US Citizen telecommuting for a US company from Canada as a Permanent Resident

[JonnyBoy123]

I’m a US citizen and I currently work for a US employer in San Francisco. COVID19 has opened the door to remote work for me. My wife is a dual citizen and we’re looking to move to Halifax, NS. I would love to keep my current job and simply work remotely from Canada. My employer does have a Canadian presence but I would have nothing to do with them or their Canadian clients. My work would be solely for the SF office and our clients. I’m curious about things like:

How could I legally be paid? USD or CAD, into a US or Canadian bank?
How could payroll be handled? Are US taxes deducted by my employer? How would I handle my Canadian tax obligations?
Would they have to conform to provincial labor laws, or could I operate under US laws?
Does my employer have to do anything differently for you than they would if I worked remotely from the US? Or can I handle any necessary differences on my end without them having to worry about it?
How would health benefits, etc, handled?

I had a conversation with a colleague who worked remotely from China for about a decade. She said she just purchased a “digital” US address in a state without income tax, and had her employer pay her in USD in a US bank, and deduct payroll taxes as though she were living in that state. She simply made sure to pay her federal taxes each year as she normally would have. To me this seems like the best option, but I wonder if it would run afoul of Canadian law. Ideally, I would just have them pay me into a US bank account (maybe RBC US) and I would transfer the money to a Canadian bank monthly. I would waive any US health benefits, and would pay any Canadian taxes myself as required by law.

Any information you could provide would be immensely helpful!

 

[cohenivan124]

I’m a US citizen and I currently work for a US employer in San Francisco. COVID19 has opened the door to remote work for me. My wife is a dual citizen and we’re looking to move to Halifax, NS. I would love to keep my current job and simply work remotely from Canada. My employer does have a Canadian presence but I would have nothing to do with them or their Canadian clients. My work would be solely for the SF office and our clients. I’m curious about things like:

How could I legally be paid? USD or CAD, into a US or Canadian bank?
USD - you'll pay all taxes and social security in USA. You'll have to declare everything when you file your taxes in both countries. You won't be double taxed though.

How could payroll be handled? Are US taxes deducted by my employer? How would I handle my Canadian tax obligations?
You won't have any canadian onligation if all taxes are paid in USA. When you file your canadian taxes and if you were taxes at lesser rate in USA then canadian govt will tax you. Hire a tax consultant who knows IRS and CRA regulations.

Would they have to conform to provincial labor laws, or could I operate under US laws?
As per canadian govt you are not employed in canada so you aint eligible to benefit from provincial labor laws. (i maybe wrong here).

Does my employer have to do anything differently for you than they would if I worked remotely from the US? Or can I handle any necessary differences on my end without them having to worry about it?
I don't think your employer will need anything except a mailing address in USA/Canada

How would health benefits, etc, handled? If your are a PR in canada (spouse of canadian citizen) then you'll get health benefit

I had a conversation with a colleague who worked remotely from China for about a decade. She said she just purchased a “digital” US address in a state without income tax, and had her employer pay her in USD in a US bank, and deduct payroll taxes as though she were living in that state. She simply made sure to pay her federal taxes each year as she normally would have. To me this seems like the best option, but I wonder if it would run afoul of Canadian law. Ideally, I would just have them pay me into a US bank account (maybe RBC US) and I would transfer the money to a Canadian bank monthly. I would waive any US health benefits, and would pay any Canadian taxes myself as required by law.

Any information you could provide would be immensely helpful!

 

[JonnyBoy123]

Thank you, this is helpful information. I was under the impression that most of my tax liability would be in Canada because that is where I would be living permanently. I’ll have to talk with a tax professional, as you suggest.

 

[canuck78]

I’m a US citizen and I currently work for a US employer in San Francisco. COVID19 has opened the door to remote work for me. My wife is a dual citizen and we’re looking to move to Halifax, NS. I would love to keep my current job and simply work remotely from Canada. My employer does have a Canadian presence but I would have nothing to do with them or their Canadian clients. My work would be solely for the SF office and our clients. I’m curious about things like:

How could I legally be paid? USD or CAD, into a US or Canadian bank?
How could payroll be handled? Are US taxes deducted by my employer? How would I handle my Canadian tax obligations?
Would they have to conform to provincial labor laws, or could I operate under US laws?
Does my employer have to do anything differently for you than they would if I worked remotely from the US? Or can I handle any necessary differences on my end without them having to worry about it?
How would health benefits, etc, handled?

