Should Canadian contractor ask US client to pay into a US or Canadian bank account?

Question

A Canadian [citizen] independent contractor, living in Canada, will take on a US client. The contractor is operating under their sole proprietorship business name which is distinct from their actual name (not sure if that impacts the situation or not). The contractor had previously lived and been employed full-time in the US so he has a SSN and US bank account.

Should the contractor provide the client with the bank details of a US account (then transfer up into Canada) or a Canadian account?

Of particular interest here is how the decision affects a US income tax return, as well as residency determination in the US.

Update: The contractor is not a US citizen.

Possibly related (very close match but does not specify Canada): Receiving money in US for work performed overseas

And: Taxes for a foreign freelancer getting paid in the USA

gaefan · Answer

I suggest that you charge them an amount in US dollars.  It will likely complicate things on their end if you charged in Canadian dollars.

Then have them wire the US dollar amount to your Canadian bank.  The bank will handle the currency conversion for you.  You probably won't get the best conversion rate, but it keeps the process very easy for you.

You won't have to pay any US income taxes since you live in Canada and are doing the work in Canada.  (If you have a US Green Card then double check this last statement because that could possibly change the situation...)

IdaG · Answer

I've been looking for this online and some posts do indicate that it doesn't lead to tax liability in the US, but I haven't found comprehensive info.
And to comment on the previous post (I couldn't leave a comment directly there), there are advantages to getting paid to a US account exactly because of the conversion rates mentioned in the previous post, there are other (legitimate) ways to transfer from US USD account to a Canadian CAD account online losing <1% in conversion rates compared to the market rate (e.g. VBCE online). If using the bank conversion, it could easily be 2-2.5% compared to the market rate. So I was also wondering about the same question, doesn't seem to affect tax liability in the US, but would be great to find more info on that.

Should Canadian contractor ask US client to pay into a US or Canadian bank account?

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