Earning income from the US while living in Canada

[kenmoremmm]

I'm not a permanent resident of Canada yet - still on a temporary work permit as a US Citizen. I'm considering taking on some work in the US. Maybe it would total $5-10k/year. What tax implications are there as a full time resident of Canada? I haven't had much time yet to dive into really understanding the CRA tax code.

[Bingeworker]

Our family is cross-border (Canadian residents), and the thing is that both countries want all of your money.  They don't both get it though, due to tax treaties, but it does make doing your taxes a hassle.  It's doable though, my husband lives in Canada but earns his money in the US, but every year there is some sort of little bureaucratic crisis that gets slowly and annoyingly sorted out.  Canadian taxes are higher, although some states come pretty close.  I should mention that I'm not the one doing our taxes (husband is) so my info is second-hand, but if you don't mind the bureaucracy and a few headaches, then don't be too worried about continuing to earn American money, if the 5-10K annually is worth it for the added tax complexity.

[Bingeworker]

... forgot to add, it's the Canadians who will get your taxes since it's here you will be living (unless you are incorporated and leaving the money in the states as part of a business, in which case you would be no stranger to complication anyway).  I'm assuming you knew that though.

[ricelife]

Can you not be a W2 employee? I heard that if you are an independent contractor this would be less of a problem. Bill them hourly and invoice and then pay your taxes in Canada.

I am thinking of doing something like this too - live in Canada (Canadian citizen) while working for US clients and getting paid in USD via invoicing/self employment.

[kenmoremmm]

OP here:
Yes, it sounds like a W2 employee as an independent contractor is the way to go per my cross-border tax advisor here in Canada. It definitely has me thinking about options, that's for sure. I quit my job with my former employer b/c they were not international (only in the US). I needed a company that would be able to move me into Canada. Now that I'm in, assuming I can secure permanent residency soon, I could possibly jettison my current employer and get a much much higher contractor rate from the US employer. I would probably be able to go down to 1/2 time instead of full time...

[GreenQueen]

I've done this, making USD in the Canadian branch of US company with Canadian payroll. That worked because all US federal taxes were offset by the Canadian federal tax credit, I paid almost no state taxes, and no social security.

Do not become a full-time employee for a US company that does not have a Canada branch or payroll. US taxes on citizenship not residency. Canada will give you federal tax credits on federal income but not state or social security. So you will be taxed by Canada and the States for the full income, but Canada will only offset what you make at the federal level. Maybe you don't mind "losing" that money (in theory you will eventually get social security back if you have enough points), it's probably not worth it.