Two exciting questions about Canadians earning income abroad
May 26, 2008 3:20 PM   Subscribe

How do taxes work for a Canadian citizen producing creative content for an american publication? How about a Canadian providing 'e-training' to an American?

I currently have a gig producing content for a subscription-based web-publication, based in the U.S. The publication is a registered LLC. I know that creative work is different from, say, contract work, but I'm still sort of confused about how it is treated, as income... I'm obviously not going to be getting a T4 or anything. In total, the income should come out to a little more then $1000 a month. How do I go about reporting this income? I'm sort of an income-tax noob, I'll concede up front.

Slightly more obscure, I also occasionally do work teaching certain computer-skills to individuals from around the world, for which they pay me hourly. The skillsets involved are fairly obscure, and their instruction commands very good compensation. As an individual, how would this income be dealt with for tax purposes? I imagine it's different from the creative work, since i'm more accurately working in a sort of consultancy roll, albeit individual-to-individual, not to a business.

In both cases, the work is done purely through the internet, with no physical interaction between parties. In the first case, the compensation would generally be via cheque; in the second it would be through something more like paypal.

What's the easiest way for me to deal with this income? Is there a simple form for this sort of stuff, or is it complicated?
posted by anonymous to Work & Money (6 answers total) 1 user marked this as a favorite
Look, you need to talk to the CRA if you have questions. You could get misinformed here. You haven't even mentioned if you're an incorporated business or a sole proprietorship or partnership nor what province you're in.
posted by loiseau at 3:48 PM on May 26, 2008

This is one of those circumstances where being wrong can be quite costly. It's probably worth speaking to an accountant about this (a real accountant, not H&R Block).
posted by Nelsormensch at 3:57 PM on May 26, 2008

I have written articles for US magazines as a Canadian citizen & resident. You fill out a US tax form indicating that you're a foreign national and do not need tax withholding. Then you have to self-report the income on your Canadian tax return. You don't file US taxes as you don't have a SSN or ITIN and you're not a US citizen or resident.

In all cases, any income you make has to be reported to the CRA. If it comes from someone who doesn't themselves file with the CRA (a foreign company) there's a "other income" line on your tax returns. It all goes there.

Note: yes, they have no way of verifying this. You could, in theory, simply omit all your foreign earnings from your Canadian tax return. The CRA has no way to find out without an audit, but if you are audited then you
ll be in trouble.
posted by GuyZero at 4:49 PM on May 26, 2008

Specifically, such income would be stated on line 130 or line 164/137 of your T1 form. Consult a tax professional or the CRA tax guide instructions as to which one applies to you.
posted by GuyZero at 4:53 PM on May 26, 2008

Line 130 isn't a great one to use, since (I think) you wouldn't be able to write off self-employment expenses against it.

GuyZero's approach is the one I'm more familiar with. IANAL,IANAA.
posted by acoutu at 8:17 PM on May 26, 2008

I assume you're posting anonymously to evade being caught for tax evasion. It's not worth it. The CRA is very good at sniffing out anomalies, especially when your lifestyle doesn't match your income. It may take them some time to get around to auditing you, but audit you they will.
posted by randomstriker at 10:18 PM on May 26, 2008

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