I had a conversation with a colleague who worked remotely from China for about a decade. She said she just purchased a “digital” US address in a state without income tax, and had her employer pay her in USD in a US bank, and deduct payroll taxes as though she were living in that state. She simply made sure to pay her federal taxes each year as she normally would have. To me this seems like the best option, but I wonder if it would run afoul of Canadian law. Ideally, I would just have them pay me into a US bank account (maybe RBC US) and I would transfer the money to a Canadian bank monthly. I would waive any US health benefits, and would pay any Canadian taxes myself as required by law.

Any information you could provide would be immensely helpful!

If your company has Canadian presence you will need to become a PR before you can remotely work from Canada. Without being a PR you would not have access to health coverage in NS.

 

[deibler]

Hi JonnyBoy, I am also a US citizen and I work for a company in San Francisco actually. I live in Calgary, Alberta. My fiance is a Canadian citizen and I received my PR in Canada in May 2019.

Answers:

How could I legally be paid? USD or CAD, into a US or Canadian bank?
--You'd have to talk to your employer. My employer pays me in US direct deposit in to a US checking account I have with TD. I also have a Canadian TD account. I use my credit card with no international transaction fees to purchase everything possible. Then I pay my credit card off from my US account. I use credit cards to get points/rewards so using a credit card in this manner isn't a problem for me (I don't maintain a balance). I get that doesn't work for everyone.

How could payroll be handled? Are US taxes deducted by my employer? How would I handle my Canadian tax obligations?
--Your company would need to update your account to specify whatever designation that you don't live in the US. Then, you won't see state tax deducted anymore. My company also allows us to specify that we don't have federal tax obligation in the US and we can elect to NOT have federal tax taken out.
What ends up happening: US/Canada tax treaty prevents double taxation. All US federal taxes taken out essentially (this is a HUGE simplification) get returned to you and then you pay what you owe to Canada.
--I DON'T recommend you do your taxes yourself the first year or two. It's expensive to get a CPA do cross-border taxes but you don't want to mess it up. The way things will look the first year when you spend x time in the US and y time in Canada will make the tax thing different than it is if you were in Canada for a full year. Also my opinion is that you can read every book and article about the tax treaties and still be confused. I still don't understand how it all works. So I just hire a CPA.
--What I've done since I moved here is pay federal tax to the US and then save $x away to cover expected shortfall to Canada come tax time. Taxes in Canada are pretty high but if you were living in California it might be pretty comparable.

Would they have to conform to provincial labor laws, or could I operate under US laws?
--Hmmmm idk. Like what?

Does my employer have to do anything differently for you than they would if I worked remotely from the US? Or can I handle any necessary differences on my end without them having to worry about it?
--Hmmmm idk. Like what?

How would health benefits, etc, handled?
--Well here in Canada healthcare is not through employment, I was eligible for a provincial healthcare card in Alberta as soon as I showed a stamp in my passport. I was a VISITOR and had no immigration yet. They did put an expiration date of 6 months on it though. So once I got my PR I got a permanent card. Not sure the rules over in NS.

I had a conversation with a colleague who worked remotely from China for about a decade. She said she just purchased a “digital” US address in a state without income tax, and had her employer pay her in USD in a US bank, and deduct payroll taxes as though she were living in that state. She simply made sure to pay her federal taxes each year as she normally would have. To me this seems like the best option, but I wonder if it would run afoul of Canadian law. Ideally, I would just have them pay me into a US bank account (maybe RBC US) and I would transfer the money to a Canadian bank monthly. I would waive any US health benefits, and would pay any Canadian taxes myself as required by law.
--Not sure what you or your friend are getting at here. If you live in Canada for a full year and file a tax return, they want you to pay federal and provincial no matter where your money is.

