Working remotely from Canada in US company as Canadian PR

[harirajmohan]

I have been following the discussions in this thread , apart from the possible issues at the border crossing and the complications with H1 extension, taxes are also becoming a concern because, I was doing rudimentary calculations and found our that since the tax bracket in Canada is much higher than that of US, the difference amount needed to be paid at Canada would be huge.

What are the experiences of the members of the group/ their friends/ acquaintances who live in Canada and work in US regarding the taxes, do you get some leverage to write off some income to minimize the Canadian taxes ?

Not sure if there is any special exemption for cummuters but you can certainly use the ones available to all.
https://www.olympiabenefits.com/blog/5-tips-on-how-to-save-income-tax-in-canada
https://www.investopedia.com/articles/pf/07/canadian_tax.asp
https://www.theglobeandmail.com/investing/personal-finance/taxes/article-ten-ways-to-reduce-taxes-in-2019/

 

[su0du0tict]

1. Yes, paying taxes for US income in US.
2. Yes, paying taxes for US income in Canada. While filing in Canada, the CAD equivalent amount of taxes paid in US would be listed as taxes already paid hence this amount will be deducted from the total taxes to be paid and then if there is any remaining tax to be paid then just that amount would be paid in Canada.
3. I am not sure if we can deduct travel expense. check with a tax consultant.

Hello Harirajmohan,
Three follow up questions :
1.While determining the Canadian Equivalent of taxes paid in the US:
Can you add up all the taxes paid in the US i.e Federal Tax, Social Security Tax, Medicare Tax and State Taxes or it is only limited to certain taxes paid

2. While doing the conversion to CAD, are the rates in xe.com acceptable or there is any other website that needs to be taken in account to do the conversion. Also, what is the date of the conversion , since USD-> CAD rates fluctuates. Is it 31st Dec of the previous year.

3. 401 K deductions from paycheck, can that be also written off as RRSP contribution , I was reading some posts / resources online that it may be the case, however, would like to know your experience/ views on the same.

 

[harirajmohan]

Hello Harirajmohan,
Three follow up questions :
1.While determining the Canadian Equivalent of taxes paid in the US:
Can you add up all the taxes paid in the US i.e Federal Tax, Social Security Tax, Medicare Tax and State Taxes or it is only limited to certain taxes paid
2. While doing the conversion to CAD, are the rates in xe.com acceptable or there is any other website that needs to be taken in account to do the conversion. Also, what is the date of the conversion , since USD-> CAD rates fluctuates. Is it 31st Dec of the previous year.
3. 401 K deductions from paycheck, can that be also written off as RRSP contribution , I was reading some posts / resources online that it may be the case, however, would like to know your experience/ views on the same.

1. Yes, all are to considered as taxes paid in US which are deductible from taxes to be paid in Canada.
2. https://www.bankofcanada.ca/rates/exchange/annual-average-exchange-rates/ (not some other sites)
3. 401k is tax deductible which you have option to include but RC268 form needs to be included in tax return. One time i did mention 401k without RC268 form then it was not considered tax deductible hence dont forget to include the form RC268.

 

[DEEPCUR]

I have been following the discussions in this thread , apart from the possible issues at the border crossing and the complications with H1 extension, taxes are also becoming a concern because, I was doing rudimentary calculations and found our that since the tax bracket in Canada is much higher than that of US, the difference amount needed to be paid at Canada would be huge.

What are the experiences of the members of the group/ their friends/ acquaintances who live in Canada and work in US regarding the taxes, do you get some leverage to write off some income to minimize the Canadian taxes ?

why high taxes need to be a concern and what’s the issue if more taxes need to be paid? Even after factoring higher taxes, what you earn by working for an US employer would be way higher than what you’ll make with a Canadian employer after conversion. You get Canadian healthcare, and most importantly you also get to keep your US job so that you can easily move to if you need to in future after getting citizenship. I remember having a cake and eating it.

 

[canuck78]

1. Yes, all are to considered as taxes paid in US which are deductible from taxes to be paid in Canada.
2. https://www.bankofcanada.ca/rates/exchange/annual-average-exchange-rates/ (not some other sites)
3. 401k is tax deductible which you have option to include but RC268 form needs to be included in tax return. One time i did mention 401k without RC268 form then it was not considered tax deductible hence dont forget to include the form RC268.

Up to you to decide whether you will be able to in the US longterm. Your other option is to return to India where you will likely earn as much but save more,

 

[DEEPCUR]

Up to you to decide whether you will be able to in the US longterm. Your other option is to return to India where you will likely earn as much but save more,

totally irrelevant post and suggesting India is beyond the scope of this discussion. people posting here do know what India is worth more than what you’ve ever known.

I believe you have neither have had H1 nor commuted to US on visas nor from India, I am not understanding why are posting on and on in these threads in a highly discouraging, negative and critical tone.

 

[cpatolia]

No issues.I just answer honestly.I live in Canada.. work in US. and that is legal.
On my H1B itself is marked "Canadian Permanent Resident" as I updated my H1B in toronto..There is nothing illegal in this.

HI, How you file your US Taxes, as a regular resident or as non-resident with W2?

