Friday, May 29, 2009
Stop me if you've heard this one before
So an American attorney, a Canadian tax accountant and an American CPA walk into a bar...
Well, they didn't really walk into a bar--I've been talking with them in trying to get some international tax issues sorted out. Being self-employed in another country comes with a heap of implications far beyond the usual capabilities of QuickBooks, TurboTax, voodoo and chicken blood.
Long story short, we were informed by the Canadian tax adviser that I am going to owe taxes on my "worldwide income" to Canada for the time I am here, and U.S. law provides for the Foreign Income Exclusion so I'm not in double jeopardy. (Note: All of my clients are in the U.S., but because I am doing the work while residing in Canada, they have a claim on the taxes.) So far, so good.
After arriving at the arcane intersection of immigration law and tax law, however, I concluded that there was another key step: I needed to make sure I wasn't obligated to pay into both countries' social security systems. This is precisely what the US-Canada Social Security Totalization Agreement does, and we have similar treaties with dozens of countries.
You can read the legalese in its entirety if you can't get to sleep tonight and/or want to have nightmares, but here are the steps I'm taking based on the counsel I've received:
1) Apply for a Certificate of Coverage as a self-employed individual from the U.S. gov't.
2) Present said certificate to the Canadian gov't.
3) Apply for an Individual Tax Number for Non-residents, which gives me a route to pay taxes to Canada.
"And the taxman’s shouting ’cause he wants his dough
and the wheels of finance won’t begin to slow."
--The Jam, Burning Sky
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I love the "worldwide income" comment...you James Bond you... : ) -Kara
ReplyDeleteForget freelance--paperwork will be your new full-time job.
ReplyDelete