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Ask YC: Do we need to file/pay US taxes (Canadian corporation)?

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Re: Ask YC: Do we need to file/pay US taxes (Canadian corporation)?

#11

Post by mgk »

We just went through this.

We decided to charge in USD. We have a lot of international users, and while people generally know where their own currency stands vis a vi the Greenback, we surmised that they wouldn't be nearly as familiar with where they stand against the Loonie.

We initially went with the Canadian cc processor Moneris. They support recurrings, although their API support sux. Watch out too for the application approval process which was v slow and v painful.

We do not see the cc numbers. They are passed along to Moneris directly.

Moneris could only support Visa and MC transactions for USD, which was pretty limiting (credit cards are not used nearly as much in countries like Germany and Brazil) so we also went ahead and hooked up a pay by Paypal.

Shortly after we set everything up, Paypal started offering its cc processing service to Canada. They have much better API support then Moneris (although PP’s web UI sux), and since we had already set up the PP payment option, it was a no brainer to move it all over to PP. So PP now processes our cc as well.

Similar to Moneris, we do not see the cc numbers at all. They are passed along to PP directly.

(We took a look at Amazon, but they were not offering their 'Easy Pay' service in Canada.)

If you are a Canadian registered, there is no need to worry about US taxes.

Re: Ask YC: Do we need to file/pay US taxes (Canadian corporation)?

#12

Post by btilly »

pbhjpbhj wrote: post #8
tom_rath wrote: post #4

Earlier quoted context omitted.

If your business has no presence in the United States you should not need to pay any taxes to that government. This topic comes up frequently on the BoS board: http://discuss.joelonsoftware.com/default.asp?biz and a quick search there should provide a ton of resources. If in doubt, consult an accountant.

They clearly have a US presence if they're selling to US customers though. Rather than asking a Tax Attorney could you ask the IRS? They should know! Bet they won't tell you though.

Did you mean "should know" as in "are likely to know" or "it would be good if they knew"? Based on my experience with them, I would agree with the latter possibility and disagree with the former.

OTOH I'm also the only person I personally know who wound up filing the simplest US tax form along with a handwritten note describing additional income that was not taxable for a reason that could not be found on any US tax form. For the curious, that reason can be found as article XX in http://www.irs.gov/pub/irs-trty/canada.pdf. (That is a later form of the treaty than the one I was using, but article XX is unchanged.)

Re: Ask YC: Do we need to file/pay US taxes (Canadian corporation)?

#13

Post by jacquesm »

btilly wrote: post #12
pbhjpbhj wrote: post #8

Earlier quoted context omitted.

They clearly have a US presence if they're selling to US customers though. Rather than asking a Tax Attorney could you ask the IRS? They should know! Bet they won't tell you though.

Did you mean "should know" as in "are likely to know" or "it would be good if they knew"? Based on my experience with them, I would agree with the latter possibility and disagree with the former. OTOH I'm also the only person I personally know who wound up filing the simplest US tax form along with a handwritten note describing additional income that was not taxable for a reason that could not be found on any US tax…

That tax code only applied to you because you had a presence in the US though.

As for the communications with the IRS, compared to similar institutions in other countries they are absolutely stellar.

Please note that that is a relative statement :)

Re: Ask YC: Do we need to file/pay US taxes (Canadian corporation)?

#14

Post by alexsolo »

mgk wrote: post #11

We just went through this. We decided to charge in USD. We have a lot of international users, and while people generally know where their own currency stands vis a vi the Greenback, we surmised that they wouldn't be nearly as familiar with where they stand against the Loonie. We initially went with the Canadian cc processor Moneris. They support recurrings, although their API support sux. Watch out too for the applic…

Thanks for the info (I'm one of the co-founders of PagerDuty).

Which PayPal product are you using? Website Payments Pro? We'd like to chat with someone who's gone through the process of setting this up already. We are also trying to evaluate which provider to use. Can you please send me an email (alex [at] pagerduty.com)?

Re: Ask YC: Do we need to file/pay US taxes (Canadian corporation)?

#15

Post by jacquesm »

mgk wrote: post #11

We just went through this. We decided to charge in USD. We have a lot of international users, and while people generally know where their own currency stands vis a vi the Greenback, we surmised that they wouldn't be nearly as familiar with where they stand against the Loonie. We initially went with the Canadian cc processor Moneris. They support recurrings, although their API support sux. Watch out too for the applic…

Beware of account termination fees with moneris.

Re: Ask YC: Do we need to file/pay US taxes (Canadian corporation)?

#16

Post by btilly »

jacquesm wrote: post #13
btilly wrote: post #12

Earlier quoted context omitted.

Did you mean "should know" as in "are likely to know" or "it would be good if they knew"? Based on my experience with them, I would agree with the latter possibility and disagree with the former. OTOH I'm also the only person I personally know who wound up filing the simplest US tax form along with a handwritten note describing additional income that was not taxable for a reason that could not be found on any US tax…

That tax code only applied to you because you had a presence in the US though. As for the communications with the IRS, compared to similar institutions in other countries they are absolutely stellar. Please note that that is a relative statement :)

Being that I am a dual US/Canadian citizen, it would have applied to me regardless. I don't know what most other countries do, but I'm definitely annoyed that the USA will try to tax my non-US earnings because I am a citizen.

As for similar institutions in other countries, the only one I have experience with is Canada, and my experience with them has been orders of magnitude better than my experience with the USA. How do you think I tracked down the right article in the US/Canada income tax treaty to avoid double-taxation?

Re: Ask YC: Do we need to file/pay US taxes (Canadian corporation)?

#17

Post by jacquesm »

btilly wrote: post #16
jacquesm wrote: post #13

Earlier quoted context omitted.

That tax code only applied to you because you had a presence in the US though. As for the communications with the IRS, compared to similar institutions in other countries they are absolutely stellar. Please note that that is a relative statement :)

Being that I am a dual US/Canadian citizen, it would have applied to me regardless. I don't know what most other countries do, but I'm definitely annoyed that the USA will try to tax my non-US earnings because I am a citizen. As for similar institutions in other countries, the only one I have experience with is Canada, and my experience with them has been orders of magnitude better than my experience with the USA. Ho…

There is the 180 day rule, I'm not sure if it applies to you.

Re: Ask YC: Do we need to file/pay US taxes (Canadian corporation)?

#19

Post by btilly »

jacquesm wrote: post #17
btilly wrote: post #16

Earlier quoted context omitted.

Being that I am a dual US/Canadian citizen, it would have applied to me regardless. I don't know what most other countries do, but I'm definitely annoyed that the USA will try to tax my non-US earnings because I am a citizen. As for similar institutions in other countries, the only one I have experience with is Canada, and my experience with them has been orders of magnitude better than my experience with the USA. Ho…

There is the 180 day rule, I'm not sure if it applies to you.

I don't know what 180 day rule you're talking of, but I'm very sure it did not apply. A US citizen is taxable in the US for world-wide income. (Though there is a nice tax break for money made as a foreign resident, and there are lots of double-taxation treaties with lots of countries.)

I was in the bizarre situation of being a US citizen living in the US, going to a US school, being paid a scholarship from the Canadian government that was not taxable in the US. To make things worse I was actually a dual citizen in a country that barely acknowledged the possibility of such. In short I was that bureaucratic nightmare called "an exception they don't have any forms for".

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