Lise asked:

I'm a freelance editor who lives and works in Toronto from a home office. In August 2009, through a freelance projects web site (Guru.com; Elance.com), I started doing business with a couple of American companies, some of whom used the project web sites for payment (escrow, then I transferred the funds to my bank account), others with whom I entered into a contractual basis, being paid directly by company cheques. At this point, I'm wondering how I go about claiming this income for my 2009 taxes. And, since these seem to be on-going projects, how I'll go about claiming for subsequent tax returns.

Adrienne K. Woodyard answered:

A person who is resident in Canada for tax purposes is required to report all of the income he earns, even from sources outside Canada, in his Canadian (T1) tax return. Therefore, you must report any income derived from customers in the United States in the same way as your Canadian-source income.

You will also likely be required to file a U.S. tax return in relation to the income you earned from sources in that country (even though you may be exempt from paying U.S. tax). You should consult with a U.S. tax accountant with respect to this issue.

About the author

Adrienne K. Woodyard is a partner at Lerners LLP. Her areas of practice are: tax law and business law. She can be reached at: (416) 601-4146 or awoodyard@lerners.ca.

 
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