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I work for an American company in NYC where I live. This company

I work for an American...
I work for an American company in NYC where I live.
This company has a Canadian branch.
I have a Canadian PR card (permanent resident card) that I would like to keep.
One of the ways to keep it is to work for a Canadian company.
So I was looking to become an employee of the Canadian branch of the company I work for - however I would still reside in NYC.
I talked to the company accountant and he said there may be problems if the IRS ever audits us, as they would see a problem with there being an employee who works in NYC, lives in NYC but does not pay city and state taxes. I know there is a tax treaty between the US and Canada but my question is: is this feasible, what I am trying to do? Or would there be a potential problem as I was explained?
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Answered in 54 minutes by:
10/2/2012
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,592
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

As a US Resident you are taxed on your worldwide income. Same with your New York state and city taxes - you live there, you are taxed there regardless of where your employer is located. Therefore, what you are trying to do won't work. You might not have taxes withheld, but they will still be payable at the end of the year. Also, your employer would still need to withhold American payroll taxes such as social security and medicare since you are working inside the US, regardless of where the company is headquartered.

Hope this all makes sense - basically it doesn't matter where your employer is headquartered. If you live in the US, you are taxed in the US. If you live in New York, you are taxed in New York.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO XXXXX ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid, but the Web site will still collect your payment. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site**
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Customer reply replied 5 years ago

Hi,


I am not trying to do anything shady with taxes - all I care about is keeping my Canadian PR, which I can if I am employed by a Canadian company, even if working in the US.


 


So if I work for a Canadian company and my paycheck comes from them, it will get to my hands already after the discounts for federal and provincial Canadian taxes.


 


And I do know I won't be double-taxed, so come time to do my taxes in the US, I will get credit for what was withheld in Canada.


 


So I don't understand how my employer would withhold social security and medicare if they would be Canadian.


 


My question pertains to what I specified in the original question.

It doesn't matter where your employer is located - it matters where you live. You live in New York City, therefore unless you drive to Canada to work, you do not work in Canada even if your employer is Canadian.

So, you will still be liable for US taxes, including your social security tax. Your employer cannot just treat you as Canadian because you work for a Canadian subsidiary, especially when you live and work in the United States.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO XXXXX ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid, but the Web site will still collect your payment. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site**
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Customer reply replied 5 years ago

I believe we got sidetracked.


 


My main question is if it would be a problem for the company I work for in the US to have me employed through their Canadian branch if the IRS were to ever audit them for any reason.


 


As I said, I'm a PR in both countries and I don't mind paying whatever taxes - I just don't want to cause trouble for my employer, and I want to keep both PRs.


 


If you say the answer is "there would be no problems for your employer", then could you please clarify when the US taxes will be discounted? Because if my paycheck is coming from the Canadian payroll, then it's being discounted at the source for Federal and Provincial taxes, so at what point would it be discounted for City and State (NYC/NY) + SS and Medicare here?


 


I appreciate the patience but please kindly address the point about whether all this would be a problem for my employer, and then if not, how so. Thanks.

If they are withholding the proper US taxes, then there shouldn't be an issue for them.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO XXXXX ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid, but the Web site will still collect your payment. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site**
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,592
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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