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Working remotely for a US company from Ontario: tax guide

Working from home in Ontario for a US company is common, and the tax side is easy to underestimate. Your employer may not run a Canadian payroll, which means nobody deducts the tax, and you may not receive a T4 slip. The responsibility to report and pay then falls on you. This article explains how the CRA looks at your residency, where US pay goes on a Canadian return, what happens with CPP, how foreign tax credits work and how to avoid a large balance owing. It covers the Canadian side only. US tax rules are separate.

Sora Accounting & Tax · General information · Editorial policy
Updated · 6 min read

Ontario home office, US employer, one Canadian return

Shows pay from a US employer crossing the border to a home office in Ontario and ending up on a single Canadian tax return.

Visual labels: Work in Ontario; US payroll; Canadian T1 return.

What to take away

  • Living in Ontario generally makes you a Canadian tax resident, so your US pay is reported on your Canadian return.
  • If no Canadian payroll is run, you may need to plan for instalments and for CPP yourself.
  • Report pay in Canadian dollars, and claim a foreign tax credit rather than subtracting foreign tax from income.

Where you live decides where you are taxed

For Canadian income tax, the CRA bases your obligations on your residency status, and that depends on all the relevant facts, including your residential ties to Canada. Where your employer is incorporated, or where it pays you from, does not decide it. If you live in Ontario with a home, family and daily life here, you are generally a resident of Canada, and residents are taxed on their world income.

That means salary from a US company for work you do at your Ontario kitchen table belongs on your Canadian T1 return. Residency has its own tests and edge cases, such as a recent move or spending long periods elsewhere. If your situation is not simple, read our explainer on tax residency and settle the question before you file.

What a US employer usually does not do

Canadian payroll deductions are built around employers that live or operate in Canada. The CRA’s special payments chart says an employer that does not reside in Canada and has no establishment here should not deduct CPP contributions, unless it has filed Form CPT13 to cover employment in Canada under the CPP.

In practice, many remote workers are paid through a US payroll provider that withholds US amounts, or nothing, and issues a US wage statement. A Canadian T4 is generally the product of Canadian payroll registration, so do not expect one. Ask your employer or its payroll provider three things in writing: whether any Canadian deductions are made, what is withheld for US purposes, and whether the company has registered anything with the CRA. You need those answers for planning and for your return.

Reporting the pay on your return

Employment income not shown on a T4 slip goes on line 10400, other employment income. The CRA’s page for that line lists foreign employment income as an example, and says it is your responsibility to keep track of what you earn. If the pay is shown on a T4 slip, it goes on line 10100 instead. The CRA’s description of foreign employment income refers to income earned outside Canada, so ask an accountant to confirm that pay for work done at home in Ontario fits the same treatment.

Report the amount in Canadian dollars. For foreign employment income, the CRA says to use the Bank of Canada exchange rate in effect on the day the amount arises, or the annual average rate if pay arrived at various times in the year. For a US wage statement showing 401(k), 403(b) or 457(b) contributions that reduced the figure, the CRA says to add those contributions back to your line 10400 amount. Amounts withheld for US Social Security or Medicare are treated as foreign taxes: do not include them as income, and consider them for the foreign tax credit. Keep a simple pay log with each payment’s date, gross amount, amounts withheld and the rate used.

The CPP question

If no CPP was deducted from your pay, your Canadian pension record for those earnings may have a gap. The CRA’s line 22200 page says you can choose to make CPP contributions on certain employment income, and refers to Form CPT20, Election to Pay Canada Pension Plan Contributions, with Schedule 8 of the return. Whether the election fits a remote worker employed by a US company is something to confirm with an accountant, because the CRA’s own wording of the election focuses on certain kinds of earnings.

The Canada–US social security agreement adds one more point. The CRA’s circular describes a general territoriality rule: work done in one country is normally covered only by that country’s system. Work performed in Ontario therefore generally points to the Canadian system, with exceptions for temporary assignments. Do not assume that either country’s contributions are waived without confirming your position, and see our article on CPP on self-employment income if your US company treats you as a contractor.

Foreign tax withheld: claim a credit, do not subtract it

If any US income tax was withheld from your pay, do not reduce your Canadian income by it. The CRA says to report the full amount and, where it applies, claim a foreign tax credit. The federal credit is calculated on Form T2209 and the Ontario credit on Form T2036, and a tax treaty can affect whether and how much you can claim. Foreign income and foreign tax are both converted to Canadian dollars at Bank of Canada rates.

A credit is generally limited to the Canadian tax on that foreign income, so it does not guarantee that all foreign tax is recovered. If US tax was withheld on work you did entirely in Ontario, the question of whether it was due in the first place is a US tax question, and you may need a cross-border professional to ask for it back. Read our explainer on the foreign tax credit and keep every US wage statement and tax form.

Plan for the tax bill: instalments

Employment income with nothing withheld behaves like self-employment income at filing time: the whole tax bill arrives at once. The CRA says you may have to pay instalments if your net tax owing is more than $3,000 for the current year and also more than $3,000 in either of the two previous years. Net tax owing is what is left after tax deducted at source and credits, so a worker with no deductions can cross that line easily.

Even before instalments apply, set aside money from each payment against the tax for the year, because the balance for 2026 is generally due April 30, 2027. Use your most recent notice of assessment and a reasonable estimate of the year’s total income. Our articles on tax instalments and on setting money aside when self-employed explain the calculation options and the dates.

Employee or contractor, and employment expenses

Everything above assumes you are an employee. Some US companies engage remote workers as independent contractors, and the label alone does not settle the question. A contractor reports business income and expenses, pays both halves of CPP and may need a GST/HST registration. Read our article on contractor misclassification risks and use the employee or contractor tool before you decide how to report the income.

If you are an employee and want to deduct home-office costs, the CRA says Form T2200, Declaration of Conditions of Employment, must be completed by the employer for employees to deduct employment expenses. A US company may be unfamiliar with it, so raise it early. Our guide to working from home as an employee covers what the form is for.

What to bring to an accountant

Bring your employment contract or offer letter, every wage statement or pay record, the dates you worked in Ontario and elsewhere, proof of any tax withheld, and the answers you collected about deductions. Include your last two notices of assessment, since they show the balances that matter for instalments.

Mention any travel to the US for work, because the days spent there and how you were paid for them can raise US questions that this article does not cover. Also mention a move, a spouse’s income and any US citizenship or green card, since each changes the cross-border picture. Starting the conversation before your first pay period of a new job is far easier than rebuilding the records at filing time.

Sources & editorial notes

Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.

Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.