Canadian business, how to pay U.S. employee?

[rogainer]

Does anyone here have a Canadian business with U.S. employees? Or know the best way to handle this? Or can refer an accountant who knows?

Employee or subcontractor? U.S. bank account? Paypal? Wire transfer?

Looking for convenience & to minimize taxes & fees for both the employee and employer.

Thanks

 

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[OldFaithful]

If you have an accountant that you use already, ask him/her. If not, it's probably time to find one. Ask for referrals and try to find an accountant that has some experience in this area. It will take some time/effort, but it may be the only way to get it done.

 

[MidwestLandlord]

According to my accountant wife,

The USA will treat it as US income, so you'll have to follow all the rules such as W-2's, FICA, Obamacare if applicable, etc.

Plus there is licensing involved if the business is actually taking place in the US (federal and state level licensing). Also, there are state level tax codes to deal with, including income tax etc.

Also, you might have obligations on the Canadian side of things, such as a T4.

She said be aware the the US IRS fine for not issuing a W-2 is the tax due, PLUS up to 25%, PLUS interest, and that the US and Canada have laws in place that allows the Canadian government to collect this on behalf of the USA.

Long story short: Get a CPA that is experienced in US-Canadian Tax codes and wages.