Living in Canada, working in the US, help with tax prep.

[christinamh]

I'm hoping that someone can help answer a few income tax questions I have. I'm also hoping I can do this myself and not have to hire an accountant.

I am an American citizen and currently a permanent resident of Canada. I work remotely, from home for a company in the US. I have no withholdings at all through out the year. At the end of the year I receive a 1099-MISC. So at this point I'm a little confused what to do. Should I file my taxes in Canada first (claiming foreign income) and pay the taxes owed, then file in the US and file a foreign tax credit for what I paid in Canada? Or should I do it the other way around and file in the US first, pay taxes owed and then file in Canada and file for a foreign tax credit in Canada? Seems like it makes more sense to pay in Canada first since I am a resident of Canada and technically no longer a resident in the US.

Can anyone help?

 

[jordo]

Found a few links that may help you. The 2nd link goes into quite a bit of detail.

https://turbotax.intuit.ca/tips/how-are-taxes-assessed-for-u-s-citizens-working-in-canada-347
http://madanca.com/blog/americans-working-in-canada-and-taxes/

In the 2nd link at the bottom are a few questions and answers regarding remote work. I think this one is very close to your situation
http://madanca.com/blog/americans-working-in-canada-and-taxes/#comment-14258

 

[christinamh]

Thank you. Those links are helpful for sure but don't particularly answering my case. It talks a lot about being a US citizen and working in Canada. I don't technically work in Canada. I work for a company in the US. I am an independent contractor, paid in USD to my US bank account. I have no tax withholding of any sort all year. At the end of the year I receive a 1099-MISC.

 

[christinamh]

In the 2nd link at the bottom are a few questions and answers regarding remote work. I think this one is very close to your situation
http://madanca.com/blog/americans-working-in-canada-and-taxes/#comment-14258

Sorry I missed this link. That actually does help a lot and the first thread sounds very similar to my situation. Thank you!

 

[scylla]

My husband files his Canadian taxes first (obviously declaring worldwide income). Then files his US taxes second and claims credits for the tax already paid to Canada.

He's an American citizen living in Canada and most of his work is remote.

 

[christinamh]

My husband files his Canadian taxes first (obviously declaring worldwide income). Then files his US taxes second and claims credits for the tax already paid to Canada.

He's an American citizen living in Canada and most of his work is remote.

Awesome, this is exactly how I thought the process would go. Thank you. So in his case, is it similar to mine where he doesn't have any withholding so he doesn't actually pay in the US, just in Canada and then files for a foreign tax credit in the US for what he paid to Canada?

 

[scylla]

Awesome, this is exactly how I thought the process would go. Thank you. So in his case, is it similar to mine where he doesn't have any withholding so he doesn't actually pay in the US, just in Canada and then files for a foreign tax credit in the US for what he paid to Canada?

Yes - that's right.

 

[dscheel42]

Hi, this is a similar situation for me and was wondering how you went about paying income tax and social security tax. Are you paying it all as a lump sum at the end of the year or quarterly as you might have done in the US?

 

[Wonderland_1010]

Hi, this is a similar situation for me and was wondering how you went about paying income tax and social security tax. Are you paying it all as a lump sum at the end of the year or quarterly as you might have done in the US?

It depends. Some people pay their taxes in installments and some people pay it all at once at the end. But if you are paying more than $2000 or more then CRA will give you an option to pay installments instead of paying all at once.

 

[dscheel42]

Awesome, this is exactly how I thought the process would go. Thank you. So in his case, is it similar to mine where he doesn't have any withholding so he doesn't actually pay in the US, just in Canada and then files for a foreign tax credit in the US for what he paid to Canada?

Is he paid via direct deposit to a US bank or sent a cheque to deposit in a Canadian bank?