When considering telecommuting for a job in another country (also known as cross-border telecommuting), keep in mind the differences in how each country collects taxes. This applies to countries like Canada and the United States, as well as between states and provinces.
Investigating the Tax Implications of Merchant of Record Services – The Truth About Cross-Border Taxation
Under the Canadian system, taxes are based on residence, not citizenship. If you are in Canada for more than 183 days, your income, regardless of its source, is taxable in Canada. There are exceptions for government employees.
In the United States, taxes are based on citizenship and where you do the work. So, based on citizenship, the US can tax its citizens in Canada. Where you do the work determines state tax issues.
There is a tax treaty between Canada and the United States. It sets out the circumstances for who has a claim on income tax and who must pay the country in question. There are provisions to prevent double taxation.
