Work remotely from Canada for US Employer

[canuck78]

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!

Reporting that you are living in the US while not actually living in the US can always be problematic.

 

[raopriety]

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.

Hi MapGia, I am also an independent contractor for a US university who sends check to my family's address in Toronto. No taxes withheld by the university. I have a Canadian PR and have no other jobs except this one. How do I file taxes with Canada? Any guidance is much appreciated! Thanks

 

[sumanthyj]

I am in a tricky situation, I have had a great interview with a US client for a remote position. Until after the interview they realized I am a Permanent Resident of Canada and not a citizen yet. So, I have explored few posts and have done my research on how to proceed and have found suggestions to go for an incorporation. But, there seems to be no document showing that's one way of doing things.

Can someone here point to where I can find something of similar documentation to show it to my client and get a job?

Thanks in advance

 

[Prasanth_11]

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.

Thanks for your detailed post, @chikoo1985 , I am in a similar situation ie., a Canadian PR and not a US Citizen or a GC holder, planning to work for a US firm remotely in Canada.

I am planning to talk to a CPA to discuss the process of opening a business and being a self-employed independent contractor and also to PEO to get their rates.

@chikoo1985 , just curious, What did you end up doing in your case?

I am based in Vancouver, any CPA you can refer?

Is there a single PEO (or) are there multiple firms doing that service? If all I need is run my paycheck through them, any idea about their rates?

Thanks in advance

 

[chikoo1985]

Thanks for your detailed post, @chikoo1985 , I am in a similar situation ie., a Canadian PR and not a US Citizen or a GC holder, planning to work for a US firm remotely in Canada.

I am planning to talk to a CPA to discuss the process of opening a business and being a self-employed independent contractor and also to PEO to get their rates.

@chikoo1985 , just curious, What did you end up doing in your case?

I am based in Vancouver, any CPA you can refer?

Is there a single PEO (or) are there multiple firms doing that service? If all I need is run my paycheck through them, any idea about their rates?

Thanks in advance

Currently I am submitting my invoice as an individual freelancer/contractor and did no open the corporation yet. The invoices I submit to my client (employer), don't charge any taxes and will pay it later once I file taxes. Your client (employer) may ask you to fill out few US tax forms for their record. I will open a corporation once my income crosses CAD30,000 in this fiscal year. I have CPA here in Toronto and going by as per his instructions.

I suggest you to find a CPA locally. That will work better.

 

[Prasanth_11]

Thanks @chikoo1985, I am working from a CPA here in Vancouver.

 

[micheal_tye]

what is tax regulation in canada

 

[chikoo1985]

what is tax regulation in canada

You may want to do your research but below are few helpful links;

https://turbotax.intuit.ca/tips/tax-advice-for-freelancers-6193

https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html

https://www.canada.ca/en/department-finance/programs/tax-policy/tax-treaties/country/united-states-america-convention-consolidated-1980-1983-1984-1995-1997-2007.html

 

[micheal_tye]

How to calculate tax in Canada anyone help for this.

 

[amit.r]

I have a Canada PR and also H1B. I currently have job with US company (W-2 employee). I know I can work remotely from Canada in such cases and I have to pay personal income tax to Canada & US separately. However, does my company also need to pay taxes to Canadian Government if I work remotely from Canada for US employers.

 

[chikoo1985]

I have a Canada PR and also H1B. I currently have job with US company (W-2 employee). I know I can work remotely from Canada in such cases and I have to pay personal income tax to Canada & US separately. However, does my company also need to pay taxes to Canadian Government if I work remotely from Canada for US employers.

I am assuming you will get paid in the Canadian account. If you work remotely from Canada then you can become a freelance consultant (if your income is below CAD 90,000) or Open incorporation if your income is more than CAD 90,000 and raise an invoice to your US client (your employer) each month. The invoice will be without HST. At the end of the year, you take care of all the taxes at your end in Canada. US and Canada have a treaty so you need NOT to pay dual taxes. In this case US employer need not to worry about any kind of taxes. They may ask you to fill out a couple of forms (probably w-8 BEN) for the same.

I would highly recommend hiring a local CPA who understands these cross-border arrangements. There are plenty

Once you start working remotely from Canada, there is no need for H1-b. You can probably use the current H1B's remaining days in future if needed.

