Jerome Roth
US Employee Income Tax Services
Our firm offers US tax preparation and filing services for employees working in the US. We use professional tax preparation software to enable us to provide accurate, timely and efficient services. This enable us to efile both federal and state tax returns where applicable. We also offer help for employers with US withholding taxes and filing election forms for their employees. The payroll regulations are different for each US state and therefore we do not offer US payroll services. If needed, we can refer you to an economic US payroll provider.
Requirement to file US Income Tax returns
Canadian residents working temporarily in the US would report and file US tax returns under the following conditions:
- Employment income over $10,000 USD and physically present in the US for more than 183 days,
- Employed at a fixed or permanent US establishment, or
- Employed by a business controlled by a US person or entity
Employees would be filing a US non-resident tax return and reporting only their US sourced income. Employees would need to pay US income tax directly if it was not deducted from the paycheques and remitted to the IRS. The IRS charges interest on payments received after the April 15th filing deadline.
Dual Reporting of Employment Income
Canadians report and file income tax returns based on world income. The US wages would also reported on their Canadian personal income tax returns. The US non-resident tax return is prepared and filed first and followed up with the Canadian tax return. Canadian tax payers can claim the US tax paid as a foreign tax credit on their Canadian returns. This eliminates double taxation.
Reduction of Canadian Income Tax Withholdings
Canadian employees working in the US can file form T1213 with CRA to have part or all of their Canadian income tax withholdings redirected to the IRS. This eliminates the taxpayer having to pay the IRS income tax while waiting for a refund on the Canadian tax return.
US Social Security
Irregardless if they need to file a US tax return, US employees should get a US Social Security Number (SSN) when they start working in the US. Having the US SSN allows them to efile their returns and to make income tax payments in a timely manner.
Canadian employees would pay US Social Security taxes on their employment income unless:
- Employed with A, D, F, G, H, J, M, or Q work visas
- Employees are covered under Canadian CPP
US taxpayers generally need a contribution period of 40 quarters (10 years) before they are eligible to collect US Social Security payments. The 2024 maximum US Social Security withholding tax is $10,453 where the maximum CPP withholding tax is $3,868.
Canadian employers can file form CPT56 for their employees with CRA to continue CPP coverage for up to 5 years while working in the US. This would exempt the employee from paying into US Social Security.
US Tax Preparation Fees
- Basic tax preparation fee (federal 1040NR) $380.00
- Basic tax preparation fee per state $50.00 (each state)
Our basic US tax preparation fee includes:
- 20 minute initial consultation to discuss income tax filings
- Preparation and filing of the federal US 1040NR non-resident income tax return
- Preparation and filing of State non-resident income tax returns as required
- Access to our portal to view, upload, download and sign documents securely
- Transfer of information to a Canadian income tax preparer
- Assistance to Canadian income tax preparers with respect to CRA queries regarding confirmation of foreign tax credits
Canadian income tax services, elections and other US income tax filings can be provided for additional charges.
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Posted: 5/2/24
