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Sent: Friday, December 27, 2002 11:49 AM
Subject: Re: Jurock.com 'Ask an Expert': A Question for You
My question is: US-specific QUESTION: I am a H-1B visa holder in US. I created some computer software programs(they are not patented) and some companies(other than my own sponsoring company) are interested in buying them from me. Could I do that? If so, how should I report this gain in my tax return form? --------------------------------------------------------------------------- Sir, you have come up with one of the most common questions about working in the USA.
Let me explain.
Your H-1B allows you to work
for one employer and one employer only. It does not allow you to work for
anyone else including yourself.
Technically, you are not
allowed to give your neighbor a battery boost if their car has a dead battery.
You could be arrested,
imprisoned and deported if you changed the sink in a house you rented and got
reduced rent for your efforts.
Going to a store and picking
up a ladder for your neighbor could result in your deportation (happened to a
client who transported a ladder from a store to a construction site).
Therefore, designing and
creating software while you are in the US is absolutely against the immigration
laws. You would need an E2 or E5 visa or a green card to do this on your own.
Having designed this
software, if you sell it to an American Company, you have stopped them from
buying it from a US person with the right to do the work. An exception would be
if you had designed the whole program before you entered the US and were
selling it now.
You should make a deal with
the employer who is sponsoring you for "them" to sell it for you and pay you a
bonus.
In other words, you are
running a big risk. For instance, if you had an argument with the company you
sell it to, they can simply phone the INS and you will be deported for working
without the proper visa.
It is possible to have more
than one visa. It is not unusual for a person to have up to eight TN
visas for instance. If you are a Canadian, you could ask the company who
wants to buy the software to get another H-1B for you or a TN if you qualify.
The Tax Question is easy
with a Visa and impossible without.
If you developed it and sold
it, you would fill in a US Schedule "C" as a self employed person.
If it was the only thing you
had ever done and it was for your own use, and you were not a programmer by
occupation, it is conceivable that you could call it a one-time sale of a
capital asset and include it as a capital gain on schedule "D".
Hope this helps. If
you need more, you can do a phone consultation with us at (604) 913-9133
AND, I know that you will
find all sorts of people telling you that it is okay to sell the
software. "They" all know ten people who did the same thing and nothing
happened.
Their stories are anecdotal
and have the same validity as: "I went through the
red-light at the corner of Broadway and Main and didn't get a ticket so you can
too!"
david ingram - www.centa.com 108-100 Park Royal South West Vancouver, BC, CANADA, V7T 1A2 (604) 913-9133 - Fax (604) 913-9123 cell (604) 657-8451 (10 AM to 10 PM 7 days) US / CANADA Income Tax and Working Visa Matters |
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