US Citizen working for Canadian company

by JOHN SMITH on 2007-02-05 23:27:59

I am a US Citizen who resides in the US and I do not have any ties to
Canada at all. A couple of software programming opportunities have come
up for me that involve Canada.

I read US IRS Pub 597 and some of the terms were not clearly defined for
me. For example: "fixed base" "Canadian resident employer"
"permanent establishment or fixed based of an employer in Canada"

I am going to hire an attorney or tax advisor competent in this field if
I take one of the following jobs, but was hoping to get some free
advice on the topic before I start to negotiate compensation packages
with the firms involved.


Scenario 1) I am an individual consultant who lives and is based in the
US. I work for a Canadian company and will travel to Canada often to
meet with a team there. I will be in Canada for maybe 100 days per
year, but I will not have a permanent home or office there - I will stay
in hotels and borrow space from the team that is hiring me whenever it
is available. I will also work in my home office in the US for this
same company in Canada about 100 days per year. Will the Canadian firm
withhold taxes from my consulting income? Will they issue me a US IRS
Form 1099? Will I owe any Canadian taxes on the consulting income? I
assume that I will pay US taxes on the income regardless of whether the
consulting was performed in the US or Canada?

Scenario 2) A single ompany has offices in both the USA and Canada. I
am employed by the USA based office and I live in the USA. The Company
issues me an IRS W-2 at the end of the year. During the year, however I
travel frequently to the Canadian office of the company I work for. I
do not have a home or permanent office space in Canada, but I am there
for 100 days per year. Do I pay my USA taxes as if I had performed all
of my work here in the USA? Or does the fact that I travel frequently
to the Canadian office complicate things? Should the company withhold
any Canadian taxes?



Thank you.