Taxes/Payroll - Working in US/ Living in Windsor

[missedTheGCBus]

Yeah I can feel that. My accountant had already sent them transcripts 3 months ago. Not sure where it all went.
I just hope they don't do any drama at the time of applying for citizenship.

Hey @BhargavDadhaniya was your tax issue resolved, how did it go?

 

[wink]

Question is whether your employer would do a I-9 or

AFAIK IRS login is not available for people with foreign address. In my experience, transcript by mail is pretty quick, they take ~3 weeks to send it.

I was able to get a login with Canadian address.

 

[mayple]

I use one of the below:
US: olt, turbotax, taxact, taxslayer
Canada: Simpletax, ufile.

You can file online for Canada also but not sure if it works for you.

Filing methods/steps i use to avoid audit from cra: File US online. Wait till refund arrives. Apply for transcript via mail from IRS and State. File Canada one via paper(after including original W2, original transcripts).
Stupid thing what cra does is to ask for these documents in original for many of us(my colleagues) hence we follow this method. Even on 401k exemption i could not get it last year because they wanted all damn documents in original(the ones that were physically mailed to us).

Hi harirajmohan:
When you say CRA needs original, what do they consider original? I get a copy of W2 online (not mail) from my employer. Can I print and send that? Also, do you have to attach state tax transcript as well? Or can you attach IRS transcript + state tax return filed?

 

[harirajmohan]

Hi harirajmohan:
When you say CRA needs original, what do they consider original? I get a copy of W2 online (not mail) from my employer. Can I print and send that? Also, do you have to attach state tax transcript as well? Or can you attach IRS transcript + state tax return filed?

In the last 2 years they are asking same documents which we sent earlier hence started to avoid sending anything on paper. So i am uploading them whenever there is a request for additional docs. Sometimes they will end up asking second time same 1-2 docs which we submitted earlier. So still i keep on uploading. So they are accepting nowadays electronic copy but during the audit.

My colleague's cousin even got mail saying he doenst need to send additional documents with the first tax filing in apr as cra seems not considering any additional documents. Possibly they changed the process.

So for now you can start uploading copy of documents(orginal or downloaded copy) whenever there is audit. It should be fine.

 

[mayple]

In the last 2 years they are asking same documents which we sent earlier hence started to avoid sending anything on paper. So i am uploading them whenever there is a request for additional docs. Sometimes they will end up asking second time same 1-2 docs which we submitted earlier. So still i keep on uploading. So they are accepting nowadays electronic copy but during the audit.

My colleague's cousin even got mail saying he doenst need to send additional documents with the first tax filing in apr as cra seems not considering any additional documents. Possibly they changed the process.

So for now you can start uploading copy of documents(orginal or downloaded copy) whenever there is audit. It should be fine.

Thanks. I don't have an online CRA account, so I guess I'll have to create one. To clarify: for state tax filings, in your experience, do we need transcripts from the relevant state tax authority, or will the actual filed returns be sufficient?

 

[harirajmohan]

Thanks. I don't have an online CRA account, so I guess I'll have to create one. To clarify: for state tax filings, in your experience, do we need transcripts from the relevant state tax authority, or will the actual filed returns be sufficient?

I think that nowadays CRA doesnt ask but you can still keep the state transcripts ready along with irs account transcript to avoid any delay if and when they ask.
State transcript is not available for Michigan but they give copy of tax return with some michigan seal. So your state might or might not have transcript similar to irs.

 

[mayple]

I think that nowadays CRA doesnt ask but you can still keep the state transcripts ready along with irs account transcript to avoid any delay if and when they ask.
State transcript is not available for Michigan but they give copy of tax return with some michigan seal. So your state might or might not have transcript similar to irs.

Thanks

 

[monglebest]

HSA: You are obligated to close all accounts when you move to Canada. All you need is to declare the income from the sources.
When you withdraw from hsa for non-medical then its taxable to US hence that comes as income for Canada as well, automatically.
HSA is no different than the savings account in the home/other country.

I don't know where do you get this info. I have only heard the HR of my previous company asked me to sell all my RSU stocks when I resign my job while it is totally not necessary to do so. I think the same applies to HSA. I think the right understanding is I cannot contribute more to HSA, but I should be able to use the HSA existing money tax-free for medical purpose.

 

[harirajmohan]

I don't know where do you get this info. I have only heard the HR of my previous company asked me to sell all my RSU stocks when I resign my job while it is totally not necessary to do so. I think the same applies to HSA. I think the right understanding is I cannot contribute more to HSA, but I should be able to use the HSA existing money tax-free for medical purpose.

You are correct. Yes my post at that time was not with correct understanding. Thanks for correcting it.

 

[ejackson6691]

I am planning to do the same, Will be working on h1b for US based company but remote from Canada. can someone confirm my tax knowledge is correct? apparently taxes withhold by US cannot be claimed as Foreign tax credit as Canada has the only right to tax you as work was done on Canadian soil. If you are in US less than 31 days: File for refund with IRS using 1040NR, 843(refund for Social Security tax and medicaid), a schedule OI and attach 8833. CRA tax return T1 should be filed as regular. In this case, there can be cash flow issue as I will have to pay tax to CRA on entire amount and I haven't received refund from IRS yet. Anyone who has followed this refund approach or just filed CRA return for difference and US taxes paid as a foreign tax credit? If so did CRA accepted the Foreign Tax credit? Being cautious as I Don't want to receive collection notice from CRA

 

[ejackson6691]

I am planning to do the same, Will be working on h1b for US based company but remote from Canada. can someone confirm my tax knowledge is correct? apparently taxes withhold by US cannot be claimed as Foreign tax credit as Canada has the only right to tax you as work was done on Canadian soil. If you are in US less than 31 days: File for refund with IRS using 1040NR, 843(refund for Social Security tax and medicaid), a schedule OI and attach 8833. CRA tax return T1 should be filed as regular. In this case, there can be cash flow issue as I will have to pay tax to CRA on entire amount and I haven't received refund from IRS yet. Anyone who has followed this refund approach or just filed CRA return for difference and US taxes paid as a foreign tax credit? If so did CRA accepted the Foreign Tax credit? Being cautious as I Don't want to receive collection notice from CRA

@harirajmohan Do you have any idea?

