Remote work from Canada to USA employer on study permit

[Reddy0856]

Hi

I recently got a request from my USA old employer to help them in one project which is 6 months long.I explained to her that I am no longer in the USA but in Canada doing my Pg Diploma(2yrs) and so on a study permit and I still have one year study (July-2021) So I can only work for 20 hours. She is ok with that and I am looking to consider working.This is a part-time work. But I have questions on how the payment, taxes, and all. My questions are

1. I do not have legal status in the USA now. So I cant work and get paid. So What options do I have to get paid.?I have Chase bank account in the USA, Scotia bank in Canada.
I read about Canada payroll and all, so I asked my manager to work with Canada consulting and they will make my payment. But she is not interested in that due to some reasons and I cannot force her. So I personally approached a Canada consulting company(my friend's brother) to run the payroll. They agreed with a fee. So my question is, where should my USA manager transfer the money to? My Canada account or to that consulting company?? They never did this so we are not sure. Please help.
Or if my Manager cannot transfer to Canada account, can he transfer to my bank in the USA and I will transfer to a consulting company and they will transfer to my Canada account(i know this is a long process ..but just checking on different options).
3. If Canada consulting runs my payroll, then I get T4 from the consulting company and pay taxes I Canada right? just want to make sure as I don't want to mess up with anything. So this means I am working part-time 20hrs as per my study permit. Right?? I am not making much amount but just want to check if we have any limitations on earning as a student. Thank you.

 

[temp11]

As long as you are a full time student (taking 3 courses and more) during school semesters, you can work part time 20hrs per week. During scheduled breaks like summer, reading week, Christmas etc, you are free to work full-time hours (as much hours as you want to work). You are allowed to work for companies in USA but since they aren't in Canada, you will have to work as an INDEPENDENT CONTRACTOR and you will be in charge of filing your own tax. Your employer needs to give you a document from the USA that is equivalent to a Canadian T4 (they will know what document to provide an independent contractor). You will then call HR block to see how you can file your taxes as an independent contractor with the doc they gave you. The money goes directly to your bank account.

 

[Reddy0856]

Thank you for replying.Yeah. I am aware of the hours. Still, I don't want to complicate so I decided to work only 20hrs weekly. When you say in charge of filling your own taxes, you meant tax filing in Canada? in the USA , W2 is given for tax filing. Can I use that to file taxes in Canada?Any idea on where should I ask my manager to transfer my salary to? Canada bank account or American bank??

 

[canuck78]

Thank you for replying.Yeah. I am aware of the hours. Still, I don't want to complicate so I decided to work only 20hrs weekly. When you say in charge of filling your own taxes, you meant tax filing in Canada? in the USA , W2 is given for tax filing. Can I use that to file taxes in Canada?Any idea on where should I ask my manager to transfer my salary to? Canada bank account or American bank??

Don’t believe you can be self-employed as a student. Someone can clarify. There are a few ways to set this up including setting up your own consulting company. You will need to do more research.

 

[Copingwithlife]

Hi

I recently got a request from my USA old employer to help them in one project which is 6 months long.I explained to her that I am no longer in the USA but in Canada doing my Pg Diploma(2yrs) and so on a study permit and I still have one year study (July-2021) So I can only work for 20 hours. She is ok with that and I am looking to consider working.This is a part-time work. But I have questions on how the payment, taxes, and all. My questions are

1. I do not have legal status in the USA now. So I cant work and get paid. So What options do I have to get paid.?I have Chase bank account in the USA, Scotia bank in Canada.
I read about Canada payroll and all, so I asked my manager to work with Canada consulting and they will make my payment. But she is not interested in that due to some reasons and I cannot force her. So I personally approached a Canada consulting company(my friend's brother) to run the payroll. They agreed with a fee. So my question is, where should my USA manager transfer the money to? My Canada account or to that consulting company?? They never did this so we are not sure. Please help.
Or if my Manager cannot transfer to Canada account, can he transfer to my bank in the USA and I will transfer to a consulting company and they will transfer to my Canada account(i know this is a long process ..but just checking on different options).
3. If Canada consulting runs my payroll, then I get T4 from the consulting company and pay taxes I Canada right? just want to make sure as I don't want to mess up with anything. So this means I am working part-time 20hrs as per my study permit. Right?? I am not making much amount but just want to check if we have any limitations on earning as a student. Thank you.

The W2 would be useless to file with your taxes in Canada . It’s an American slip, and would be disregarded since it would have American deductions FICA etc . When you say this consulting company has agreed to do your payroll , in what capacity ? You as an employee , and they’ll issue you a t slip, or just calculate the deductions ?
You first have to decide , are you going to be an employee , or as a sole proprietor?
If you’re a sole proprietor, you’d file your taxes as usual, then do a T2125 for the business/professional income . From that you’d pay any taxes on the income . If you’re going to be an “ employee “ of this consulting firm , they’d deduct all taxes etc, remit to the government and they’d issue you a T4 at the end of the year .
Or they could issue you a T4A for services rendered. They are issued if the amount paid is over $500 in the year OR taxes are deducted . You’d use that then when you file your taxes in replace of a T4.
As mentioned you could set up your own consulting firm as a corporation, and take payroll thru that entity . But I HIGHLY advise you to carefully think about that . It’s expensive, you must file corporation taxes each year, issue t slips etc , all that for only 20 hrs a week. Btw , to file a corporation income tax return each year thru an accountant, can set you back $800-1000 bucks

 

[temp11]

Don’t believe you can be self-employed as a student. Someone can clarify. There are a few ways to set this up including setting up your own consulting company. You will need to do more research.

