QUESTION:
I am a Canadian citizen working for a U.S. company in Virginia under a TN
visa. I have been working in the United States for 6 years and have paid
U.S. taxes for all of that time. I have not filed a Canadian tax return
since I came to the United States.
I have been informed by my employer that I may move back to Canada and
continue to work for them through telecommuting. My employer would like for
me to travel back to the United States for a month or two out of the year to
work at our headquarters in Virginia. Should I continue to obtain my TN
visa so that I may go back and work for a month or two out of the year? How
will this affect paying taxes to the United States and Canada?
I will be paid in U.S. dollars. Where do I file my taxes? How does this
affect deductions ( i.e. 401K, Social Security, Medical, Dental ) on my
paycheck now? Is there any way to shelter some of my money so that I do not
get hit with the increased income tax rate in Canada as opposed to the
United States?
My employer has told me that they can put me on the payroll as a contractor
if this makes things easier. Thanks.
--------------------------
david ingram replies:
1. You will still need TB visa to work in the US for a month or two and the
pay for that period will be taxable to the US
Federal Government and the State of Virginia. However you will file a
1040NR instead of a 1040.
2. The money earned in Canada PLUS the money earned in Virginal will be
subject to Canadian taxes. You will have lost the benefit of a joint tax
return so your taxes WILL be higher although your Canada Pension Plan
contributions are significantly lower than the US FICA (social security).
3. A solution would be for your employer to pay you as a contractor and pay
you everything the employer was paying you PLUS any employee benefits your
were having paid for you. This would include pay, 1/2 the social security,
and contributions to FICA and any medical or disability and life insurance
premiums being paid for you.
If you were to set up as a proprietorship in Canada, your proprietorship
would receive all the money and you would have the advantage of being able
to pay your wife a salary for receptionist duties, etc, thereby splitting
the tax rate somewhat.
You would have to join the provincial medical plan where you live. If you
wanted extended benefits, they are available at a reasonable cost by joining
your local chamber of commerce.
Your tax preparation problems would be looked after by sending them to my
office here in North Vancouver.
I likely have 35 people doing what you are doing so it is nothing new.
Answers to this and other similar questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram am a
permanent guest on Fred Snyder of Dundee Wealth Managers' LIVE talk show
called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the internet
at
www.600AM.com <http://www.600am.com/>
Call (604) 280-0600 to have your question answered. BC listeners can also
call 1-866-778-0600.
Callers to the show and questioners on this board can also attend the
Thursday Night seminars on finance and making your Canadian Mortgage
Interest deductible.
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
Home office at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 9 AM to 9 PM 7 days a week (please do not fax or phone
outside of those hours as this is a home office)
email to taxman at centa.com <mailto:taxman at centa.com>
www.centa.com <http://www.centa.com/> www.david-ingram.com
<http://www.david-ingram.com/>
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