My client teaches Sales Seminars. He is now expanding into the US. Last fiscal he had one client from whom he received $12,500. The have a US tax person preparing a US return. Is there a tax credit for any US tax they pay? Where would I enter it in TaxCycle?
Have a look at Schedule 21 Part 2 for foreign business income tax credit.
Doing business in the USA requires some more details before determining how and where to report the income.
I am not sure what you mean by a Canadian CCPC doing some US business. I am not sure what USA taxes are being paid. What is the legal entity paying the USA taxes?
Here are some questions to consider:-
Was the sale delivered in person or virtually? If virtually where was the tech platform located that delivered the service? Where was the payment received? By a USA tech platform that automatically generated a 1099? In that case can this still be considered to be a sale by the Canadian Corp or is this really foreign income to be reported personally?
Who is the selling entity to the USA customers? What type of entity is it? Registered where?
Where does title transfer or where is the sale deemed to be have been completed? Is that service considered to be delivered in the province of incorporation?
Is the sale subject to Canadian GST or HST?
Would the USA consider that an IRS 1099 form is required?
- Would the recipient’s state, city or region consider that state and/or local taxes would be due as part of the sale? For USA sales often a combination of state and local taxes are due. There are a ton of free presentations and webinars on CPA Academy regarding the traps and penalties re failing to report and failing to remit state and local taxes on income with 1099.
USA state and local taxes are extremely complex. Avalara software provides a high level of compliance.