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Canadian Resident 1040 NR?

Asked by: Dan - 13 September, 2013 Hello,

I am a Canadian Resident with a single member LLC in US. I live in Canada.

My LLC sells goods to US customers. I have a fulfillment center in US that does the shipping for me.

I have few questions -
1. Do I file 1040NR for filing income tax?
2. Do I need to disclose the US Income to the CRA?
3. I also have a sole proprietory firm in Canada, do I need to disclose my Canadian income to IRS?
4. My LLC is registered in Califronia. My $800 Franchise fees were due in April but I havenot paid them as yet. How do I calculate the panelty amount if I pay now?

Answered by: Wray Rives - 15 September, 2013 Dan,

Because your business is selling tangible goods in the US, you are required to report the income from this business to the IRS. As a general rule you will not owe Canadian tax on the US source income, but as a Canadian citizen you are required to report your worldwide income to the CRA.

Non-US residents do not have to report their worldwide income on form 1040NR, just the US source income.

California charges a penalty of 5% of the amount due for each month your franchise fee is late, up to a maximum fee of 25%.


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