Work remotely from Canada for US Employer
- Thread starter sanchalanam
- Start date
Hi -
I am looking to move to Canada as a PR and my current employer offers the option of working remotely from Canada, provided that I do office visits every 2 months. I am currently on OPT.
1) How does the taxes work? Am I allowed to keep getting paid in USD to US account, and get W-2 at the end of the year, or I need a T-4?
2) If I do need to be paid in Canadian $ and get T-4 at the end of the year, I am assuming my OPT will no longer be valid?
Any help is much appreciated!
I am looking to move to Canada as a PR and my current employer offers the option of working remotely from Canada, provided that I do office visits every 2 months. I am currently on OPT.
1) How does the taxes work? Am I allowed to keep getting paid in USD to US account, and get W-2 at the end of the year, or I need a T-4?
2) If I do need to be paid in Canadian $ and get T-4 at the end of the year, I am assuming my OPT will no longer be valid?
Any help is much appreciated!
I have a similar situation but different visa. I am currently working in US on h4 ead. And I'm planning to move with my husband to Canada next month. My employer is very happy with my performance so is ok for me to work from Canada remote and we don't have Canada office.
So can I get US salary even after my h4 ead expires and I work from Canada?
1) That is at your employer's discretion. I would ask your company's accountants / HR.
2) Your salary shown on the tax slip, if in USD, will be converted to CAD to report on your Canadian tax return. Since you work for a US company, in usual cases the US payroll will withhold parts of your employment income to pay for income taxes and social security taxes. To say what type of US tax return you need to file, how to minimize your taxes, etc., I'd definitely need more information.
Let me know if you live in Vancouver though as there might be easier ways to chat!
Good luck with everything!
Hello,
Can you please share your workaround and how were you able to work in Canada? I am planning to move to Canada on PR and in US my h1b might get picked this year or might not. My US employer does not have any branch in Canada but will allow me to work from Canada remotely. Thanks!
There are a few work around available like setting up your own consulting business. If you are working remotely your permanent address must be in the US for H1B which is not your case. Many are lying and stating their address is in the US.
Great that I stumbled on this thread, but I am confused a little and hope that the experts can clarify my doubts.
Situation: I am Canadian PR and moving in March 2020 but will continue to work with my US-based employer remotely from Canada. I will be getting paid in USD in the US bank account. I will be handling North American market including the U.S. clients and may have to travel to the U.S. for business purposes so I may have to file for business visa. I will not have H1b anymore - not relevant information but though to mention it anyway.
My understanding: I think I have got two practical options. 1) Professional Employment Organization (PEO). 2) Open Personal company and continue the work as a consultant. Whatever I have researched based on that I figured there is no need of incorporate.
Option #1: Professional Employment Organization (PEO): Is a recommended and better option because things become smoother. It works as an intermediary agency to be your legal employer in Canada. The US company would route your pay through this Canadian based PEO agency who would employ you as their legal employee in Canada and then assign/place you to work for the US company as their client. This way, you would be protected by the provincial Employment Standards Act (independent contractors are not protected) and the PEO agency would make all the proper income tax deductions, CPP and EI contributions on your behalf as well as issue you a proper T4 income statement at the end of the year so you can file your taxes. Although PEO agencies charge a nominal fee for their service, it is typically paid by the US company who wants to employ you. When you go into the US(one b1/b2 visa) be sure not to say that you are meeting your US employer, or otherwise they will ask you to show a work visa and will likely turn you away for not having one. Instead, state you are going to the US to meet your client which is the actual truth whether you are an independent contractor or working as an employee through a Canadian PEO agency. Keep your visits in the US shorter than 1 week each time as US Customs may think you are entering to work in the US if you are there for weeks (or months) at a time.
Cons: US company may not be willing to have an intermediary agency because of their policy or any xyz reason. I think I will face this problem.
Option # 2: Personal Company: This option is a little complicated and will require to hire a CPA who knows how to handle the taxes properly. Taxes are the most important part and no one wants to mess around with it or take it for granted.
To open personal company start here https://www.canada.ca/en/services/business/start.html (I am yet to explore this). Below is copy-paste from another forum.
You now have this little issue of GST. Americans have no idea of what you are talking about. Just leave that out.
But, get yourself a Canadian corporate tax number. The how-to is on the link above.
