Reaching your buyers is easy now. E-commerce is here to help. You choose your product and your buyer. The online market is here to connect you both.
Ever since the e-commerce market has made sellers reach their buyers at any place in the world, the taxation processes have also decided to step in to make and break new regulations for it.
If you are a Canadian, and selling your products in the U.S. market, we have listed some of the tax forms you may need to submit.
Moreover, we have discussed the tax deadlines, so you can file your taxes smoothly.
Difference Between ECI & PE
Before we mention any of the deadlines, we just want to make sure that you understand the difference between ECI and PE.
Moreover, we also recommend reading Canadian e-commerce taxation processes in the U.S. before you file your taxes.
The general way to define ECI and PE will be as follows:
- ECI (effectively connected income): if you sell your products in the U.S. and you use different suppliers or logistics in the U.S., you will be categorized under ECI.
- PE (Permanent Establishment): if your business has employees and offices in the U.S., and you operated for 183 days to function, you will be categorized under PE.
In the coming section, we have listed the forms you may need to submit for both scenarios. Moreover, the U.S state in which you operate also has some variability to define your taxes.
Tax Forms Canadian E-commerce Sellers May Need to Submit in the U.S.
1 – Tax Forms Requirements for Individuals
| Category | U.S Tax Form (IRS) | Canada Tax Form (CRA) |
|---|---|---|
| Neither ECI Nor PE | Doesn’t Need to File any Form | T1 + T2125 |
| Only ECI | 1040NR + Form 8833 | T1 + T2125 |
| Both ECI & PE | 1040NR | T1 + T2125 |
2 – Tax Form Requirements for Corporations
| Category | U.S Tax Form (IRS) | Canada Tax Form (CRA) |
|---|---|---|
| Neither ECI Nor PE | Doesn’t Need to File any Form | T2 |
| Only ECI | 1120-F & Form 8833 | T2 |
| Both ECI & PE | 1020-F | T2 |
3 – Tax Form Requirements for non-resident US LLC
| Category | U.S Tax Form (IRS) | Canada Tax Form (CRA) |
|---|---|---|
| Neither ECI Nor PE | 1120 Pro Forma & Form 5472 | T2 |
| Only ECI | 1040NR, Form 8833 & Form 5472 | T2 |
| Both ECI & PE | 1040NR & Form 5472 | T2 |
Tax Forms Deadlines for Canadian E-commerce Sellers in the U.S.
| Category | Deadline |
|---|---|
| Individuals | June 15th |
| Corporations with only ECI | Every 15th (day) of the 6th month when the fiscal year ends. |
| Corporations with ECI & PC | Every 15th (day) of the 4th month when the fiscal year ends. |
Consult a CPA to File your Tax Return
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