According to IRCC "Study permit holders can be self-employed if their study permit allows them to work off-campus." See ->

https://twitter.com/i/web/status/1009818269421883394

 

[temp11]

Thank you for replying.Yeah. I am aware of the hours. Still, I don't want to complicate so I decided to work only 20hrs weekly. When you say in charge of filling your own taxes, you meant tax filing in Canada? in the USA , W2 is given for tax filing. Can I use that to file taxes in Canada?Any idea on where should I ask my manager to transfer my salary to? Canada bank account or American bank??

You are welcome.
According to IRCC "Study permit holders can be self-employed if their study permit allows them to work off-campus." Tell them to send it to your US Bank account (if you don't have one, then use Canadian bank). But first, why don't you contact HRBlock on the phone tomorrow? They know what form you are to file when you are working as a freelancer/independent contractor AND what you need from your employer. Trust me, call them. It's easy and not complicated.

See ->

https://twitter.com/i/web/status/1009818269421883394

 

[canuck78]

You are welcome.
According to IRCC "Study permit holders can be self-employed if their study permit allows them to work off-campus." Tell them to send it to your US Bank account (if you don't have one, then use Canadian bank). But first, why don't you contact HRBlock on the phone tomorrow? They know what form you are to file when you are working as a freelancer/independent contractor AND what you need from your employer. Trust me, call them. It's easy and not complicated.

See ->

https://twitter.com/i/web/status/1009818269421883394

Would pay to sit down with an accountant about how to structure your business. HR block employees often know how to do basic tax preparation.

 

[Reddy0856]

Don’t believe you can be self-employed as a student. Someone can clarify. There are a few ways to set this up including setting up your own consulting company. You will need to do more research.

Well.. I don't want go through all the hassles of independent contractor or setting up as an own consulting company. I don't think that's even worth it to do for 20hrs part time work

 

[kklamondin]

It should be the same as being a contractor in the US and receiving a 1099 tax document. Depending on the type of work you do, you may not have to have a corporation and just be a sole proprietor. That would depend on if you have anything you could be liable for in what you do. I'm in a similar situation and have spoken to an accountant in the US and Canada. The easiest way to do it is to be paid as a consultant/contractor and then you have to figure out your taxes. Speaking with HR Block or an accountant is the first step. I was able to speak with them w/o having to pay, when it's time to do taxes, then I'll pay them to do them. Also, if you're a US citizen, you always have to file taxes even if you no longer live in the US. It doesn't mean you have to pay taxes, but you need to file a return no matter what.

 

[canuck78]

It should be the same as being a contractor in the US and receiving a 1099 tax document. Depending on the type of work you do, you may not have to have a corporation and just be a sole proprietor. That would depend on if you have anything you could be liable for in what you do. I'm in a similar situation and have spoken to an accountant in the US and Canada. The easiest way to do it is to be paid as a consultant/contractor and then you have to figure out your taxes. Speaking with HR Block or an accountant is the first step. I was able to speak with them w/o having to pay, when it's time to do taxes, then I'll pay them to do them. Also, if you're a US citizen, you always have to file taxes even if you no longer live in the US. It doesn't mean you have to pay taxes, but you need to file a return no matter what.

Would not recommend HR Block for anything but basic tax preparation. They are usually tax preparers not accountants.

 

[kklamondin]

canuck78 - agreed. Just mentioned it because others have. Might be a good place to start for basic information, but in the end a qualified accountant is best.

 

[Reddy0856]

It should be the same as being a contractor in the US and receiving a 1099 tax document. Depending on the type of work you do, you may not have to have a corporation and just be a sole proprietor. That would depend on if you have anything you could be liable for in what you do. I'm in a similar situation and have spoken to an accountant in the US and Canada. The easiest way to do it is to be paid as a consultant/contractor and then you have to figure out your taxes. Speaking with HR Block or an accountant is the first step. I was able to speak with them w/o having to pay, when it's time to do taxes, then I'll pay them to do them. Also, if you're a US citizen, you always have to file taxes even if you no longer live in the US. It doesn't mean you have to pay taxes, but you need to file a return no matter what.

Thank you.

No I am not a citizen of the US or Canada.I am on a study permit in Canada. This is a web development work (Coding). when you say the easiest way to do is to be paid as a consultant, what do you mean? Consultant for a Canada company? Could you please elaborate on it.Thank you.

 

[kklamondin]

You're a consultant or contractor to the US company. They pay you a fee for your services. You can have them send you a check and then you deposit it in your Canada bank account. The bank can handle the currency exchange. When you are paid as a consultant or contractor, you are not an employee of that company, so they won't take taxes out. You are responsible for paying the taxes to Canada. Typically you would get paid more upfront since the employer is not taking the taxes out for you. What you would receive is your "gross income" versus what US employees usually get which is their "net income" (taxes removed). At the end of the day, you should call an accountant and see if they're willing to give you some information over the phone. When it's time to pay taxes, you may wish to hire them to help you.

 

[Reddy0856]

Ok

You're a consultant or contractor to the US company. They pay you a fee for your services. You can have them send you a check and then you deposit it in your Canada bank account. The bank can handle the currency exchange. When you are paid as a consultant or contractor, you are not an employee of that company, so they won't take taxes out. You are responsible for paying taxes to Canada. Typically you would get paid more upfront since the employer is not taking the taxes out for you. What you would receive is your "gross income" versus what US employees usually get which is their "net income" (taxes removed). At the end of the day, you should call an accountant and see if they're willing to give you some information over the phone. When it's time to pay taxes, you may wish to hire them to help you.

Oh, I see!! I got what you are saying.
But sending a check is difficult. I will check this with my US company..But If my manager wishes to make payment online, which bank should I consider? Canada bank? or a USA bank?

I am thinking to hire a Canada consultancy company that just runs my payroll (at some fees) and shows as their employee. Is this a bad idea??I will see an accountant to discuss more.