Bring your two numbers, business and tax, and open a “small business” bank account at the branch where you do your normal banking. It is free.
Now you have a business where you deposit all the incoming cheques. Do the currency transfer via the bank’s internal route.
You also have to create a tax return for your company. That one makes your own salary tax free and you also deduct for all expenses. If there is a profit, you can take it out next year as “Shareholder’s dividend”. Go easy here, though. You cannot have an enormous “shareholder’s dividend” because you have underpaid your own salary. Balance this well, or you will be audited.
No, you normally would not have to declare any income to any US authority. Do not set up an account at IRS. They have a habit of chasing you for life.
Resist, even if the employer insists. You should not be an employee of theirs, but only a consultant. Do NOT allow them to take any US income tax deductions. NEVER. You are NOT living or working in USA.
You won’t get any benefits at all from being registered as an employee in USA, living in Canada.
(I know, their payroll department will go “bonkers” before someone will put them right on your status. - Been there, fought that - for a looooong time.)
P.S. Don’t for a single short moment think that you can “just take the US cheque” and accept it - no tax…. You will be found … and pay dearly. Revenue Canada has its ways…
My Questions:
- If I go with option # 2 (personal company) - I surely will have to hire a CPA who can perform all the above-mentioned steps. Is it worth hiring a CPA compared to a PEO?
- Can my US employer pay in CAD?
- Am I missing anything?
Please post your opinion and experience. This will help me and many others.
Thanks,
Chikoo.
Situation: I am Canadian PR and moving in March 2020 but will continue to work with my US-based employer remotely from Canada. I will be getting paid in USD in the US bank account. I will be handling North American market including the U.S. clients and may have to travel to the U.S. for business purposes so I may have to file for business visa. I will not have H1b anymore - not relevant information but though to mention it anyway.
My understanding: I think I have got two practical options. 1) Professional Employment Organization (PEO). 2) Open Personal company and continue the work as a consultant. Whatever I have researched based on that I figured there is no need of incorporate.
Option #1: Professional Employment Organization (PEO): Is a recommended and better option because things become smoother. It works as an intermediary agency to be your legal employer in Canada. The US company would route your pay through this Canadian based PEO agency who would employ you as their legal employee in Canada and then assign/place you to work for the US company as their client. This way, you would be protected by the provincial Employment Standards Act (independent contractors are not protected) and the PEO agency would make all the proper income tax deductions, CPP and EI contributions on your behalf as well as issue you a proper T4 income statement at the end of the year so you can file your taxes. Although PEO agencies charge a nominal fee for their service, it is typically paid by the US company who wants to employ you. When you go into the US(one b1/b2 visa) be sure not to say that you are meeting your US employer, or otherwise they will ask you to show a work visa and will likely turn you away for not having one. Instead, state you are going to the US to meet your client which is the actual truth whether you are an independent contractor or working as an employee through a Canadian PEO agency. Keep your visits in the US shorter than 1 week each time as US Customs may think you are entering to work in the US if you are there for weeks (or months) at a time.
Cons: US company may not be willing to have an intermediary agency because of their policy or any xyz reason. I think I will face this problem.
Option # 2: Personal Company: This option is a little complicated and will require to hire a CPA who knows how to handle the taxes properly. Taxes are the most important part and no one wants to mess around with it or take it for granted.
To open personal company start here https://www.canada.ca/en/services/business/start.html (I am yet to explore this). Below is copy-paste from another forum.
You now have this little issue of GST. Americans have no idea of what you are talking about. Just leave that out.
But, get yourself a Canadian corporate tax number. The how-to is on the link above.
Bring your two numbers, business and tax, and open a “small business” bank account at the branch where you do your normal banking. It is free.
Now you have a business where you deposit all the incoming cheques. Do the currency transfer via the bank’s internal route.
- Pay yourself a salary AND pay your payroll deductions to Revenue Canada BEFORE (Very important - extremely important) the 12th of any calendar month. Calculate your monthly payroll deductions here:
Payroll Deductions Online Calculator - Run your own expense account against your business. Nothing “funny here”, you may be audited. Add legitimate items such as computer supplies, paper, maintenance costs, etc. This is all tax-deductible
- Run an expense account of your travel, if you have any, with all receipts on file. Business car travel is compensated at 55 c/km. You cannot charge for going to/from a place of work. Do the GST deductions. This is tax-deductible.
https://www.canada.ca/en/revenue... - Add a charge for using a home office
Small businesses and self-employed income
It is usually “the room” size vs the house or apartment size. Example: One room out of four is 25 % of all expenses for the house or apartment. This is tax-deductible.
