I am an American citizen. I am currently in the process of immigrating to Canada. I am waiting on my COPR right now. I currently work from home, data entry work. I will continue doing this when I officially immigrate to Canada. I am paid in USD to my US bank account. I know I will need to file taxes in the US come tax time because I am making USD. However, how will this work once I have immigrated to Canada? Will I be double taxed, meaning have to pay taxes in Canada too? Does anyone have any insight as to how this works? Surely I am not the only one who does this.
Questions about living in Canada but working in the US (from home)
- Thread starter christinamh
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You will have to file Canadian income tax and declare your worldwide income and be taxed on it. Unlike many other countries, the US taxes non-residents. So unfortunately no matter where you are living and no matter how long you have been outside of the US, you will have to file US taxes as well (one of the joys of being American). However you will receive credit in your US taxes for any taxes you have already paid to Canada. This avoids double taxation.
I think you missed what I said. I technically work in the US as I am paid from an American company (as an independent contractor). I make money in America. But I will now be living in Canada (continuing to work from home for the American company). I won't be making money in Canada. How does this work for taxes?scylla said:
No, scylla is correct (as per usual).
You will be taxed in Canada because you will be a resident of Canada, even though you will be working remotely. This is why you will pay tax to Canada first, followed by The U.S., (if any is required). It becomes even more fun when you have to factor in the conversion rate between the USD and CAD. Fortunately, there are sites that provide an annual (or end of year) conversion chart to make your life a bit easier.
You will be taxed in Canada because you will be a resident of Canada, even though you will be working remotely. This is why you will pay tax to Canada first, followed by The U.S., (if any is required). It becomes even more fun when you have to factor in the conversion rate between the USD and CAD. Fortunately, there are sites that provide an annual (or end of year) conversion chart to make your life a bit easier.
Also, as you must already know, as an Independent Contractor (issued a 1099-MISC), you have to pay self employment tax on anything earned over $400. You'll need to factor that into your Canada tax return, although I'm not sure how that will work for you since you won't be paying into Canada Pension Plan if you're working remotely. You'll still probably need to pay something after the first $400 (USD equivalent).
If you make more than the threshold (somewhere ~ $10,300 I think) you can start to write off 1/2 of the SE, because you are acting as employer and employee, so you get the `employer' portion to write off as an expense. Again, not sure how that translates to the CRA, especially with the conversion rate.
Too bad Cruz dropped out of the GOP race. Abolishing the IRS, in favor of a simple flat tax, was a pleasant thought, for a while.
If you make more than the threshold (somewhere ~ $10,300 I think) you can start to write off 1/2 of the SE, because you are acting as employer and employee, so you get the `employer' portion to write off as an expense. Again, not sure how that translates to the CRA, especially with the conversion rate.
Too bad Cruz dropped out of the GOP race. Abolishing the IRS, in favor of a simple flat tax, was a pleasant thought, for a while.
Ok so file in Canada first, then in the states? Even though I make money in the states only? I have read where people have said file in the states first, then Canada? I am an American citizen. I will be a Canadian permanent resident.Ponga said:
If you file in the states first you can fully expect to pay the US taxes, then when you file in Canada you can fully expect to pay some more taxes because the ones you paid in the US won't be enough to cover the ones you owe in Canada.christinamh said:
Living in Canada requires you to pay taxes to Canada, whether you're a US citizen or a citizen of Saturn. Which order you pay your taxes is up to you, however, if you file your Canadian tax return first you can then use the taxes you paid to Canada as a deduction on anything you owe to the good ole US of A. It doesn't matter where the dollar came from, it only matters that it came to you while you were a resident in Canada.
For myself, I file my Canadian return first, then I file my US return using the credits I paid to Canada to offset any taxes owed to the US. I haven't had to pay to the US in the two years I've been taxable in Canada.
Hmm this sounds alright. Especially if the dollar and loonie stays the way it is. I wouldn't mind filing Canadian first and then not having to pay in the states. But I kind of expected that since Canadian taxes are higher that I will pay some in Canada too. Like if I paid US first, got the credit for Canadian taxes. And then paid the left over amount in Canada.Alurra71 said:
I believe you would need to pay tax in Canada based on the conversion of the USD to CAD. If you made $20k in USD, you'd need to show the amount in CAD on the CRA tax forms, which would be ~$26,580 for 2015, based on information found here:christinamh said:
http://www.usexpattaxhelp.com/US-yearly-average-exchange-rates%20.php
Also, it's very important that the company that you work for, send future 1099-MISC forms to your address in Canada (and have that address on the form), otherwise you could be liable for state tax (I assume Florida), if that's the address they have for you.
Florida has no state tax, only federal. I do receive 1099-MISC each year. I don't know why it would make a difference where my 1099 is sent though?Ponga said:
It would have mattered if you have an address on the 1099-MISC in a state that does have local tax. Some freelancers (for example) have been dinged for having their 1099_MISC sent to a friend/relative in the states and being told they owe state tax.christinamh said:
Some employers think that the 1099-MISC needs to be addressed (and mailed) to a person in the U.S., which is NOT true!
Mine is always emailed to me. I didn't think it mattered anyway because when you file your taxes you put your address and where you lived for the year (to determine your state tax--if any). So I figured you would just put that you live in Canada. I mean, your employer could mail your 1099 anywhere... It doesn't necessarily mean you live there. But anyways, as for me there is no state tax in Florida. Also my 1099 is always emailed to me, not mailed.Ponga said:
Yes, but a copy is also sent to the IRS and it will have the same street address. Some employers think that it needs to be sent to a U.S. address (and showing that address on the form), which, again, is NOT correct.christinamh said:
I understand that in your particular case it's no big deal, but perhaps someone in a similar situation will see this thread that appreciates the information.
I understand. Thanks for clarifying. It's probably helpful to others.Ponga said:Yes, but a copy is also sent to the IRS and it will have the same street address. Some employers think that it needs to be sent to a U.S. address (and showing that address on the form), which, again, is NOT correct.
I understand that in your particular case it's no big deal, but perhaps someone in a similar situation will see this thread that appreciates the information.