work for Canadian clients while in the US

[Chica Yeyé 41]

The IRS determines it's taxes based upon where the work product or service was performed. So according to their standards telecommuting employment is subject to U.S. taxes. As such, would that not be seen as work done in the U.S.?

Well - sort of. There's a tax agreement between the Us and Canada so you don't get taxed twice, but I still had to report Canadian income on my US taxes and vice versa - they just write it off more or less because it's already been taxed

Interesting. I didn't know there was some sort of agreement between Canada and the U.S.. I knew someone who went through virtually the same thing, but ended up having to pay 2 years in back taxes and penalties, but that was another country (Germany).

My first IRS return had those extra forms for Canadian foreign earned income. Same went for my last Canadian return. It was a pita though.

As for working from here for a Canadian company, I am really not sure; but it is an interesting scenario --- maybe someone who has done it can shed some light.

[Udella&Wiz 325]

The IRS determines it's taxes based upon where the work product or service was performed. So according to their standards telecommuting employment is subject to U.S. taxes. As such, would that not be seen as work done in the U.S.?

Well - sort of. There's a tax agreement between the Us and Canada so you don't get taxed twice, but I still had to report Canadian income on my US taxes and vice versa - they just write it off more or less because it's already been taxed

Interesting. I didn't know there was some sort of agreement between Canada and the U.S.. I knew someone who went through virtually the same thing, but ended up having to pay 2 years in back taxes and penalties, but that was another country (Germany).

Countries who have Tax treaties with the US

http://www.irs.gov/businesses/internationa...d=96739,00.html

Hmmmm Germany is on that list, but I know that my friends Wife had to pay 2 years of federal and 2 years of state taxes. I'm going to have to call him on my lunch break because now I have to know

Now don't get me wrong , I don't think it's all tha it's cracked up to be- it didn't help me much last year - I had to pay taxes on my EI income in the US and then I had to file a 'section 217' in Canada to try and get the Cdn taxes back on it.

Didn't work out so great - I was late filing the 217 and thus was taxed twice Now I did NOT have to pay twice the taxes on my US income, so that was just fine

I think people run into a lot of trouble when they make the mistake of thinking that they don't have to report all their income to both countries or they just forget to file properly and then they find out later they owe some huge chunk

[kizza 1]

Thanks for the replies! I just got back, so I havent had time to check out the posted links or research the forum more, but definitely will.

I believe the law you are talking about regarding declaration of income tax in the US and in Canada is called the "double taxation" law. If I understand it correctly, you won't pay taxes twice on your income, as long as you have paid at least what you owe the second country. i.e. if I get taxed 40% in Qc and 30% in the states, I dont have to pay taxes in the US - but still have to declare. If I get taxed 30% in Qc and 40% in the US, I would owe the US the 10% difference.

[kike 0]

Under the substantial presence test, an alien individual who is present in the United States for at least 183 days during the taxable year is a resident for tax purposes, and an alien present in the country for fewer than 183 days during the current year is a resident if she is present for at least 31 days during the year, spends substantial portions of her time in the country during the three-year period ending with the taxable year, and has a closer connection to the United States than to any foreign country.

Normally, the substantial presence test is met for a particular calendar year if the taxpayer is present in the United States on at least 31 days during the year and meets a 183-day test. The 183-day test is satisfied only if the sum of the days present in the United States during the taxable year, one third of the days present during the immediately preceding calendar year, and one sixth of the days present during the second preceding year is at least 183. The 183-day test is met, for example, if the taxpayer has been present for 122 or more days during each of these three calendar years (122 plus one third of 122 plus one sixth of 122 equals 183).

An alien individual who meets both the 31-day test and the 183-day test is nevertheless a nonresident if she (1) is present in the United States for fewer than 183 days during the current year; (2) has a tax home in a foreign country during the year; and (3) has a closer connection to that country than to the United States. An individual has a “tax home” at a particular place if she would be allowed a deduction under § 162(a)(2) for expenses incurred in traveling away from that place on business. According to the regulations, this means that an individual's tax home is at her regular place of business or if she has more than one regular place, at the principal place of business. An individual has the closest connection with the country with which she “has maintained more significant contacts,” including the location of her permanent home, family, personal belongings, and personal bank accounts, the location of the social, political, cultural, and religious organizations “with which the individual has a current relationship,” where she obtained her driver's license, where she votes, and the country of residence designated on documents filed by the individual. However, the closer connection exception is not available if the individual has applied to become a permanent resident and this application is pending at any time during the taxable year.

[bradcanuck 1]

I have not read anything in this thread other than the initial OP post.

I worked for a Canadian company for 3 years in the US and I informed my interviewer about it (he asked how we were able to pay bills etc) he said this was allowed and expected and was NOT an issue. All forgiven.

So in MY personal experience working for a CDN company in the USA while awaiting AOS did NOT hurt my application.

[kizza 1]

I have not read anything in this thread other than the initial OP post.

I worked for a Canadian company for 3 years in the US and I informed my interviewer about it (he asked how we were able to pay bills etc) he said this was allowed and expected and was NOT an issue. All forgiven.

So in MY personal experience working for a CDN company in the USA while awaiting AOS did NOT hurt my application.

Really? Great!

Just to make sure our situations are really comparable, where you still employed by the Canadian company or considered self-employed?

and that was before you got your EAD?

Did you file your taxes at the IRS, Revenue Canada, or both?

thanks!