We have a remote location employee that is moving across the border into Canada. What did you do with employement taxes?

Question: Is the worker a US Citizen or not.

If a US Citizen, continue to w/h as normal (as well as State/Local). That person will have to file an IRS 8088 to obtain a IRS 6166 (proof of taxpayer status) in the US and provide it to the Canadian tax authorities per the Tax Treaty and double taxation.

If they are not a US Citizen and are not working in the US, no taxes need to be deducted.

Once he establishes residency in Canada then you need to start remitting Canadian taxes. The easiest solution would be to call ADP Canada and register to run a one person payroll with them. Will be fairly inexpensive and they will take the lead in filings. (Personal note to Mr Johnson above, Canada is already a step ahead with providing health care for its citizens and various employee protections at the expense of the employer. We have a long way to go in this regard so no need to worry)

Mary, you should also take in to consideration the potential for the US Company to create tax-nexus in Canada and consider whether you should establish a branch or a subsidiary to hire this employee. It is likely that ADP will require you to have a basic ' business registration' in order to establish a local payroll but I would recommend speaking with a Canadian attorney (perhaps start with your US attorney as they may already have experience with US/Canada issues).

If the employee is based out of Canada and satisfies the test of residency then he will be liable to tax in Canada. The employer would need to withold taxes in Canada and the taxes witheld can be offset against his tax liablity if any in the US.