NAFTA Telecommuters being paid by US Company

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Date:           Tuesday November 18, 2003
Time:           04:23 PM -0800
QUESTION:
We are an interpreting company and would like to start using bilingual interpreters that are located in NAFTA countries.  
These would be independent contractors telecommuting from either Canada or Mexico.  I keep getting told by Canadian Interpreters that US companies us them all the time and they just file their taxes.  This begs the question of who files with
whom. If you could clarify this or direct us to a knowledgeable legal counsel on the matter it would be appreciated.
SXXXXXXX
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david ingram replies:
Whether they telecommute or you fax them the documents or mail them the tapes or deliver the material by courier, your Canadian interpreters are only taxable in Canada.  
You are paying a Canadian busines and there is no need to withhold anything from the money sent to them. No services have been performed in the United States.
You might be tempted to issue a 1042S but there is no reason to do so.  
Your interpreters must convert the US dollars to Canadian Dollars or Mexican Pesos and report the monies received in their own country. They have NO US reporting requirements unles they happen to be US citizens in which case they must file a US tax return no matter where the money came from and no matter where they live.
I don't know where to refer you to specifically other than a ream of US IRS booklets .  However seven years experience with Canada and US and Mexican tax situations for individuals and businesses and this newsletter give me some credibility.  In fact, if you go to GOOGLE and search on - income tax expert us canada mexico - I have the first four positions and five inteh top ten on three different web sites.  Since I publicize these answers to thousands of people (with your identification removed) if I ever make a boo boo, my readers let me know.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321 
New email to [email protected]
www.centa.com www.david-ingram.com
Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
 
This from "ask an income tax and immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. Canadian David Ingram deals daily with tax returns dealing with expatriate:
multi jurisdictional cross and trans border expatriate problems  for the United States, Canada, Mexico, Great Britain, the United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, American and Canadian and Mexican and any of the 43 states with state tax returns, etc.
  Your name has been added to our email list because of an enquiry we have received,  we may not answer your question but 
another similar question will be as we lump them.
You may find more answers at www.centa.com
David Ingram of the CEN-TA REALTY  Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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