Double Taxation Risk for Canadian Independent Contractors with California Clients

In this incredible age of technology, it becomes easier and easier to work for anyone from anywhere with each passing day. This has proven to be of particular benefit during the current pandemic. But outside of shelter-in-place or work-from-home orders, the whole world is potentially open for business for independent contractors who provide remote services.

The downside, of course, is that it is now also much easier to find yourself in unknown territory, and I’m not just talking about geography. You see, this type of remote transacting can bring about unpleasant tax exposures that will catch you off guard, particularly if you’re a Canadian independent contractor.

Let’s look at the Golden State. The State of California’s tax agency, the California Franchise Tax Board (FTB), has apparently earned a reputation for imposing high individual (as high as 13.3%) and business tax rates and is notorious for their aggressive enforcement and collection activities. Much like the Internal Revenue Service (IRS), the FTB casts its net far and wide, and they have a unique set of regulations in place to ensure they bring in the largest possible haul… more details check out the video

This video presents a discussion on Canadian and US tax implications arising from working remotely for a foreign employer in a traditional commuter employment arrangement.