Additional Question: I read that it would be an issue from CRA as my US employer would be required to withold Canadian Payroll taxes, if I work remote from Canada. Better to travel at least few days in a year to avoid this.

If Social security tax is withheld by US, what do you do when you file as a Canadian resident? Do you get a refund?

 

[harirajmohan]

@harirajmohan Do you have any idea?

Additional Question: I read that it would be an issue from CRA as my US employer would be required to withold Canadian Payroll taxes, if I work remote from Canada. Better to travel at least few days in a year to avoid this.

If Social security tax is withheld by US, what do you do when you file as a Canadian resident? Do you get a refund?

paryroll withholding issue is new hence i didnt encounter on it. I heard that they are asking only when you work from home. I am not sure much on it.

I am not sure if we can get refund of social security tax.

 

[monglebest]

From somethreads of this forum, I heard that CRA can look for trouble from my US employer while I am remotely working from Canada (H1B in US), is that what you mean no Canadian tax payroll?

Another thing is about the foreign tax credit? I thought when I am a Canadian tax resident, then my global income should be taxed by CRA, does that make it foreign tax credit or not? Correct me if my understanding is wrong.

I am planning to do the same, Will be working on h1b for US based company but remote from Canada. can someone confirm my tax knowledge is correct? apparently taxes withhold by US cannot be claimed as Foreign tax credit as Canada has the only right to tax you as work was done on Canadian soil. If you are in US less than 31 days: File for refund with IRS using 1040NR, 843(refund for Social Security tax and medicaid), a schedule OI and attach 8833. CRA tax return T1 should be filed as regular. In this case, there can be cash flow issue as I will have to pay tax to CRA on entire amount and I haven't received refund from IRS yet. Anyone who has followed this refund approach or just filed CRA return for difference and US taxes paid as a foreign tax credit? If so did CRA accepted the Foreign Tax credit? Being cautious as I Don't want to receive collection notice from CRA

 

[ejackson6691]

From somethreads of this forum, I heard that CRA can look for trouble from my US employer while I am remotely working from Canada (H1B in US), is that what you mean no Canadian tax payroll?

Another thing is about the foreign tax credit? I thought when I am a Canadian tax resident, then my global income should be taxed by CRA, does that make it foreign tax credit or not? Correct me if my understanding is wrong.

yes, Thats what I mean by payroll taxes, If I work remote than it means I am employed by US employer in Canada not in US, which requires them to deduct taxes and remit to CRA.

Since you are a Canadian resident you pay to CRA taxes on your global income, you can claim taxes paid to US as credit, thats what I mean by Foreign tax credit(FTC). When working remote completely from Canada, CRA is taking issue with claiming FTC on taxes paid to IRS. They are saying, Tax returns should be first filed in Canada and then take Tax credit on US side, thereby paying taxes to Canada and asking for a refund from IRS. This can result to cash flow issue as you have to pay CRA even though your taxes might have been withheld by your employer and paid to IRS.

From what I can see traveling few days a month is safest approach. thereby you can easily claim FTC and everyone is happy.


@harirajmohan If I can't get a refund from IRS on my Social Security, can I claim it as Foreign Tax Credit?

 

[monglebest]

yes, Thats what I mean by payroll taxes, If I work remote than it means I am employed by US employer in Canada not in US, which requires them to deduct taxes and remit to CRA.

Since you are a Canadian resident you pay to CRA taxes on your global income, you can claim taxes paid to US as credit, thats what I mean by Foreign tax credit(FTC). When working remote completely from Canada, CRA is taking issue with claiming FTC on taxes paid to IRS. They are saying, Tax returns should be first filed in Canada and then take Tax credit on US side, thereby paying taxes to Canada and asking for a refund from IRS. This can result to cash flow issue as you have to pay CRA even though your taxes might have been withheld by your employer and paid to IRS.

From what I can see traveling few days a month is safest approach. thereby you can easily claim FTC and everyone is happy.


@harirajmohan If I can't get a refund from IRS on my Social Security, can I claim it as Foreign Tax Credit?

How if the US employer does not have Canadian site? The situation is quite similar to digital nomad nowadays. Then why pay roll tax matters?

If I am not US tax resident, then I file 1040NR, the tax rate is higher than form 1040. Supposed these tax I paid to US can be claimed as Foreign tax credit at Canada, then I told CRA that since I have paid IRS so the CRA can only ask me to pay the difference. Why is that not OK? If I pay CRA first, it sounds like I need to ask IRS to refund me more? But how? Based on what? Tax treaty? Otherwise I will pay more tax if IRS refuse to refund me more because I work for US employer but physically in Canada. Another way is can we request IRS not to withhold?

Also, how does your a few days in US per month can work this thing out? Long term speaking, a person can only be tax resident in one country (183 days out of 365 days a year). For this discussion, it should always be Canada.