getting T4 in Canada and W2 in USA on TN work visa -

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QUESTION:
I am a Canadian Engineer sent by the Canadian wing of my company to work on
a project in the United states. I have obtained a TN visa that lists my
employer as The US version of the company that I work for.MY salary is paid
in Canada and the tax withheld. We have discovered that they are paying "our
US" taxes to The IRS at the same time they are deducting tax from our income
in Canada. Some of us have received W2 forms for our taxes. I expected to be
able to obtain the overseas employment tax credit for being in the States
for at least 1 year.The crutch of the matter is that the Canadian Company
are paying our US Taxes "for our Benifit"" as an advance on our Canadian Tax
refund and expect us to give our Canadian Tax refund to them to cover the US
taxes paid on our behalf. The company has also generously offered to pay to
have their accounting firm do our taxes for the year.
Can they do this to us?
=================================================================
david ingram replies:
Yep!!!!
If you are working in the States, your first tax liability is to the US with or without a visa.
Usually in your situation, the employer just deducts the Canadian tax and you find yourself with a $20,000 US tax bill next April and no money to pay it as you wait for the refund from Canada. US interest and penmalties build.
You should be thanking the company.  What I think has happened is that you discovered the overseas tax credit (T 626) and thought you would have a bonanza because you did not even think about owing or paying the US tax.
One client had a $218,000 retroactive tax bill and lost his house wife and car (in that order) in the same situation.
Make sure that the State tax is being looked after as well if you are working in a state with income tax.
Yep - they can do that - should do that - and you should thank the company for doing it.
Since you are still a resident of Canada it seems (you should check that out) and have not moved to the US, that will also stop your having a rude tax bill to Canada because they had deducted lower US taxes on a US payroll leaving you with a catch up to Canada and no money.
You might want to have someone like us check the returns over after they are doe by the company accountant or better still, have the company pay you what they would have paid someone else and get your own person and keep your personal return away from the company's clutches.
For any one else's benefit, your type of return is what we do by phone, fax, email, snail mail or courier.
David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321 
[email protected]
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