how to pay US tax when working for three months as contract employee
I am a canadian about to be an independent contractor working in the U.S. for 3 months. I am using a per diem schedule.
This is my first time as a U.S. contractor and wonder how I would handle the U.S.-Canada personal income taxes? any suggestions welcome
thanks!
david ingram replies:
Although you may be being paid as an indendent contractor, I presume that you are actually working for one employer under the auspices of an H1 or TN visa.
If you are earning less than $10,000 US, you would file a 1040NR and exempt the income under article AIV of the US / Canada Tax treaty. However, if you are working in a state with income tax, you would have to file a state return and pay tax to the state.
If you are earning over $10,000, it s all taxable on the Federal and the state return.
The figures would then be converted to Canadian funds and reported on schedule T2124 (business income) or T2032 (professional income) on your Canadian return.
The net foreign income would go on line 433 of schedule A and the actual taxes paid to the USA would go on line 431 for you to claim the foreign tax credit in Canada.
This, of course is the kind of return that I and others like Gary Gauvin in Texas specialize in and we would be glad to look after your return by snail mail, email, fax or courier.
This is my first time as a U.S. contractor and wonder how I would handle the U.S.-Canada personal income taxes? any suggestions welcome
thanks!
david ingram replies:
Although you may be being paid as an indendent contractor, I presume that you are actually working for one employer under the auspices of an H1 or TN visa.
If you are earning less than $10,000 US, you would file a 1040NR and exempt the income under article AIV of the US / Canada Tax treaty. However, if you are working in a state with income tax, you would have to file a state return and pay tax to the state.
If you are earning over $10,000, it s all taxable on the Federal and the state return.
The figures would then be converted to Canadian funds and reported on schedule T2124 (business income) or T2032 (professional income) on your Canadian return.
The net foreign income would go on line 433 of schedule A and the actual taxes paid to the USA would go on line 431 for you to claim the foreign tax credit in Canada.
This, of course is the kind of return that I and others like Gary Gauvin in Texas specialize in and we would be glad to look after your return by snail mail, email, fax or courier.
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