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Canada and the United States

Canadian Musicians Performing in the United States

Author: Brad Howland
First Posted: June 22, 2008
Revised: June 17, 2003

Thorny tax issues arise when Canadian musicians perform in the United States. The tax treatment can vary widely depending on whether the musicians are: employed or self-employed; Nonresident Aliens, Resident Aliens or U.S. citizens; performing as individuals, in an ensemble, or as part of a business or charity.

A person or organization who hires non-employee, Canadian musicians to perform in the U.S. is generally required to withhold 30% from the gross income of the Nonresident Alien musicians (i.e. non – U.S. citizens or Resident Aliens) and remit it to the IRS. The withholding agent should file Form 1042 with the IRS to report the income and withholdings, and issue 1042-S tax slips to the musicians at the end of the year. A person or organization who doesn't withhold the required tax itself becomes liable to pay that tax to the IRS.

Nonresident Alien musicians can file 1040NR income tax returns at the end of the year to receive a refund of some or all of the tax withheld. They can claim foreign tax credits on their Canadian federal and provincial returns for any U.S. tax not refunded. Those musicians who don't have U.S. identification numbers must apply for them by submitting Form W-7 and applicable identification documents with their 1040NR returns.

Exemptions from Withholding

It used to be theoretically possible to claim exemptions from withholding using one of three different methods, but in recent years the IRS has tightened up the language in its publications, making it clear that exemptions for musicians will only be allowed when they enter into a Central Withholding Agreement (CWA) with the IRS.

The IRS maintains a helpful page on CWAs and updates it frequently. Musicians interested in pursuing an exemption should read it carefully. A recent update noted that "Effective January 1, 2013, requests for a central withholding agreement must be received by the IRS at least 45 days prior to the first event to be covered by the CWA. Requests received with less than 45 days prior to the first event to be covered by the CWA will not be processed and such event(s) will be subject to withholding at 30% of the gross income as is required by IRC 1441."

Payments for performing in the U.S. are often not made directly to the musicians, but instead go to an agent (U.S. or Canadian), business, or charity. Also, musicians may work in the U.S. as employees, rather than self-employed taxpayers performing independent personal services. Artists from Abroad maintains a website devoted to untangling these issues – it may help to determine the appropriate type and amount of withholding.

Visa Requirements

A good source for visa information is again Artists from Abroad. Many Canadian musicians obtain a P2 Visa for temporary work in the U.S. It can be obtained for a maximum one year period, but is limited to the time period of the actual performances. P2 Visas can be obtained through any Local of the Canadian Federation of Musicians (CFM). There is an agreement in place between the CFM and the United States Citizenship and Immigration Services (USCIS) that allows the CFM to petition on its members behalf, streamlining the process enormously.

The information on this website, and the use of this website, are both provided without warranty of any kind. Income tax rules change every year and some information may be out of date. All readers wishing to take advantage of the information offered here should consult a qualified income tax preparer. In no event will Brad Howland, Howland Tax Services, or this website be liable for any damages, including lost profits, arising out of the information offered on this website, or the usage of this website. All material on this website Copyright © 2001-2022 by Howland Tax Services, Inc. Please contact us for permission to use this material in any form. Website designed and maintained by Brad Howland.