 

[amit.r]

I am assuming you will get paid in the Canadian account. If you work remotely from Canada then you can become a freelance consultant (if your income is below CAD 90,000) or Open incorporation if your income is more than CAD 90,000 and raise an invoice to your US client (your employer) each month. The invoice will be without HST. At the end of the year, you take care of all the taxes at your end in Canada. US and Canada have a treaty so you need NOT to pay dual taxes. In this case US employer need not to worry about any kind of taxes. They may ask you to fill out a couple of forms (probably w-8 BEN) for the same.

I would highly recommend hiring a local CPA who understands these cross-border arrangements. There are plenty

Once you start working remotely from Canada, there is no need for H1-b. You can probably use the current H1B's remaining days in future if needed.

I cant be consultant. I want to continue as a W-2 employee and don't want to change that due to some other issues. Salary is greater than >90K CAD per year

 

[chikoo1985]

I cant be consultant. I want to continue as a W-2 employee and don't want to change that due to some other issues. Salary is greater than >90K CAD per year

Oh ok. hope some expert replies to this. I have no idea.
Also, would highly recommend consulting a lawyer for this. You don't want to mess this up. I know for the fact that the person needs to be present in the country (except vacations) if s/he has an H1b visa. I think the company won't be able to pay you a salary. there are people who work in Michigan and stay near the border in Canada and have to do the daily commute to be present at the work location when borders were open. My point is H1B can not permit remote work.

 

[justinline]

I cant be consultant. I want to continue as a W-2 employee and don't want to change that due to some other issues. Salary is greater than >90K CAD per year

If you are commuting lets say every day to work for all practical purposes you are working in US at specified location, all the taxes will be deducted for that state and of course the Federal, SS and Medicare. The company should not be worried about taxation in Canada.
You need to take care of tax fillings in both US and Canada.
Lot of people do the commuting between say Windsor and Detroit and follow the same pattern.

Now the case with remote work and as a employee becomes tricky, if the company wants to keep you as employee and still working in Canada, the right way to do that is run payroll for you in Canada, either registering themselves or through some PEO, following all the rules and regulations of Canada. That will be burdensome for company and based on a friends experience those PEO services are not cheap either.

Now the easiest route is to convert to contractor and just get paid as one man company.

Having said that, I do know lot of people who just kept working in Canada with payroll in US, remote working all the time, travelling once a while. CRA I haven't heard giving anyone hard time yet.......yet!! Some did for whole duration till they got citizenship and some are doing even after that. As of now I haven't heard they had any issues as of yet.

 

[mastersboy]

If you are commuting lets say every day to work for all practical purposes you are working in US at specified location, all the taxes will be deducted for that state and of course the Federal, SS and Medicare. The company should not be worried about taxation in Canada.
You need to take care of tax fillings in both US and Canada.
Lot of people do the commuting between say Windsor and Detroit and follow the same pattern.

Now the case with remote work and as a employee becomes tricky, if the company wants to keep you as employee and still working in Canada, the right way to do that is run payroll for you in Canada, either registering themselves or through some PEO, following all the rules and regulations of Canada. That will be burdensome for company and based on a friends experience those PEO services are not cheap either.

Now the easiest route is to convert to contractor and just get paid as one man company.

Having said that, I do know lot of people who just kept working in Canada with payroll in US, remote working all the time, travelling once a while. CRA I haven't heard giving anyone hard time yet.......yet!! Some did for whole duration till they got citizenship and some are doing even after that. As of now I haven't heard they had any issues as of yet.

Sorry for stupid questions, but based on your comment above, I as wondering:

1. Why would CRA give anyone hard time for this? As long as they disclose the U.S. income and pay any Canadian taxes, they should be OK? Am I missing something obvious here such as implications on being "tax resident" in Canada etc. that could have impact on PR renewal/citizenship application?
2. Would a U.S. citizen who is also Canadian PR, working for a U.S. firm as a regular employee (W-2), but working remotely from Canada be an issue for Canadian PR renewal/citizenship application? I understand that there are several folks who live near border who do this? Or do border commuters get special privileges?
3. Finally, I am interested to know if a U.S. citizen who is also Canadian PR, their "employee" status in the U.S. employer payroll (if they work remotely from Canada), have any impact on Canadian PR renewal or citizenship at all or does CIC only care about actual physical days present in Canada (and do not care about your U.S. tax status)?
Thanks!