Any information you could provide would be immensely helpful!
--In my situation (not sure about everyone) as soon as CRA (Canadian IRS) received a full year tax return from me and saw I was paying back 2019 taxes in 2020 they've set me up on forced installments for 2020. What this means is I owe them for 2019 by September 1st. Then in like March 2021 I owe them for anticipated Q1 taxes for 2020. This way they get money I owe them more quickly. It's not an issue because I save a lot per paycheck to pay CRA.
--Expect little to no support from IRS when you live abroad. If you file taxes with a CPA in Canada they don't have privileges to file electronically so your return will go to the US old fashioned snail mail style.
--DO NOT TRANSFER MONEY US>CAD THROUGH BANKS!!! They charge insane fees. I use XE & transferwise and just use whichever has a better rate. But transferwise is faster so I usually use them.

I'll let other people chime in on what I am doing wrong I'm new at this too.

Please ask more questions I am happy to help. I did this all alone/solo and it was hard sometimes.

 

[omatthews]

Hi JonnyBoy, I am also a US citizen and I work for a company in San Francisco actually. I live in Calgary, Alberta. My fiance is a Canadian citizen and I received my PR in Canada in May 2019.

Answers:

How could I legally be paid? USD or CAD, into a US or Canadian bank?
--You'd have to talk to your employer. My employer pays me in US direct deposit in to a US checking account I have with TD. I also have a Canadian TD account. I use my credit card with no international transaction fees to purchase everything possible. Then I pay my credit card off from my US account. I use credit cards to get points/rewards so using a credit card in this manner isn't a problem for me (I don't maintain a balance). I get that doesn't work for everyone.

How could payroll be handled? Are US taxes deducted by my employer? How would I handle my Canadian tax obligations?
--Your company would need to update your account to specify whatever designation that you don't live in the US. Then, you won't see state tax deducted anymore. My company also allows us to specify that we don't have federal tax obligation in the US and we can elect to NOT have federal tax taken out.
What ends up happening: US/Canada tax treaty prevents double taxation. All US federal taxes taken out essentially (this is a HUGE simplification) get returned to you and then you pay what you owe to Canada.
--I DON'T recommend you do your taxes yourself the first year or two. It's expensive to get a CPA do cross-border taxes but you don't want to mess it up. The way things will look the first year when you spend x time in the US and y time in Canada will make the tax thing different than it is if you were in Canada for a full year. Also my opinion is that you can read every book and article about the tax treaties and still be confused. I still don't understand how it all works. So I just hire a CPA.
--What I've done since I moved here is pay federal tax to the US and then save $x away to cover expected shortfall to Canada come tax time. Taxes in Canada are pretty high but if you were living in California it might be pretty comparable.

Would they have to conform to provincial labor laws, or could I operate under US laws?
--Hmmmm idk. Like what?

Does my employer have to do anything differently for you than they would if I worked remotely from the US? Or can I handle any necessary differences on my end without them having to worry about it?
--Hmmmm idk. Like what?

How would health benefits, etc, handled?
--Well here in Canada healthcare is not through employment, I was eligible for a provincial healthcare card in Alberta as soon as I showed a stamp in my passport. I was a VISITOR and had no immigration yet. They did put an expiration date of 6 months on it though. So once I got my PR I got a permanent card. Not sure the rules over in NS.

I had a conversation with a colleague who worked remotely from China for about a decade. She said she just purchased a “digital” US address in a state without income tax, and had her employer pay her in USD in a US bank, and deduct payroll taxes as though she were living in that state. She simply made sure to pay her federal taxes each year as she normally would have. To me this seems like the best option, but I wonder if it would run afoul of Canadian law. Ideally, I would just have them pay me into a US bank account (maybe RBC US) and I would transfer the money to a Canadian bank monthly. I would waive any US health benefits, and would pay any Canadian taxes myself as required by law.
--Not sure what you or your friend are getting at here. If you live in Canada for a full year and file a tax return, they want you to pay federal and provincial no matter where your money is.

