US citizen in Canada (PR) working for US company as an FTE paid into US Bank

[canuck78]

Yea I may not be speaking the terms 100% correct but at the end of the day the tax credit makes it so I get the US back and then pay Canada. I did things a bit different in tax year 2019 vs 2020 in relation to what actually is taken out of my paycheck. Yes employed by US employer.

You should still owe US taxes unless you are prepaying them or making a pretty low salary.

 

[jclarke99]

You should still owe US taxes unless you are prepaying them or making a pretty low salary.

Why? Yes, typically U.S. taxes would be deducted from paychecks. But the goal would be to claw all of that back at tax time, using the tax treaty credit, whereby Canada would actually obtain the tax revenue. As chs has discussed previously, U.S. tax deductions from pay checks together with quarterly tax payments to CRA would mean double taxation during the year and a need to claw back the U.S. tax payments at tax time. So, an arrangement to not have U.S. tax withheld during the year makes sense if an employer is open to that.

I'm under the impression that you believe that the U.S. should actually get the bulk of the tax revenue and that most of the tax treaty credit would be applied to Canadian taxes. I don't believe that's the case given Canadian residency. After all, health care, schools, infrastructure, etc. is not free.

 

[canuck78]

Why? Yes, typically U.S. taxes would be deducted from paychecks. But the goal would be to claw all of that back at tax time, using the tax treaty credit, whereby Canada would actually obtain the tax revenue. As chs has discussed previously, U.S. tax deductions from pay checks together with quarterly tax payments to CRA would mean double taxation during the year and a need to claw back the U.S. tax payments at tax time. So, an arrangement to not have U.S. tax withheld during the year makes sense if an employer is open to that.

I'm under the impression that you believe that the U.S. should actually get the bulk of the tax revenue and that most of the tax treaty credit would be applied to Canadian taxes. I don't believe that's the case given Canadian residency. After all, health care, schools, infrastructure, etc. is not free.

If you are working on H1B IRS gets paid first then CRA so yes the bulk of taxation often goes to US. It doesn't make much sense because of the access to services.

 

[CaliMoon123]

You should still owe US taxes unless you are prepaying them or making a pretty low salary.

IRS form 673, 401K contributions, and mortgage interests (for property in Canada) can all reduce the amount of taxes owed to Uncle Sam.

I am also a US citizen with PR in Canada, working for small US company remotely. Paid into a US account.

Starting in 2022, after I make my first filing, I will probably need to start making quarterly payments to CRS for estimated 2023 taxes.

 

[rthtor]

If you are working on H1B IRS gets paid first then CRA so yes the bulk of taxation often goes to US. It doesn't make much sense because of the access to services.

@canuck78, I'm in the exact same situation - US H1B working remotely from Can for US corp with USD deposited in US account.
How many tax years have you filed taxes for using ^method? How did it work out? Were you audited by CRA?

The Q about who gets the bulk tax revenue and who deals with the ForeignTaxCredit is still open.
I'm seeing conflicting answers not only in this thread, but also another one.
Exhibit A - https://www.canadavisa.com/canada-immigration-discussion-board/threads/work-remotely-from-canada-for-us-employer.97746/post-2873141
vs
Exhibit B - https://www.canadavisa.com/canada-immigration-discussion-board/threads/work-remotely-from-canada-for-us-employer.97746/post-3013224

Yea I may not be speaking the terms 100% correct but at the end of the day the tax credit makes it so I get the US back and then pay Canada. I did things a bit different in tax year 2019 vs 2020 in relation to what actually is taken out of my paycheck. Yes employed by US employer.

@deibler, could you please shed light on which mode you used and how it worked out eventually? Also, what was different in 2019 vs 2020?