Canada PR Holder on H1B Visa working remote in Canada

[srinikrish]

Hey Krish,
I'm in a similar situation. I consulted an accountant and got some advice on this. So the advice I got is specific to my situation but can share it here as it might be helpful.

1. Taxation in Canada - Whether or not I will be taxed in Canada will depend on my residency status as defined by cra(this is different from immigration status). For my situation since the day I moved to Canada on PR I am considered a Canadian tax resident. So even if I am getting my salary in US dollar in a US bank I have tax liability here in Canada for my global income (salary, dividends, stock gains, interest income etc.). Keep in mind that tax brackets in Canada are higher so you would be owing more taxes in Canada. I will be filing my taxes in 2021 and will pay whatever tax I owe since the time I moved to Canada.

2. Taxes in US - Taxes will continue to be taken from my payroll as usual but as I will be filing as a resident in Canada I will not be considered as a tax resident in US from the time I moved to Canada. Example: Say I moved to Canada on Nov 1 - Then Nov 1 to Dec 31 I am a Canadian tax resident but Jan 1 to Oct 31 I was a US tax resident. Due to tax treaty I will get refund for the taxes I already paid in US while I was a resident of Canada as I will be paying taxes in Canada.

3. Tax Payment Timeline - I'm not very clear on this part but ideally your taxes should go to CRA during every pay period or every quarter. Since you have been working from Feb you might be owing taxes since Feb which might be a significant amount.

Difficult part for me is I will need to pay Canada taxes out of pocket and then wait to get US tax refund which might create a cash flow issue.

I'd recommend connecting with a cross border tax specialist to get answers to your specific situation and be compliant. Keep in mind that the points are just for my specific situation and might not be applicable to you. Best to consult an accountant to get the right advice.

Thanks!

Hello,
Please let me know the Cross Border accountant who can help us on this.. I contacted S+C Partners..Their charge is very high.

Thanks,
Krish

 

[arpita.k20]

I have a similar question, therefore posting it on this thread.

I am working on H1B visa right now. I am planning to move to Windsor Ontario in coming few months. Can I work remotely from Windsor, ON on H1B? On H1B can my home address be in Canada(when I am working 100% remote)?
I want to make sure I am not violating my H1B visa status, if I move to Ontario. My plan is to stay in Windsor for 3 years till I get my Canadian citizenship(I currently have Canadian PR)
Please let me know if someone is doing this already. Any advice is appreciated

Thanks
Arpita

 

[Dattateja]

Hi Everyone,

I am also looking to get some information regarding this issue. I am Canadian PR holder since March 2019, I also have a valid H1B until Dec 31st 2021. I came back to Canada on August 1st 2020, and since then I am working remotely. I have couple of questions regarding taxes and how frequent should I travel to USA to not face any issues regarding my H1.

1. For 2019, I wasn't considered a resident for tax purposes in Canada since I haven't stayed for more than 180 days, so I wasn't obligated to file my taxes, yet I filed my taxes and even though I had universal income, my taxes in Canada were $0. In 2020 as well I stayed less than 180 days in Canada, so will this year also be same like 2019, $0 taxes in Canada?

2. In 2021 I will be staying more than 180 days in Canada so I have to file taxes in USA as non Resident and as Resident in Canada and pay the difference in Canada? I have to file this in 2022?

3. Do I have to travel to USA every month? Currently I am out of USA since October 10th 2020 and I might go back in April 2021? will that be a problem?

Thanks.

 

[localhost8100]

My H1 is valid until August 2022. I am planning to move to Canada in April 2021. Can I still draw salary in US on valid H1 and stay in Canada? Is it not gonna effect me being a non resident and drawing salary in US?

 

[srinikrish]

Timeline should not be a problem.
File tax in US between Feb first week and Apr15th. You can very well get the refund from IRS long before you can file at CRA.
File tax in Canada as the deadline is Apr30.

So you dont need to pay out of pocket on the amount equivalent to US taxes upfront in Canada as you will be deducting the USD tax amount in CRA tax return saying you already paid in US. And you would pay the rest of the tax to CRA.

If you want to avoid double tax then you are supposed to be mentioning the tax paid in US.
Also you will be deducting the net tax paid (which means that the refund is not part of the tax).

Hello,

when we file as non residents, Tax from Federal and State will be refunded Only to US citizens and not for H1B holders. But since, we worked from canada, we are bound to pay to CRA... So, what do we do in this case?.. Please guide..

Thanks,
Krish

 

[canprofus]

Hello,

when we file as non residents, Tax from Federal and State will be refunded Only to US citizens and not for H1B holders. But since, we worked from canada, we are bound to pay to CRA... So, what do we do in this case?.. Please guide..

Thanks,
Krish

you can get credit for whatever you paid in US Federal taxes and pay only the difference to CRA.. it is all the same. you cannot do anything about offsetting state taxes. if you want to save that, you need to give up on your full time employment and change to consultant.

