This year I've decided to learn a little more about the Canadian tax system than I have in the past, mostly because some of my clients have started working across the the US-Canada border. On the US side of things, Americans report their worldwide income to the IRS, and can claim either the
foreign earned income exclusion or a
foreign tax credit based on their Canadian wages. These two tax benefits help reduce or eliminate the tax bite of reporting and paying tax in two different countries. For Canadians working in the US, they can
adjust their level of income tax withholding using a special provision in the Canada-US tax treaty.
But all of this deals with the US side of things. And I wanted to learn more about the Canadian side of taxes.
The first thing I looked for was information about situations where someone works in both Canada and the US. Catherine Roseberry (About.com's Guide to Mobile Office Technology) has a concise article on cross-border telecommuting. She covered a number of situations I had been wondering about, especially the case of a Canadian citizen telecommuting for a US employer.
The next thing I really needed to know was how to report self-employment income in Canada, as many of my clients work for themselves and so wouldn't be receiving T4 slips to report their Canadian compensation. Susan Ward (About.com's Guide to Canadian Small Business issues) has put together a list of small business tax deductions. Surprisingly, the list sounds very similar to what I am accustomed to advising here in the US: document your business expenses, fund retirement accounts, and give to charity. Ms. Ward also has a list of frequently asked questions about small business tax issues for Canadians.
Some resources for digging further:
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