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gonorth 06-15-2008 03:13 AM

Consulting in the US - tax questions?

I am a canadian resident who will be working on a consulting contract in the US (NYC) under the TN status.

I share an apartment in Quebec with my girlfriend but will have to rent an apartment in NYC as I'll be working from there.


1) Given I will be working in the US, will I be paying US or Canadian taxes? I can start in late June or July, so have the option of being 6 months + 1 day in either country: does it changes the answer, if so, is US the best option?

2) As a consultant, I can get tax deductions for my business expenses. Does that apply to
- apartment rental in NYC if I'm working at the client (in full as an hotel would be or only fraction e.g. my office)?
- travel to Canada (as I have a residential tie over there), I intend to fly back every other week



Vito 06-15-2008 03:13 AM

Consulting in the US - tax questions?
The only question I can really address is the taxation issue. You will be paying tax in Canada no matter what. If you can avoid US taxation by using the 6 months +1 day option, I'd advise it, because it simplifies your life. However, that is a US tax question, and I don't think you'll be able to do that. You'd need to check a US tax lawyer or the IRS on that, but I believe all US income will be taxable in the US.

In any event, any US tax paid will act as a credit against your Canadian taxes. Pay close attention to that, because the tax credit will not necessarily cover you Canadian taxes due. The system is such that you end up paying the higher of the two rates, probably Canada's.

I doubt you can use either your apartment or flights as a tax write off, those are personal. You should be able to use the office deduction. But again, you'll need both a US and Canadian tax lawyer to advise you on that, because it's an issue in both countries.

Ideal 06-15-2008 03:13 AM

Consulting in the US - tax questions?
Your tax return will be fairly complex at the end of this tax year! Let me try to help you tho.

1) Whatever earnings you earn in Canada are taxed in Canada. Whatever earnings you earn in the USA will be taxed in the USA. What will happen is you should file a part-resident for both countries. It really doesn't matter - the dates you actually become a working resident in the USA is when you'll start paying taxes on earnings in the USA. (Not sure about the Canada rules though)

2) Your personal travel to and fro your home country does not apply as business expense, as it is not directly related to your work. eg: It is not imperative that you visit Canada once or twice a month to do your job. If you attempt to use any "home office" deductions, make sure that there is a dedicated space for all your work related deductions - the IRS is really cracking down on people who use their kitchen table as an office, when in fact, it's used as a kitchen/dining room table more often than an "office". You'll need the total space of your place, the square feet of the dedicated space plus any utility bills associated with your "home office". Make sure you keep paid receipts - not just the bills because they don't show that the bills have been paid. Hope this helps!

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