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Hello. With there being more people working from home like in my situation I am curious as to what the process should be if you’re an American with Canadian PR living in Canada (Alberta) working remotely for an American company. Is it better to be an independent contractor or just stay employed with them? Do you file in the US first and the in Canada? It’s all so confusing. Thanks for any guidance!
Hi Andrea, if you are an employee of an American company and living / working in Canada, then your US employer must begin deducting Canadian payroll taxes from your paychecks, and must remit payroll taxes to the CRA. Some employers don't want this hassle, so they prefer to enter into a contractor relationship with their remote works. However, before becoming an independent contractor, you must make sure that you are truly 'independent', and not really an employee in fact.
Also, as a US citizen, you have to pay US income taxes on your worldwide income, but you can claim a foreign tax credit for part of the Canadian taxes paid.