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Working remotely during COVID-19 leads to big tax hit for Canadian couple, others may face similar bill

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(WXYZ) — Canadians who work in Michigan but can’t cross the border because of the pandemic may have to shell out thousands of dollars in income taxes for 2020.

One couple just found out they owe tens of thousands in income taxes to the Canadian government.

“Between my wife and me we owe between 75 and 80-thousand dollars to the Canadian government,” said Gaurav Ahuja, who works in Auburn Hills but lives in Canada.

Gaurav’s wife also works here in Michigan, but they live in Canada. Since this pandemic began they’ve been working from home.

“So now, we will have to claim a lot of monies back from the IRS. So, if we are able to do that, that’s a huge if, that will offset our taxes. Even after that, we will owe around 30-thousand dollars to the Canadian government,” said Ahuja.

The couple will pay taxes here in the US, but after that Ahuja says he and his wife will still owe tens of thousands in Canada, something he wasn’t aware of.

“When you are a resident of Canada for more than 183 days, how they feel is you’re taxed on your worldwide income,” said Gail Chene a tax consultant in Canada.

Gail explains why the couple owes so much in Canada and that other people may have similar issues.

“These people earned this money in Canada, so even though it’s paid out of the US company, it was earned on Canadian soil. If they cross every day they're going to be taxed in the United States on their U.S sourced income, but let’s say they worked until March 16 when the border closed, then they worked remotely from home, that’s where the problem comes in,” said Chene.

Ahuja says he may have to sell his car and other valuables to pay the taxes. Dealing with the pandemic and now paying thousands of dollars in taxes is taking a toll on him and his family.

“So, 2020 is gone. I know that year completely blindsided us. I’m now concerned about 2021, what’s going to happen to my taxes next year,” said Ahuja.

Gail says if you live in Canada and work in the US but have been working remotely since the pandemic began, talk to your tax consultant immediately.

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