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Ee's going back and forth to Canada

edited January 2012 in International Issues
I think I already know the answer to this question, but I'm going to ask anyway.

We use Peoplesoft and are able to process payroll for our Canadian employees and our US employees. Canadian tax filings are always a challenge but we can handle it.

However, it appears that we will have some US residents who will be going over to Quebec to work. They may be there for a day, a week, or a year. The facts and circumstances are complicated, but our tax counsel is advising that because these folks are US residents we must tax them on the US side and issue W2's, while simultaneously taxing anything earned in QC and issuing T4's/RL-1's.

PeopleSoft is very clear that it can not handle this...we can capture the wages as either US or Canada, but not both. The question I am getting from my tax brethren is "but other companies do this all the time...why can't the payroll software handle it?"

In my experience and in reading this forum, I do not see that other companies do this all the time, at least not easily. When it comes up, I often see the recommendation that the jobs should be filled by a third party. These are union jobs so that's not an option for us.

So is there somebody out there who is doing this "easily" with some standard software? Did I miss something obvious?



  • pfdtxpfdtx ✭✭
    edited March 2017

    You'll need to setup different records for each employee. These employees will have two employee ID's / Personnel numbers and you will need to run two payrolls for each employee. These concurrent payrolls are sometimes called Hypothetical / Shadow payroll. One of the two payrolls will zero out the net as it's only purpose is to capture employee and employer taxes but not generate a payment. There are a lot of variables so I really can't review the process on a discussion board. Just know that if the employer is paying the Shadow payroll taxes, the payroll will need to be grossed up.

    I strongly suggest you run payroll in only one country and pay an allowance to the employee for tax preparation. Hypo / Shadow payrolls can get very expensive and complicated, especially with executive benefits.

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