US Citizen/Canadian PR working as Independent Contractor for US company

[ugterrier]

Hi everyone,

I'm hoping I can get some advice here--you guys seem pretty knowledgable. I am a US citizen but obtained my Canadian PR in July 2014. I will finally be moving permanently to Quebec this summer, but due to pre-existing US debts, I am planning to rely on a small (less than $10K US) amount of income as an independent contractor for a US company to pay those US debts each month. I can work for them from anywhere, and I will be paid in US$. However, as I'm starting to think more about the Canadian tax system, I'm wondering what sorts of taxes I will have to pay on that income. In the past, I have had to set aside some of it for US taxes, so that isn't a big deal. I typically received a refund of any estimated taxes that I prepaid. Should I do the same thing in Canada? If so, any idea what percentage? Do I need to incorporate for that small amount?

Any info you can provide would be much appreciated!

Stacy

 

[scylla]

You'll need to declare this income in your Canadian tax return (you are taxed on worldwide income) and pay taxes on it as appropriate. When you file your US tax return, you will get credit for the taxes you have already paid on this income in Canada - and this will avoid double-taxation of your income. Canada's tax rates are typically higher than the tax rates in the US. I would increase the amount of money slightly that you are setting aside for tax purposes.