Canadian tax for US citizen working in Canada for 8 months

QUESTION:

I have been offered a consulting job with a Canadian Corporation in
Saskatoon, Sk. for 8 to 12 months starting in mid-September.
I am a US citizen and I have my own US 'S' type Corporation.
Should I contract with the Canadian Corporation Corp-to-Corp for my services
or should I contract as an individual and close down my US Corporation for
this term? I am the sole employee of my Corporation.


david ingram replies:

If you are coming to Canada and intending to work with a visa, only the
Canadian company can hire you unless you were to come under Treaty NAFTA.
NAFTA does not allow you to use your own Corporation to sponsor you although
all sorts of people have done so because the person issuing the visa has not
recognized the situation and issued an inappropriate and non-renewable visa.

There are other methods of transferring yourself but it does not work with a
one person corporation.

Therefore, I am afraid that you will likely be working as an employee or as
a contract worker (employee without benefits) for the Canadian company and
paying tax to Canada first and then to the USA.

When you report the wages or contract wages on your US return, you will
claim credit for any Canada Pension Plan, Employment Insurance or Income tax
paid to Canada on form 1116 of your US 1040.

Your US corp will just sit there for the duration waiting for your return.

Glad to look after the returns when the time comes and I can likely help
with information about the visa.

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