Tax question Help!

[1212WEST1212]

Im currently in the US and i been approved for Canada PR. I will be moving next month and already gave work my 2 week notice. However, my manager needs me to continue to work for another 3 months or so and has offered me the option to work as a contractor.

He mentioned that i can work from home in canada and i would just submit a form with the hours worked to the accounting department and they will pay me based on my worked hours. Now, since i would be a contractor i won't get taxes taken out, and i know it will be my responsibility to report this income to the canadian revenue dept (CRA). My assumption is that i will only have to pay canadian tax but what do i need to do when taxes are due?

Does anyone have any experience with this? the company does not have presence in Canada so they can't pay me that way. Also i would not be traveling to the US and i would no longer be an employee receiving benefits.

I want to make sure i do things right and i don't want to accept this contract work if its going to affect me with taxes. Any help would be appreciated.

 

[canuck_in_uk]

Im currently in the US and i been approved for Canada PR. I will be moving next month and already gave work my 2 week notice. However, my manager needs me to continue to work for another 3 months or so and has offered me the option to work as a contractor.

He mentioned that i can work from home in canada and i would just submit a form with the hours worked to the accounting department and they will pay me based on my worked hours. Now, since i would be a contractor i won't get taxes taken out, and i know it will be my responsibility to report this income to the canadian revenue dept (CRA). My assumption is that i will only have to pay canadian tax but what do i need to do when taxes are due?

You will need to file your US tax return and pay whatever taxes you owe there. You would then need to file your Canadian tax return, declaring your US income and the tax you already paid. CRA will credit you for the tax paid in the US, so you would only owe the difference if the Canadian taxes are more (which they generally are).

 

[1212WEST1212]

You will need to file your US tax return and pay whatever taxes you owe there. You would then need to file your Canadian tax return, declaring your US income and the tax you already paid. CRA will credit you for the tax paid in the US, so you would only owe the difference if the Canadian taxes are more (which they generally are).

Thank you for your reply, just follow up question. Would this still be the case if i'm not a US citizen? I currently have a US work visa, once i move to Canada the US work visa gets cancelled. One I move I will be activating my Canadian permanent residence status. I will be officially leaving my work in 2 weeks and if i accept the contract it would be once i'm in Canada. Since the contract offer and the work will strictly be done in Canada and i would be a consultant rather than an employee would I still have to deal with the IRS? I keep hearing different stories in other forums, im not sure if i should just directly contact a tax accountant :/.

 

[canuck_in_uk]

Thank you for your reply, just follow up question. Would this still be the case if i'm not a US citizen? I currently have a US work visa, once i move to Canada the US work visa gets cancelled. One I move I will be activating my Canadian permanent residence status. I will be officially leaving my work in 2 weeks and if i accept the contract it would be once i'm in Canada. Since the contract offer and the work will strictly be done in Canada and i would be a consultant rather than an employee would I still have to deal with the IRS? I keep hearing different stories in other forums, im not sure if i should just directly contact a tax accountant :/.

As you will be paid in the US while working for a US company, I'm sure that the IRS is going to want their cut.

I would suggest you just contact the IRS to ask.