How do I figure what taxes I have to pay if I work and live in the US but am employed by a Canadian Co?

Question

I live in the US and am a US citizen. How do I figure what taxes I have to pay if I work and live in the US but am employed by a Canadian company? I am a salesman and have been offered a job and they tell me that I will be responsible for figuring my own taxes. Help please!

Answer 1

If the Canadian company has offices here in the US, then they should be following US laws. If they're offering jobs to American citizens in the USA, they should be following US laws regarding taxes, so it should be the same as an American company.  

Answer 2

From what you said, they are hiring you as an "independent contractor." You are responsible for your own FICA tax (social security, medicare) at 15.3%, plus withholding on your own income tax. If you will owe more than $1,000 for the year in taxes, you are also responsible for making estimated tax payments. You report your income on a Sch-C, form 1040.

The good news is you get to take business expenses. So you also have to keep records of these.

The company being based in Canada has nothing to do with what taxes you pay in US.

Answer 3

The United States has an Income Tax Treaty with Canada. This treaty explains how taxation works for both countries. You said that you reside in the United States, but, does that mean that you drive back and forth to canada, or that you work for the Canadian company in the United States. Residency is a big issue with this treaty.

You can read about the Treaty in IRS Publication 597. Go to irs.gov and type in Canadian income in the search box and it will take you to it.

Answer 4

They can only do that if you are an independent sale rep. If yes, tuck away 40% and consult the tax laws.  If no, they should handle are extortion (withholding)

Answer 5

Ignore the post that says to go read the tax treaty.  You are living and working HERE, so the treaty doesn't apply.