Work in the USA from BC, Canada

Wednesday, July 2, 2014 8:26:07 PM

Take-home Messages

Personal service income that’s foreign sourced requires neither a TIN nor Treaty Benefits.
Foreign sourced means the service provider is physically located outside the US while doing all work.
The US does NOT tax foreign source income.
To the employer, it’s a business expense. They need neither to report nor withhold.
It’s a different circumstance if the service provider enters the US to install, demonstrate, present, or otherwise do any work.
The Tax Law Area of the International Taxpayer Service Call Center is a terrific resource!
Call 1-267-941-1000 and use option 4 and then option 4. There’s little wait time.

I need a U.S. taxpayer identification number, because a potential employer needs a completed W-8BEN form, including Part II on Treaty Benefits. Should I apply for a SSN or ITIN?

That little question lead to a very thorough, unexpected answer – be sure to read to the end, because I was misguided in my question.
Answers are from the International Taxpayer Service Call Center.Use an ITIN unless you’re a US Citizen or resident.
Start with an “informal” tax number, to get started with your employer.
Then start the process for obtaining an ITIN.
Thank you helpful call center person #1!
The ITIN is not designed for income but can be a hack to make it work for contractors.
The SSN is for citizens or those who are sponsored employees.
Questions that the agent asked me:

Personal service income that’s foreign sourced does NOT require Treaty Benefits nor a TIN…
because the US government will NOT tax it.
This is based on the location in which the person completes the services, which in this case, is in Canada.
When my employer pays me, in this case, they have neither to report nor withhold. It’s a business expense.
This might change if my physical presence moves into the USA for an installation, demonstration, or presentation, for instance.
Then we’d need to look at the specific circumstances.
Further, if the employer wanted to hire me as an employee, then they would sponsor me, and I would apply for a VISA and SSN.