Freelance Work Done in Canada for Client in the US--How to Get Paid?

Hi,

I am in Canada and I recently have done some work for a US based client. I sent an invoice but they asked for a US Tax ID# that will let me accept US payments, and if I don’t have that they have to “withhold for income tax”. I’ve searched the forums and internet and the IRS site for information about this, but it’s just confused me more!

Basically, what I think I probably need to do is apply for an “Individual Taxpayer Identification Number (ITIN)” from the IRS. This will apparently take 4-8 weeks.

But I’m still confused–will I have to pay US tax to the IRS or does the ITIN # exempt me from that (and I claim it on my income tax here). Also, is it possible to get paid without having this #? They said they’d have to “withold for income tax”–I’m not quite clear whether they mean they can’t pay me until I have this number, or that they have to deduct tax since I don’t have a tax ID #. If the latter, is there a way to get this money back after I get a valid ITIN #?

I am new to all of this (I’ve been doing freelance work for a long time but the few times I’ve gotten paid from people in the US I haven’t run into this issue) so any help would be greatly appreciated!

I can provide more information if this isn’t quite clear enough! Also, I am an individual self-employed freelancer, Canadian citizen only, if that info affects anything.

Thanks for any help, and hopefully the replies can help out other people in the same situation!

Matt

Are you an individual or a company? Unless Canada is different then other countries, they shouldn’t need a tax ID from you at all but I’ve never worked with a Canadian vendor.

you need to sign form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding)

then they will forward the entire amount to you

shout out to da 416

:slight_smile:

It sounds like you’re working as an individual, which is where income tax and paperwork issues would come into play. If you were a company, you wouldn’t have this issue (but I hear you’d have other issues with paperwork and taxes).

So… provide whatever your client needs to comply with US law and then talk with an accountant who specializes in cross-border situations with individuals (you shouldn’t have trouble finding one in Toronto).

Individual. What would you suggest I reply to/ask them?

I doubt it would make a difference whether they’re hiring someone in Canada or the U.K. (for example)–it sounds like an IRS requirement so would apply to any foreign country I imagine.

Thanks–according to the form instructions, I’ll still need to have an ITIN number so I guess I’ll have to apply for that and just wait.

Either that or it looks like they’ll withhold 30%–does anyone know if I can get paid my X amount minus the 30% right now, and then after I get my ITIN tax ID number, apply somehow to get that back? Any links to the form I’d need to submit or something would help (Google’s still not helping here!).

Thanks,

Matt

i’ve receive payment from USA numerous times, and on those occasions where the clients even bother with paperwork (most clients just pay via paypal), i have never had tax withheld, i don’t have an ITIN, and all i’ve ever signed is a W-8BEN

If you are a freelancer, or a company you do not have to do ANY paperwork for this. Just make sure not to charge them GST or PST for anything.

Even if you are an individual, you are still probably considered as being self employed and would bill them as a sole proprietor.

Also, check this article out: http://www.mezzoblue.com/archives/2005/07/11/taxation/

I agree. That form is all I have ever had to sign in order to get payments from the USA.