# Dual US/Can Citizen telecomm Canadian Co



## tufa4311 (Jan 16, 2011)

I'm a dual Us/Canadian citizen. I'd been living in Canada for most of my life but recently moved to the US to be with my wife. I continue to telecommute to my job in Canada, get paid in Canadian funds, pay Canadian taxes. What do I need to do now to figure out how my taxes should be done. I know that "residency" is a determining factor, at least in the US. I don't know what my legal residency status would be because while I only go back to Canada for a couple of weeks each quarter, I still have my payroll paid into my Canadian bank account, still have a savings, RRSP, student loan accounts all in Canada and am told this can matter for residency. 

Questions:
-should my job cont. to withhold taxes from my Canadian paycheck?
-should I continue to file in Canada?
-I will start filing jointly with my wife in the US and the tax preparers are trying to figure out how they will put my already paid payroll taxes in Canada against my US taxes due so I don't get double taxed but it seems confusing to them as well.


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## Bevdeforges (Nov 16, 2007)

Technically speaking, most countries (the US included) consider you to be "working in" whatever country you are physically located in whilst doing the work. There are lots of factors to be considered in determining your "tax residence" but from what you've said so far, it really seems that you are resident in the US for tax purposes and should NOT be paying Canadian taxes.

Some of those factors are: physical presence in the US, your wife is living in the US and you returned there "to be with" her (and continue to return there on a regular basis). The savings and other accounts only really figure in if they are needed for "tie breakers" - i.e. if there were reasons to doubt your "residence" in the US. 

For 2010, depending on how long you've been living in the US, your tax preparers could take the Canadian income taxes you've paid as "foreign tax credits" against whatever you owe to the US, but I would expect to get a letter from the IRS questioning your tax residence at some point in the process. Any other payroll taxes (say, for social insurances or local income taxes) are pretty much lost as they don't fall under the tax treaties - except for any retirement accounts, which you'll ultimately be able to collect against when you retire.

For 2011, you're going to have to start filing estimated payments - and should probably establish some sort of contract with your Canadian employer. Normally, on a contract basis, you should be paid somewhat more than your old take-home salary because you'll be responsible for covering your own taxes, benefits, and operating expenses.
Cheers,
Bev


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## tufa4311 (Jan 16, 2011)

*follow-up*

Thanks for the reply.

For 2011: my employer is not going to change the agreement we have. I am a salaried employee paid in Canadian funds. What I am looking for is what options I have after that fact.

-could I still get paid in Canadian finds BUT NOT have taxes withheld and NOT file with the CRA and ONLY file with IRS?

-could I still get paid in Canadian funds and STILL have taxes withheld and Still file with the CRA and file with the IRS also, using my Canadian withheld taxes as credits against my US taxes due?

Bev, I understand there may be easier ways at doing this, such as going on a contract or getting paid on a US payroll, but those options are not available to me at this point. So rather than worrying about those points I really need an objective view on the other options (i.e. question #1 and #2 above, and any other option I have not thought of that does not alter my employment status and/or Canadian payroll status)

Thx


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## Bevdeforges (Nov 16, 2007)

tufa4311 said:


> -could I still get paid in Canadian finds BUT NOT have taxes withheld and NOT file with the CRA and ONLY file with IRS?


For that one you'll have to ask your Canadian employer. I suspect they won't be able to keep you on the Canadian payroll but not withhold taxes.



> -could I still get paid in Canadian funds and STILL have taxes withheld and Still file with the CRA and file with the IRS also, using my Canadian withheld taxes as credits against my US taxes due?


You can try it. But I suspect the US IRS isn't going to go for this approach.



> Bev, I understand there may be easier ways at doing this, such as going on a contract or getting paid on a US payroll, but those options are not available to me at this point. So rather than worrying about those points I really need an objective view on the other options (i.e. question #1 and #2 above, and any other option I have not thought of that does not alter my employment status and/or Canadian payroll status)
> 
> Thx


To do things the way you want to do them, you're going to have to maintain your Canadian residence somehow - probably by spending the majority of your time in Canada. Maybe someone else has some ideas.
Cheers,
Bev


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## tufa4311 (Jan 16, 2011)

OK Bev, thx.

I'll be filling out some form for the CRA that will give me their "opinion" on my residency with relation to taxes. I assume that I will be found to not have Canadian residence. So, forget about what I would prefer...how should it be done. How should my tax return(s) be handled?

I'm guessing is something like this: my job has to start paying me on a US Payroll and I assume that means that while I'll still be getting paid in Canadian currency I will no longer have Canadian taxes withheld. Will the US Payroll start withholding US Taxes or will I just get a check with zero taxes withheld and then I have to file with the IRS and then manually pay the US taxes, most likely quarterly so I don't have a huge amount at the end of the year...is that what would need to happen?


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## Bevdeforges (Nov 16, 2007)

If your employer is to pay you on a "US payroll" they must have a US presence somewhere - an office or something where they pay their US employees. If they are able and willing to pay you on a US payroll, then your pay will come from that office and will have the appropriate US withholdings taken out - taxes, social security and medical insurance (if applicable). Obviously, under those circumstances, the US office will pay the employer's portion of the various withholdings. (What usually happens in international companies is that the office that is actually employing you will reimburse the office processing and paying your salary through some form of inter-company transfer of funds or budget allocation.)
Cheers,
Bev


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