You also have to create a tax return for your company. That one makes your own salary tax free and you also deduct for all expenses. If there is a profit, you can take it out next year as “Shareholder’s dividend”. Go easy here, though. You cannot have an enormous “shareholder’s dividend” because you have underpaid your own salary. Balance this well, or you will be audited.
No, you normally would not have to declare any income to any US authority. Do not set up an account at IRS. They have a habit of chasing you for life.
Resist, even if the employer insists. You should not be an employee of theirs, but only a consultant. Do NOT allow them to take any US income tax deductions. NEVER. You are NOT living or working in USA.
You won’t get any benefits at all from being registered as an employee in USA, living in Canada.
(I know, their payroll department will go “bonkers” before someone will put them right on your status. - Been there, fought that - for a looooong time.)
P.S. Don’t for a single short moment think that you can “just take the US cheque” and accept it - no tax…. You will be found … and pay dearly. Revenue Canada has its ways…
My Questions:
- If I go with option # 2 (personal company) - I surely will have to hire a CPA who can perform all the above-mentioned steps. Is it worth hiring a CPA compared to a PEO?
- Can my US employer pay in CAD?
- Am I missing anything?
Please post your opinion and experience. This will help me and many others.
Thanks,
Chikoo.
You need to speak with an accountant. Just want to clarify something from the beginning. You mean that your US employer will pay you in USD that will be deposited in your USD account that is in Canada.
Yes, that's what I understood. Even if I get paid in USD, will deposit it in Canadian account. (Strange to accept this point to be honest).
I agree, better to speak to an accountant for better understanding.
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I spoke to a Toronto based CPA. As per him, the compensation bracket is also an imp factor. Few pointers
- Dual taxation: There is no such thing. Canada and US have treaty so one needs not to worry about this.
- Type of company to open to work remotely: Highly recommend to hire a CPA and go as per his advice. Please note this is important because if done correctly, it probably will help in the future in the scenario of applying for a loan/mortgage. Depending on your salary, CPA will suggest what options one has.
- PEO: Safer option. They are going to charge for their services obviously.
Wanted to update this hoping this will help many. Also, those who are experienced will correct/add to this.
Thanks,
Chikoo
Thank you for your detailed posts! This has been so helpful as I've been scouring the internet for Hours!!
I do have a question, and it's ok if you don't have an answer. First a little background; I am currently on an H1 visa and I have had a Canadian PR since 2018. I finally decided to move in June 2020 even though my company is starting my Greencard process, and I am trying to decide on either one of these 2 options:
1. Remain an employee while working remotely from Canada. I called my payroll to find out if we had payroll set-up for Canada and we don't. The system is also not set up to have Canadian addresses. So what are the implications if I decide to keep my current address (my sister lives there now) in the HRIS system? This way, I'll still have US taxes deducted from my paycheck and I'll file my CA taxes afterward. Are there any implications of this for my employer? I specified the employer because my research shows that I can get away with it as long as I declare my income to CA & US. I am trying to prevent a situation whereby my employer ends up being fined by the IRS for this arrangement.
2. Apart from the fees, is there anything else I need to be aware of when going with a PEO? Are there any advantages of going through this route that trumps maintaining my "employee" status with my current company?
Also, are there any recommended PEOs?
Thank you so much for your help!
My US employer treats me as independent contractor. He e-transfers me my compensation to my Canada bank account, withhold no tax. I file income tax with Canada.
so there few options:
- Act as a freelance individual/consultant - Bill the invoice - You company have to show it as an expense for your services and no tax implications on them. , you need to take care of the taxes of your part.
- Business Master license - Highly suggest you to take CPA help.
- Open a corporation - Highly suggest you to take CPA help.
If the system isn't equipped for Canadian address then you can witch your position as a consultant.
I am not sure if you can use your sister's address because you are not in the country. Consult with a lawyer first since US visas are getting trickier everyday. You don't want to be in a position where you get banned from entering the country.