Any information you could provide would be immensely helpful!
--In my situation (not sure about everyone) as soon as CRA (Canadian IRS) received a full year tax return from me and saw I was paying back 2019 taxes in 2020 they've set me up on forced installments for 2020. What this means is I owe them for 2019 by September 1st. Then in like March 2021 I owe them for anticipated Q1 taxes for 2020. This way they get money I owe them more quickly. It's not an issue because I save a lot per paycheck to pay CRA.
--Expect little to no support from IRS when you live abroad. If you file taxes with a CPA in Canada they don't have privileges to file electronically so your return will go to the US old fashioned snail mail style.
--DO NOT TRANSFER MONEY US>CAD THROUGH BANKS!!! They charge insane fees. I use XE & transferwise and just use whichever has a better rate. But transferwise is faster so I usually use them.

I'll let other people chime in on what I am doing wrong I'm new at this too.

Please ask more questions I am happy to help. I did this all alone/solo and it was hard sometimes.

Hi there! Hoping you can provide a little insight to me. I am in a very similar situation. I am an American citizen awaiting my Canadian PR. I am currently also residing in Calgary Alberta but on a visitor basis right now (as I wait my PR). Currently I am still working for my US based company, but because I am merely visiting, I still have my US address on file. My boss and others in the company know that I am in Canada right now and "live here", however, I'm not sure that they are aware that once I get my PR it might complicate things. My question is, once I become a PR, will this be an issue for my employer once I switch my address to a Canadian address? I have read in other threads that some companies did not want to keep the employee due to tax issues and other complications with their business. Did you run into this issues at all? Is there anything I can provide my employer to make the process easier for them? Thank you so much in advance for any insight!

 

[canuck78]

Hi there! Hoping you can provide a little insight to me. I am in a very similar situation. I am an American citizen awaiting my Canadian PR. I am currently also residing in Calgary Alberta but on a visitor basis right now (as I wait my PR). Currently I am still working for my US based company, but because I am merely visiting, I still have my US address on file. My boss and others in the company know that I am in Canada right now and "live here", however, I'm not sure that they are aware that once I get my PR it might complicate things. My question is, once I become a PR, will this be an issue for my employer once I switch my address to a Canadian address? I have read in other threads that some companies did not want to keep the employee due to tax issues and other complications with their business. Did you run into this issues at all? Is there anything I can provide my employer to make the process easier for them? Thank you so much in advance for any insight!

Does your employer have any offices in Canada or any Canadian clients/customers?

 

[omatthews]

Does your employer have any offices in Canada or any Canadian clients/customers?

Nope none. Fully US.

 

[JonnyBoy123]

Hi there! Hoping you can provide a little insight to me. I am in a very similar situation. I am an American citizen awaiting my Canadian PR. I am currently also residing in Calgary Alberta but on a visitor basis right now (as I wait my PR). Currently I am still working for my US based company, but because I am merely visiting, I still have my US address on file. My boss and others in the company know that I am in Canada right now and "live here", however, I'm not sure that they are aware that once I get my PR it might complicate things. My question is, once I become a PR, will this be an issue for my employer once I switch my address to a Canadian address? I have read in other threads that some companies did not want to keep the employee due to tax issues and other complications with their business. Did you run into this issues at all? Is there anything I can provide my employer to make the process easier for them? Thank you so much in advance for any insight!

I don’t know a whole lot about it, but I can tell you that I had to get clearance from management to move to Canada. Once I get my PR status they will have to pay me in Canadian dollars in Canada on a Canadian payroll paying Canadian taxes and provide me with Canadian benefits. It is not as simple as just changing an address. I know some people choose to become independent contractors which would require less from your employer. I wish I had more insight for you. Good luck!

 

[canuck78]

I don’t know a whole lot about it, but I can tell you that I had to get clearance from management to move to Canada. Once I get my PR status they will have to pay me in Canadian dollars in Canada on a Canadian payroll paying Canadian taxes and provide me with Canadian benefits. It is not as simple as just changing an address. I know some people choose to become independent contractors which would require less from your employer. I wish I had more insight for you. Good luck!

