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  1. I am a us citizen and a Canadian tax resident, living in Canada.
  2. I have an offer from a US employer and they would hire me only on W2, no C2C or 1099.
  3. Employer has no Canadian legal entity.

What would the employer need to do to be compliant to IRS as well as CRA so they can compliantly hire me?

Which state's withholding would apply if they were to hire me and withhold tax?

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You're thinking about income tax, but that's not the employer's problem but yours.

The employer's problem is the compliance with the local labor regulations and payroll taxes. They'll need to register as an employer with the CRA and the province. Details on the CRA requirements can be found here.

As to the US State withholding, since you're not a resident of any US state and are not working in any US state - there are none. Whether the employer's payroll system is set up for that situation at all is unclear.

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  • Thankyou so much for the response. I am clear about mh responsibility with CRA and IRS. I was kinda given to believe after being sent from post to post that my employer would not need to register as an employer. 🤔. There is a lot of confusion around this. Oct 25, 2023 at 1:49
  • @TotallyTaxed the minimum wage in British Columbia is around USD 12 (depending on the exchange rate), whereas the US federal minimum wage is $7.25 I suppose you're probably making more than USD 12, but if you're not, and you're in B.C., your employer would be violating B.C. law. As far as income tax goes, if your employer withholds US federal and state tax then you will have to file income tax returns with the Canadian authorities to pay the income tax you owe them as well as with US authorities to claim a refund for whatever was overpaid.
    – phoog
    Oct 26, 2023 at 4:32
  • Makes sense. Thankyou! Oct 27, 2023 at 15:45

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