# Any American expats who are self-employed in Canada?



## Stargazer (Jan 10, 2009)

If so, what extra forms do you need to send to the IRS? How complicated is it? I heard you have to write to Social Security and tell them you're contributing to CPP?


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## pwdunn (Nov 12, 2011)

That is a question for an tax expert who specializes in US-international issues. The fact is it is not worth the trouble, IMH, of owning a business in foreign country unless you are a large corporation and even then it is a pain. The paperwork is onerous and it adds an extra, stupid expense that adds nothing to revenue and no benefits, just costs. I intentional waited until my renunciation was complete before starting a business in Canada.


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## pwdunn (Nov 12, 2011)

Also, if I wasn't new to the forum I could post a link to a page which summarizes the requirements, though it is unlikely to be exhaustive (taxmeless dot com /page4.html)


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## Peg (Sep 22, 2011)

Stargazer said:


> If so, what extra forms do you need to send to the IRS? How complicated is it? I heard you have to write to Social Security and tell them you're contributing to CPP?


I did have self-employment income in 2005 and 2006. Mine was low enough that I used the 1040-Schedule C-EZ and the Schedule SE. 

I read the link that Petros noted and it has information on a treaty that could negate paying Social Security. However, the Self-Employment tax also includes Medicare. My SE Tax was about 14% of my gross SE income. 

My figures were low as it was essentially a hobby that made a bit of money. If I had high SE Tax then I would have talked with a professional to see how to not pay it!


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## pwdunn (Nov 12, 2011)

Peg said:


> I did have self-employment income in 2005 and 2006. Mine was low enough that I used the 1040-Schedule C-EZ and the Schedule SE.
> 
> I read the link that Petros noted and it has information on a treaty that could negate paying Social Security. However, the Self-Employment tax also includes Medicare. My SE Tax was about 14% of my gross SE income.
> 
> My figures were low as it was essentially a hobby that made a bit of money. If I had high SE Tax then I would have talked with a professional to see how to not pay it!


Peg:
Was this in addition to taxes that you paid in Canada? You see because then you get into a situation where the US requires you to pay tax, and you can then claim that tax on your Canadian taxes. This means that the US is receiving tax from Canadian source that belongs here in Canada. That really irks me.


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## Peg (Sep 22, 2011)

PetrosResearch said:


> Peg:
> Was this in addition to taxes that you paid in Canada? You see because then you get into a situation where the US requires you to pay tax, and you can then claim that tax on your Canadian taxes. This means that the US is receiving tax from Canadian source that belongs here in Canada. That really irks me.


My foreign tax credit for my Canadian taxes more than offset the US income taxes.

But on the 1040 after all deductions and the foreign tax credit it has the line for the Self-employment tax. It appears to me that it is therefore required to be paid. However, since I had a lot of excess foreign tax credit and because I will never collect Social Security or Medicare I proposed that the SE Tax be waived... :boxing: Definitely curious to see if they okay that -- with hindsight I wish that I had just paid the darn SE tax and been done with it but on principle I couldn't do it. Now reading that link you provided, the SE tax might be waived via a treaty anyway. :clap2:

With all this hoopla about "Canadians would never owe US taxes because our rates are higher" - what about this 14 or 15% Self-employment Tax? It is applicable to self-employment income between $400 and I think $90,000.


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## Stargazer (Jan 10, 2009)

thanks! At the Serbinski forums, they said that you don't have to pay SS if you write to the IRS and tell them you are paying CPP. Still, I don't want my taxes to be more complicated than they already are.


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