Working Remotely for a US Company From Canada: Employee, Contractor, or EOR
The hub is the tax-aware income guide. The status test, if the US company wants a contractor but manages you like staff, is employee versus contractor. GST/HST and T2125 are side-hustle taxes. What a Canadian salary leaves after tax is the province table. Incorporating the contract is a separate decision.
- Residency is about your ties to Canada, not the address on the US offer. A factual resident reports worldwide income.
- The Canada-US social security agreement generally avoids paying both CPP and US Social Security on the same work. Work done in Canada is the usual CPP case. A certificate of coverage is for detachments, up to 60 months under that agreement.
- Self-employed coverage under the agreement follows the country of residence. A contractor living in Canada should expect CPP, both shares.
- US tax withheld at source may be creditable on the Canadian return. This page does not quote a treaty article rate.
- An employer of record can put you on a Canadian T4. What that firm charges the US company is not a figure this page has.
Which structure are you actually in?
| Employee of the US company | Self-employed contractor | Employee of a Canadian employer of record | |
|---|---|---|---|
| Slip | T4 if they run Canadian payroll. A US Form W-2 does not replace it. | No T4. Income on Form T2125. | T4 from the Canadian employer of record |
| Income tax | Employment income, taxed in your province of residence on December 31 | Business income, same residence rule | Employment income |
| CPP | Work performed in Canada is generally pensionable here unless a certificate of coverage says otherwise | You pay both shares. 2026 self-employed maximum $8,460.90, plus up to $832 of the second additional contribution. | The Canadian employer withholds the employee share and remits both shares |
| EI | Only if the employment is insurable in Canada | Not automatic. Special benefits are optional. No premium is quoted here. | Employee EI if the job is insurable |
| GST/HST | Not charged on employment income | $30,000 small-supplier tests, unless the work is rideshare | Not charged by you. You are an employee. |
Table as of October 2026. It is a classification aid. A contract that says "contractor" while the company sets your hours, tools, and rate can still be employment. CRA will look at the facts. Form CPT1 is the ruling if you and the payer disagree.
Where is the work pensionable?
The Canada-US social security agreement, in force since August 1, 1984, is designed to stop people paying into both CPP and US Social Security for the same work. CRA's current certificate-of-coverage page says a detachment to the United States can be covered by a certificate for up to 60 months. That tool is for an employer sending someone abroad temporarily, expecting them to return. It is a poor description of a person hired in Canada to work from their kitchen for a company that has no Canadian payroll.
CRA also says that, under most of these agreements, a self-employed person who works in one or both countries is subject to the legislation of the country where they reside, and should ask for a certificate of coverage so contributions are not doubled. Living in Canada and invoicing a US client points at CPP. It does not point at opting out because the invoice is in US dollars.
If you are an employee and the US company does not remit CPP, the contributions can still be owing on Canadian pensionable employment. If you are self-employed, both shares are on your return. The 2026 employee maximum outside Quebec is $4,230.45, and the self-employed maximum is $8,460.90, before the second additional contribution. Quebec uses QPP. Do not wait for a US Form W-2 to mention CPP. It will not.
What about US tax that was already withheld?
Some US employers withhold US federal tax, and sometimes state tax, because their payroll system assumes the worker is in the United States. You may also have to file a US return for that income. Canada, if you are resident here, still wants the income. The usual relief is a foreign tax credit for US tax you could not avoid, not a second full tax on the same dollar. This page does not quote the treaty article, the credit limit, or any state. The Canadian form is the foreign tax credit. Keep the US slips. If both countries treat you as a resident, or the work is done partly in each country, get a cross-border advisor. A blog table will not split a hybrid year.
The US company may ask you to complete an IRS form so they know whether to withhold. Which form is valid depends on whether you are an employee or a contractor and on the type of income. Do not sign a form because a template called it standard. Read the form's own instructions against your status.
How do you record US dollars?
Canadian returns are in Canadian dollars. Convert each amount with a method you can defend: the rate on the day you received it, or a method CRA accepts for that kind of income and that you use consistently. This page does not quote a Bank of Canada rate and it does not recommend a transfer service. Write the rate down when the deposit hits. Reconstructing a year of USD invoices from a December average is how T2125 numbers drift away from the bank account.
A US company does not put you in a US state for Canadian provincial tax. You pay the province or territory where you reside at year-end, plus federal tax. Quebec files its own return. The salary table is the employment-income picture if you are a T4 employee with no other deductions. A contractor's taxable income is profit, not the invoice total.
Frequently asked questions
Can I stay a US employee and ignore CRA?
Not if you are resident in Canada and performing the work here. The US payroll department's habit is not the Canadian residency test. Report the income. Then deal with whatever US tax was withheld, as a credit if it qualifies, not as a substitute return.
Is an employer of record just a contractor with extra steps?
No. Done properly, the employer of record is your employer. You get a T4, Canadian withholdings, and employment standards from that relationship. You do not charge GST/HST. You also do not deduct business expenses the way a proprietor does. The price the US company pays the employer of record is their cost. It is not your gross income.
Should I incorporate to bill the US client?
Only after you know you are actually a contractor and the profit is large enough to justify a second taxpayer. A corporation that you use like an employment contract can be attacked as a personal-services business. The incorporation guide and the salary-versus-dividend guide are the Canadian half. They do not remove US withholding questions.
Do I charge GST/HST to a US client?
Employment income is not a GST supply. A contractor's services may be taxable, zero-rated, or outside the small-supplier threshold depending on the place-of-supply rules and the $30,000 tests. Do not assume "US client" means zero. Read the zero-rating rules for exported services against where the work is consumed. The side-hustle article has the registration threshold. It does not have your place-of-supply answer.
What if I spend three months in the United States?
Then the facts change: where the work was done, which country's social security applies, and possibly residency. A certificate of coverage is the tool when an employer detaches you. A tourist stamp is not a ruling. Track days and duties before you assume the kitchen-table column still fits.
Sources
- CRA: Canada-United States social security agreement
- CRA: who can apply for a certificate of coverage
- CRA: international social security agreements and CPP
- Canada: social security agreement with the United States, benefits
- CRA: 2026 CPP maximums
USD in the bank is still a Canadian filing.
Status, CPP, and the foreign tax credit are the parts a US offer letter skips. The 2026 tax guide is the Canadian side of that letter.
Get the 2026 Tax Guide — $49 CAD
