[arcee]

I'm considering accepting a position as a contractor with a Canadian company. I'll be working in the U.S. but being paid out of Canada. As a contractor I understand the rules around FICA, etc. but want to know if the Canadian company sends a 1099 MISC at the end of the year as a U.S. company would or is there another form they would use.

[AtlantaTaxExpert]

Arcee:

If you work and are paid in the United States, the company has to follow U.S. tax law.

The easiest way for them to do so would be to send you a Form 1099-MISC and treated as an independent contractor. That way, they pay no taxes, and you pay both sides of the Social Security and Medicare taxes (total of 15.3%).

This being the case, you should adjust your salary demands accordingly.

[Wayne2006]

Your treatment in the US will be that of reporting your "world wide" income.

As far as Canada is concerned, as long as you are not a resident in Canada (that means "ordinary settled manner of life" as being in Canada), you will not be taxed in Canada on your Canadian source income, if there is appropriate witholding taxes taken at source.

Depending on the kind of income - usually there is a 15% witholding tax paid to the Canada Revenue Agency.

Canadian employers don't necessarily issue the equivalent of a 1099. The normal Canadian reporting forms are as follows:
T4 - employment income (compares to a W2)
T4A - for other income, directors fees, miscellaneous items
T5 - investment income - interest & dividends
T3 - Trust income

NR-4 "Non Resident" reporting income - shows income & tax withheld

Those are the main reporting forms.

The requirements in Canada are not as strict as the US as it applies to sub-contractors. Basically, if I hired a non-resident as a contractor and want to claim the expense as a business expense, I can do that without any requirement for reporting. If the work is more "employment related" - & there is a separate set of rules for "employment" vs "self-employed" then we would be looking at witholding tax issues.