It also depends if your US employer has offices in Canada. In your case it seems as though they do have Canadian offices so you couldn't work remotely as an employee for the US arm of the company. You could work as a consultant in Canada for the US division or work for the Canadian division. On a positive note it seems as though you'll be able to pay into an extended healthcare benefits which is really beneficial. People are under the false impression that Canada has 100% medicare when it is about 70%.

 

[vincentg]

I am in a similar situation. I'm a U.S. citizen and my wife is Canadian. I'm in the process of applying for PR in Canada. I am talking to a potential employer that is okay with me working remotely but is not sure about hiring me if there is substantial costs or legal risk to dealing with Canadian taxes. From the research I have done, any employer paying someone for "services performed in Canada" must withhold taxes for the services provided. The organization has no presence in Canada. I should also mention that the organization is actually a nonprofit in the U.S. (not sure if this changes anything). My questions are:

- What is the definition of "services performed in Canada"? I would assume that digital services for a us company would require the organization to file for a CRA withholding but want to be sure. The closest thing I have found to a definition is this link and it is really more of a definition of "work."

https://www.canada.ca/en/immigration-refugees-citizenship/corporate/publications-manuals/operational-bulletins-manuals/temporary-residents/foreign-workers/what-is-work.html

- If my employer is required to withhold Canadian taxes, what does that process look like?

- Does it matter that I would start work for the company while in the U.S. being payed into a U.S. bank account prior to receiving PR status?

It would be really helpful to have exact legal references.

Thanks for any thoughts or comments.

 

[deibler]

I haven't been able to find any clear answers on this kind of stuff online. It seems a cross border accountant or lawyer or something would be best. I think everyone's situation is different. Perhaps my situation is just the CRA hasn't taken notice. Things are working fine for now though, anyway.
My US employer takes NO taxes out (I live in Canada) and I just put money away every month then pay a giant sum to CRA at tax time. I look forward to seeing if anyone posts any legal references that I can check out as well.

 

[jclarke99]

3 laws need to be satisfied: Canadian immigration laws, Tax laws, and Labor laws. It's unlikely that these are all being satisfied if a U.S. employer is simply paying you while you reside in Canada. Yes, you will hear some are doing just this, but they are taking a risk.

The safest route is to use a Canadian PEO (Professional Employer Organization) that has cross-border experience. Essentially, the PEO would hire you and lease you out to your U.S. employer (at a cost to your employer). Canadian labor and tax laws are satisfied.

If the PEO option doesn't work for your employer, then you can consider being an independent contractor and invoice (monthly) your U.S. employer. The catch here is that CRA frowns on the use of this to essentially be a full-time employee for a U.S. company. In such cases, CRA can deem you a Personal Service Business (PSB) and tax you at a very high rate (Google "Personal Service Business" for more info).

 

[jclarke99]

3 laws need to be satisfied: Canadian immigration laws, Tax laws, and Labor laws. It's unlikely that these are all being satisfied if a U.S. employer is simply paying you while you reside in Canada. Yes, you will hear some are doing just this, but they are taking a risk.

The safest route is to use a Canadian PEO (Professional Employer Organization) that has cross-border experience. Essentially, the PEO would hire you and lease you out to your U.S. employer (at a cost to your employer). Canadian labor and tax laws are satisfied.

If the PEO option doesn't work for your employer, then you can consider being an independent contractor and invoice (monthly) your U.S. employer. The catch here is that CRA frowns on the use of this to essentially be a full-time employee for a U.S. company. In such cases, CRA can deem you a Personal Service Business (PSB) and tax you at a very high rate (Google "Personal Service Business" for more info).

As a follow up, someone on another thread is in a similar situation (resides in Canada, but works remotely for a U.S. company). CRA eventually requested that this individual make quarterly Canadian tax payments. This same person managed to get their U.S. employer to stop deducting U.S. taxes from his paycheck (paid in US$). So, this is the ideal situation in this case. CRA gets its tax revenue, and a tax treaty credit can be used for U.S. income taxes (without the need to claw back U.S. taxes at tax time; and also prevents a period of double taxation - U.S. paycheck deductions & Canadian quarterly tax payments).