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US taxpayers in Canada (US citizens and green card holders) earning business income would be subject to US self employment tax (SE tax) if it wasn’t for some exemptions in the Canada-US Totalization Agreement.

Under the current exemption, US citizens earning business income in Canada will be exempt from US SE tax as long as they reside in Canada, even if this income is partially earned in the US (although regular US tax would apply).

Although this income would not be subject to US SE tax it will be fully subject to Canadian CPP premiums.

If you have any questions related to SE tax and how it relates to your business income please don’t hesitate to contact us at 250-381-2400.

Phil Hogan

Phil Hogan is a Canadian and US CPA working with clients throughout Canada and the US. Phil advises on cross border tax and financial planning matters. Phil can be reached at phil@hutcheson.ca or via telephone at 250-661-9417. You can also read more about Phil at Hutcheson.ca/phil.
Phil Hogan

One response to “Do US expats in Canada Need to Pay Self-Employment Tax?”

  1. Adam Broome says:

    Hello,

    I am glad I found your website.

    My wife and I are US citizens. We reside in Canada… and have no residence in the USA. We are self employed musicians and travel for work both in Canada and the US. The question we have that is partially answered, but not fully enough for our confidence to proceed with filing:

    Do we need to submit Schedule C with our 1040?

    Thank you for your help in this.

    Adam

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Philip Hogan

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The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.

Phil Hogan

Phil Hogan is a Canadian and US CPA working with clients throughout Canada and the US. Phil advises on cross border tax and financial planning matters. Phil can be reached at phil@hutcheson.ca or via telephone at 250-661-9417. You can also read more about Phil at Hutcheson.ca/phil.
Phil Hogan

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