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Work Assignments In Canada

In general, U.S. employees working on assignments in Canada are taxed only if they earn greater than C$10,000 of employment income (for providing services in Canada) or if they are in Canada for greater than 183 days in a given calendar year and their remuneration is borne by a U.S. employer's permanent establishment or fixed based in Canada.

To claim a foreign tax credit, employees must complete Form 1116 (http://www.irs.gov, type "1116" in the search box on the RHS, and attach it to the U.S. return). Alternatively, one can claim Canadian taxes paid as an itemized deduction. Both the deduction and credit are limited to foreign income that is subject to U.S. tax, so neither can be claimed for income excluded on Form 2555 (http://www.irs.gov, type "2555" in the search box on the RHS).

US citizens are taxed on World Wide income.

The information contained in this section is not meant to be used or interpreted as tax advice. HRO provides guidance on the general matter relating to assignments in Canada for US employees. Consult you tax advisor for advice on tax matters.