 

[cpatolia]

1. Yes. Also if you have valid stamp and approved I797, you dont need to travel once a month unless you need to maintain active status or else you can go whenever you are required. Make sure that you are travelling to the correct location that was approved in your H1.
My opinion: Any travel which is not weekly will raise more questions on the job and its nature. Because it will look like you just need some other type of visa such as Business visa. so expect to answer additional questions on that. Consult your immigration team to get prepared before you move.
If your job doesnt require travel then you can just work from remote to avoid headache in explaining.
2. Not necessary.
3. I have Canada address in my records in company but they do deduct the taxes based on working location. So US address should not be necessary or doesnt make difference. We cant use US license after a while hence we will use the address in Canadian license.
4. Usual ones mainly on your job roles, location and about the company.
5. Nexus will help cut the time in most days.
I had trouble getting nexus as they asked me to stay continuous 3 years(without departing out of continental US). But my colleague had a brief travel to other continent but never raised issue for him - not sure if he had given all the travel and addresses in his application hence could not know why his case was different. So just apply and see if they approve.
My initial application got returned with the fee and had to send it after a year (after satisfying requirements).

SO AGAIN JUST A SIMPLE QUESTION AGAIN...IF YOU WORKED ON H1B FROM CANADA FOR MOST OF THE TIME OF YOUR YEAR, GET PAID ON W2. HOW DO YOU FILE YOUR TAXES IN US , AS NON-RESIDENT ALIEN OR AS RESIDENT ALIEN?

 

[Nick1233]

SO AGAIN JUST A SIMPLE QUESTION AGAIN...IF YOU WORKED ON H1B FROM CANADA FOR MOST OF THE TIME OF YOUR YEAR, GET PAID ON W2. HOW DO YOU FILE YOUR TAXES IN US , AS NON-RESIDENT ALIEN OR AS RESIDENT ALIEN?

Resident status for the purpose of Tax is different from that of Immigration. You are mixing both.

 

[cpatolia]

Resident status for the purpose of Tax is different from that of Immigration. You are mixing both.

THANKS,
I KNOW,
BUT MY QUESTION IS TAX RELATED...HOW TO I HANDLE IT...AND HOW PEOPLE IN SAME BOAT HAVE HANDLED IT?
SCENARIO - WORKED ON H1B REMOTELY FROM CANADA FOR ENTIRE YEAR

 

[harirajmohan]

SO AGAIN JUST A SIMPLE QUESTION AGAIN...IF YOU WORKED ON H1B FROM CANADA FOR MOST OF THE TIME OF YOUR YEAR, GET PAID ON W2. HOW DO YOU FILE YOUR TAXES IN US , AS NON-RESIDENT ALIEN OR AS RESIDENT ALIEN?

Please dont use caps.

THANKS,
I KNOW,
BUT MY QUESTION IS TAX RELATED...HOW TO I HANDLE IT...AND HOW PEOPLE IN SAME BOAT HAVE HANDLED IT?
SCENARIO - WORKED ON H1B REMOTELY FROM CANADA FOR ENTIRE YEAR

Simple method to identify: If you earn in US and received any tax forms such as W2 etc then file in US and then file in Canada(pay tax after deducting taxes paid in US).
Resident/Nonresident status: It all depends on how many number of days you have stayed till now. https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

 

[garry.jones]

1. Yes, all are to considered as taxes paid in US which are deductible from taxes to be paid in Canada.
2. https://www.bankofcanada.ca/rates/exchange/annual-average-exchange-rates/ (not some other sites)
3. 401k is tax deductible which you have option to include but RC268 form needs to be included in tax return. One time i did mention 401k without RC268 form then it was not considered tax deductible hence dont forget to include the form RC268.

Are you sure that not just federal but medicare, social security, state income tax are all added up to show as credit in canadian tax return?

 

[harirajmohan]

Are you sure that not just federal but medicare, social security, state income tax are all added up to show as credit in canadian tax return?

There is one way to verify - Hire a tax consultant and pay them. Paying money for advice gives more satisfaction about verification of rules which i understand.

 

[kumar135]

1. Yes, all are to considered as taxes paid in US which are deductible from taxes to be paid in Canada.
2. https://www.bankofcanada.ca/rates/exchange/annual-average-exchange-rates/ (not some other sites)
3. 401k is tax deductible which you have option to include but RC268 form needs to be included in tax return. One time i did mention 401k without RC268 form then it was not considered tax deductible hence dont forget to include the form RC268.

Your posts have been really helpful. Are we allowed to deduct 401k from our taxes if its our first year in Canada ? Because RRSP contribution limit is calculated as 18% of your previous tax returns in Canada.
This is what I read on Canada.ca site
"Generally, you cannot deduct contributions you made to a registered retirement savings plan (RRSP) in 2019 if this is the first year that you will be filing a tax return in Canada.

 

[harirajmohan]

Your posts have been really helpful. Are we allowed to deduct 401k from our taxes if its our first year in Canada ? Because RRSP contribution limit is calculated as 18% of your previous tax returns in Canada.
This is what I read on Canada.ca site
"Generally, you cannot deduct contributions you made to a registered retirement savings plan (RRSP) in 2019 if this is the first year that you will be filing a tax return in Canada.

First year it was 0 tax for me hence did not face this situation. So i dont know if one can use RC268 during first year when rrsp contribution amount is 0 for that year.