sole proprietor/corporation in Canada

To move money you can consider 4 options:
a) Norbert Gambit
b) Open account with TD/RBC USA and Moved funds from USA TD/RBC to TD/RBC USD account in Canada and then use Knightsbridge Foreign Exchange to convert money to CAD.
c) Use transferwise to move money from US accounts to Canadian accounts. Knightsbridge Foreign Exchange gives better rates for large sums while for small amount of 10-20k USD , Transferwise works better.
d) Get cheques from USA accounts and deposit directly into CAD accounts.
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Nov 18, 2007
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Valleywood
Agree with mr2711.

I have been doing it for 14+ years. Always took US cheques via mail/courier and deposited them to US dollar brokerage account. No taxes withheld.

Use Norbert Gambit within brokerage accounts to convert US$ to C$.
[OP]
Newbie
Apr 18, 2019
11 posts
1 upvote
Thank you, everyone, for your input! Norbert gambit seems like an additional level of complexity that I don't necessarily want right this moment, but that's an interesting idea.

So in theory, I should:
  • Submit a W8BEN document and send that to my employer
  • Open a $USD account at my preferred Canadian bank (any suggestions as to who offers the best product/lowest fees?)
  • Use Knightsbridge FX if my paycheque exceeds $10k USD (it doesn't yet), or use Transferwise


I was thinking about establishing myself as a business entity to potentially be able to take advantage of legitimate tax deductions from expenses - Would this not be accurate?
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Link USD account in the US to TransferWise. Use USD account in Canada with Knightsbridge.

USD accounts in Canada aren't the best...
  • TD CT USD chq $1.25 PPU fee waived with $1.5k min balance
  • Meridian USD chq 75¢ PPU fee
  • RBC USD sav one free withdrawal per month
  • BNS USD sav $1/month waived with $200 min balance, 2 free withdrawals per month
  • Check out Tandia credit union, not sure about their rates
  • Tangerine USD (no ATM access, unlimited PAD transfers, hold time on all deposits)
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titaniumtux wrote:
Apr 21st, 2019 9:37 pm
[*]Tangerine USD (no ATM access, unlimited PAD transfers, hold time on all deposits)
You can withdraw USD cash from a Tangerine USD account, using a Tangerine ATM (no fee).
What you cannot do is to deposit USD checks / cash at any ATM; for checks I use snail mail to them.
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adrian2 wrote:
Apr 21st, 2019 10:23 pm
You can withdraw USD cash from a Tangerine USD account, using a Tangerine ATM (no fee).
What you cannot do is to deposit USD checks / cash at any ATM; for checks I use snail mail to them.
Thank you for the clarification.
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[OP]
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Apr 18, 2019
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Hmm... In theory, I can probably live with one transaction per month (c/o RBC since I already have accounts with them) since I'm only getting paid on a monthly basis (assuming a deposit doesn't count as a transaction), but as mentioned, heading across the border to open an account wouldn't be too difficult either.

If I were to do that, what is the upside? Also, which institution is preferred?

Thanks again guys, this is a hugely drastic jump in my life, so your advice really helps put my mind more at ease.
[OP]
Newbie
Apr 18, 2019
11 posts
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RBC USD savings account in place. In theory, should be using Knightsbridge with it to convert to CAD.

Now to decide on the whole independent contractor vs. sole proprietor vs. incorporated decision.
Jr. Member
Aug 19, 2016
163 posts
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Get two things set up:

1. A US checking account with a US bank domiciled in the US. Could be a credit union or a regular bank--credit unions less likely to have a monthly fee.
2. A US credit card, which you can then pay from that US bank, that has no foreign transaction fee (there are many you can get)

Why this setup? A few reasons:

a) The US bank account can clear a US check or receive a US deposit and have the funds available in 1-3 days. Your Canadian account may hold it for ~4 weeks even if it's a US dollar acct

b) Use the US card for any US expenses, obviously, but also for any non-USD and non-CAD. If you vacation in EUR you would rather USD->EUR than USD->CAD->EUR

c) Even for spending in Canada you can likely get a 1.5% no FTF cashback card and just use it in Canada--the cashback will compensate for the Visa exchange fees, e.g., BoA Travel Rewards Card or Capital One QuickSilver

Then follow the advice others gave for actually getting Canadian cash (for things like mortgage, rent, paying CDN taxes, that can't be done with a credit card).

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