Paid by an American company - W8-ECI Certificate of Foreign Person's Exemption From Withholding -
QUESTION:
I have a business that is doing contract work for a U.S. company. The work is being done from Canada and I will not need to travel to the U.S. However the company wants me to fill out a W-8ECI form. This form states that I would have to file a U.S. tax return. Would I have to file in the U.S. and what is the proper form I should be filling out?
Thank You
---------------------------------------------------------I have a business that is doing contract work for a U.S. company. The work is being done from Canada and I will not need to travel to the U.S. However the company wants me to fill out a W-8ECI form. This form states that I would have to file a U.S. tax return. Would I have to file in the U.S. and what is the proper form I should be filling out?
Thank You
david ingram replies:
I think you are the person who talked to me on the phone as well.
I am answering this to send to the group to seeif any of the others have a differnt idea.
The W8-ECI form is designed to stop withholding taxes. To Quote: "Certificate of Foreign Person’s Claim That Income Is
Effectively Connected With the Conduct of a Trade or Business in the United States"
See the form at:
http://www.irs.gov/pub/irs-pdf/fw8eci.pdf
Filling it out will stop the payer from deducting tax. The form has you agreeing to file a USD tax return which on the surface makes no sense. However, if you did, since all the profits are in Canada and you have no fixed base of operation in the US and are not doing anything 'in' the United states, if you do file a tax return, it would be claiming all profits tax free under the US Canada Tax Treaty.
Anyone any other opinion? This is / has been tightened up under the auspivces of the new US Canada Tax Treaty signed on Sept 21, 2007.
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This is not intended to be definitive but in
general I am quoting $800 to $2,800 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two
interest slips and you lived in one country only - no self employment or rentals
or capital gains - you did not move into or out of the country in this
year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no
rental
$1,200 would be the minimum with a move in or out
of the country. These are complicated because of the back and forth foreign tax
credits. - The IRS says a foreign tax credit takes 1 hour and 53
minutes.
$1,500 would be the minimum with a rental or two in
the country you do not live in or a rental and a business and foreign tax
credits no move in or out
$1,600 would be for two people with income from two countries
$2,800 would be all of the above and you moved in
and out of the country.
This is just a guideline for US / Canadian
returns
We will still prepare Canadian only (lives in
Canada, no US connection period) with two or three slips and no capital
gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely
$450
And an American only (lives in the US with no
Canadian income or filing period) with about the same things in the same range
with a little bit more if there is a state return.
Moving in or out of the country or part year
earnings in the US will ALWAYS be $800 and up.
TDF 90-22.1 forms are $50 for the first and $25.00
each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00
each.
18 RRSPs would be $900.00 - (maybe amalgamate a
couple)
Capital gains *sales) are likely $50.00 for
the first and $20.00 each after that.
Just a guideline not etched in
stone.
This from "ask an income trusts tax and immigration expert"
from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily
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