# Working remotely for us company tax issues



## canadian81 (Jul 3, 2017)

I am a Canadian Resident working remotely for USA company (permanent) on W-2 in TN status. My payroll is run in the USA. My actual work location is in USA. I initially worked 70% of time from USA but last year I worked 90% from Canada (as I gained confidence of my manager). As I am more than 183 days out of USA and my employment income comes from a USA based company, my employment income will be taxable in USA (based on Canada-USA tax treaty, my employment incomes comes from a permanent establishment of a company in USA , I would be taxable in USA only and claim my us taxes as Foreign credit on my Canadian returns). Am I correct?


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## Bevdeforges (Nov 16, 2007)

I would take a good, hard look at IRS Publication 597, especially the part about Personal Services (i.e. salary) https://www.irs.gov/publications/p597/ar02.html#en_US_201510_publink1000104515 and possibly the actual US-Canada Tax Treaty itself.

You say you are Canadian Resident, but are you a Canadian citizen or a US citizen - or potentially both? If you're a US citizen working for a US company with a "permanent establishment" etc. etc., then yes, you'll be subject to US taxation. But if you're a Canadian citizen the situation may be very different. The IRS publication suggests that your income is exempt from Canadian taxes only if you are present in Canada for *no more than* 183 days.

This stuff is confusing, and unfortunately, US employers have a tendency to just "keep people on the US payroll" for their own convenience without giving much thought to the tax situation of their employees. I suspect you first need to determine your tax residence status in Canada.
Cheers,
Bev


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## canadian81 (Jul 3, 2017)

I am a Canadian citizen. I am on TN status in USA.

The USA-Canada Tax treaty says 

"Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in a calendar year in the other Contracting State shall be taxable only in the first-mentioned State if: 

(a) such remuneration does not exceed ten thousand dollars ($10,000) in the currency of that other State; or 

(b) the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in that year and the remuneration is not borne by an employer who is a resident of that other State or by a permanent establishment or a fixed base which the employer has in that other State." 

implies (replaces states with countries) 

employment in USA shall be taxable only in Canada if: 

(a) such remuneration less than ten thousand dollars ($10,000) in the currency of usa; or 

(b) the recipient is present in the USA for a period less than 183 days and the remuneration is not borne by an employer who is a resident of USA or by a permanent establishment or a fixed base which the employer has in USA. 

I do not meet both the criteria. My employment income comes from an employer who has a permanent base in USA. So USA has the first right on my employment taxes even though I am less than 183 days in USA. I will claim this tax as Foreign credit on my Canadian returns. Am I correct?


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## Bevdeforges (Nov 16, 2007)

I'm not familiar with the Canadian tax laws, so am not sure whether you take a foreign tax credit there (like you would/could do in the US). Can you seek guidance from the Canadian tax authority in some manner? That might be the safest approach.
Cheers,
Bev


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## canadian81 (Jul 3, 2017)

I spoke with a CRA agent who is expert on Foreign income for Canadian residents. She agrees with what I said above. It does not matter how long I am present in Canada if I am working for a US employer


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