 

[srinikrish]

you can get credit for whatever you paid in US Federal taxes and pay only the difference to CRA.. it is all the same. you cannot do anything about offsetting state taxes. if you want to save that, you need to give up on your full time employment and change to consultant.

Thanks!! what about state taxes..do i get the credit even for the state too?

 

[canprofus]

Thanks!! what about state taxes..do i get the credit even for the state too?

read my previous post again.. you cannot do anything for state taxes. no credits for that.

 

[srinikrish]

read my previous post again.. you cannot do anything for state taxes. no credits for that.

Thanks! That means i end up paying double taxes to the state..It's huge amount...But i spoke to some accountant and he says, we can take the credit for both the federal and state...Not sure, if he saying correctly..

 

[srinikrish]

This is from the one of the Tax accountants forum:
Are Federal and state taxes can be claimed on the Canadian return as foreign taxes.
True, Provided the same income is getting taxed in Canada.

 

[anirudh54]

This is from the one of the Tax accountants forum:
Are Federal and state taxes can be claimed on the Canadian return as foreign taxes.
True, Provided the same income is getting taxed in Canada.

Hi srini, I am pretty much in the same boat. I have the option of working from home from canada and i am deciding move to canade in the coming months. So did you get any info regarding the state taxes?

 

[mayple]

Hi Everyone,

I am also looking to get some information regarding this issue. I am Canadian PR holder since March 2019, I also have a valid H1B until Dec 31st 2021. I came back to Canada on August 1st 2020, and since then I am working remotely. I have couple of questions regarding taxes and how frequent should I travel to USA to not face any issues regarding my H1.

1. For 2019, I wasn't considered a resident for tax purposes in Canada since I haven't stayed for more than 180 days, so I wasn't obligated to file my taxes, yet I filed my taxes and even though I had universal income, my taxes in Canada were $0. In 2020 as well I stayed less than 180 days in Canada, so will this year also be same like 2019, $0 taxes in Canada?

2. In 2021 I will be staying more than 180 days in Canada so I have to file taxes in USA as non Resident and as Resident in Canada and pay the difference in Canada? I have to file this in 2022?

3. Do I have to travel to USA every month? Currently I am out of USA since October 10th 2020 and I might go back in April 2021? will that be a problem?

Thanks.

Does your employer know that while being on US payroll you've worked while being physically outside of the US ? You are likely going to be causing tax issues for your company if you work on the US payroll while being outside the US. Most companies do not approve of this arrangement due to tax compliance issues/burden.

 

[Dattateja]

Does your employer know that while being on US payroll you've worked while being physically outside of the US ? You are likely going to be causing tax issues for your company if you work on the US payroll while being outside the US. Most companies do not approve of this arrangement due to tax compliance issues/burden.

Yes my employer knows about this. From what I have gathered, my employer will continue to deduct my federal, state, ssn and medicaid taxes from my paycheck, and I file taxes in USA and submit those papers as proof of tax already paid and pay the remaining balance to CRA. I am not sure what issue is that you are talking about?

 

[mayple]

Yes my employer knows about this. From what I have gathered, my employer will continue to deduct my federal, state, ssn and medicaid taxes from my paycheck, and I file taxes in USA and submit those papers as proof of tax already paid and pay the remaining balance to CRA. I am not sure what issue is that you are talking about?

Ok - if your employer knows that you will be physically present in Canada the whole time you're working for them in the US payroll and they have no objection then I guess there isn't anything you can do.

Technically, there are guidelines from the Canadian revenue agency, the CRA, that requires that a non-resident employer (e.g. a US based employer) withhold and remit Canadian taxes to CRA (just like IRS expects US taxes be withheld for those employed in the US). This is a legal requirement under the tax treaty. It is an employer's obligation. And failing to meet this, they can be penalized by the CRA/Canadian government. Due to this, most established companies will not let you be on the US payroll (as a direct employee) and be fully remote in Canada. Hence, most people either transfer to a Canadian entity of the US company, or are employed through a PEO, or become independent contractors. Do you work for a large established organization? e.g. Microsoft, Apple, Google types? If you work for a small organization with only a US footprint, they may not be aware of these requirements. I work for a US headquartered international firm, and their lower level HR people did not know the answer to this either. I had to ask them 2-3 times, and they escalated internally to their legal/tax compliance department who then provided me with a detailed response.

The employee obligation (i.e. yours) is still the same - you file your Canadian taxes and declare your US income. If CRA pays attention and realizes that you were drawing income from US, but your US employer did not withhold and remit any taxes to them, they can take action.

 

[NikhilChalla]

Hey Srinikrish
I would really like to help you with this . I had same doubts as you had i found out this amazing tax website Maurice Morneau tax where they helped maybe you can reach them out. They are the best in Canada from 39 years