US Green Card holder moving back to Canada but will

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QUESTION:
Dear Mr. Ingram.  I spoke with you on Monday Feb 2 at 3 p.m. PST.
My name is  XXXXXXXXXXl - you noted to mention that I'm a "paying
customer" when emailing.
As we discussed I am a Canadian living/working in the US with a
green card sponsored by my Wife who is a Canadian/US dual
citizen.  I have been here since March of 1996 - came in first
through a TN1 visa and then was granted a green card in late
1997.
We discussed the options I had with my desire to move back to
Canada, be employed by  XXXXXXXXX in Canada but still travel to
work in the  USA  for  XXXXXXXXXXX Inc.  As such the best option
was for me to remain in the US for another 6 to 8 months and get
my US citizenship - and then move back to Canada.  Though this
may have been the best logical way to go, this option is no
longer available to me - we just sold our house and have a move
out date at the end of Feb.  So... I have done some further
research on your site and along with my notes, I think my best
options now are to (a) move back and upon needing to come back to
the US 3-4 weeks apply for a TN at the airport in  XXXXXXXXX or..
(b) apply for a L1.    Though my wife/kids will be moving back in
the end of Feb. I can stay here longer for a few weeks/month.
Can you please advise and give high level steps?  Do I need to
visit the INS here to say when I'm leaving? How do I go about
getting the L1 and do you think it's better than the TN?  I will
be doing Computer Systems Analyst work. I have a IS Diploma from
XXXXXXXXXXXXXXXXXXXXXXXXX with 12 years of work experience. 8 of
which is from the US @   XXXXXXXXXXX.
Thank you.
 XXXXXXXXXXXXX
==============================
David Ingram Replies:
 I think you will regret not getting your citizenship.  You are
going from a simple method of working to a more complex one with
a danger of rejection every time you cross the border and even if
you were to get a commuter green card, you have lost the time you
have already spent on your US citizenship. Get a cheap address
and stay as a US resident until you get your citizenship.
If I still cannot convince you, apply at the INS for a commuter
green card.  It is 100 x's more valuable than a L1 or a TN, both
of which can be taken at will by someone at the airport.  The L1
is best because it is far less restrictive than a TN.
The second method would be to apply for permission to keep your
green card as is while you live temporarily in Canada for family
reasons.  Keep your green card first!!!!!
The following comes from my July 1996 newsletter.
Greg Boos would be the person to consult with to get your
commuter Green card status
COMMUTER GREEN CARDS
COMMUTER GREEN CARDS
The following "Guest Article" is by Immigration Attorney Greg
Boos, J.D., Esq, of Bellingham, Washington. He can be reached for
further information at (360) 671-5945 or fax at (360) 676-5459.
This article is Copyright 1995 by Clark Boardman Callaghan
(1-800-323-1336). All rights reserved. Reprinted by permission of
Clark Boardman Callaghan Immigration Law Report Volume 14, Number
22, prepared by the law firm of Fragomen, Del Ray & Bernsen.
ALIEN COMMUTERS: U.S. RESIDENT STATUS WITHOUT U.S. RESIDENCE
 Aliens admitted to the United States as lawful permanent
residents (LPRs) or as special agricultural workers (SAWs) with
temporary residence may reside in either Canada or Mexico and
commute to places of employment in the United Sates without loss
of immigration status. Such "alien commuter" status may be
obtained either at the time of original entry as a resident of
the United States, or thereafter, if the alien has LPR or SAW
status.
 This article reviews the basics of alien commuter status as well
as some of its associated benefits and drawbacks. Practitioners
can use the alien commuter category to add creativity and
flexibility to immigration options available to their clients who
reside in Canada and Mexico (particularly those whose employment
is relatively close to the border). Alien commuter status allows
such clients to retain their foreign residences and proximity to
relatives and loved ones, benefit from tax laws on concurrent
business concerns in both the United Sates and the home country,
and for Canadians, maintain subsidized health insurance coverage
and other social benefits.
 Status by tradition
Alien commuters enter the United Sates as special immigrants (INA
101(a)(27)) - a privilege that does not require actual residence
in the United States if LPR status has not previously been
surrendered or otherwise lost. INA 101(a)(20). The ability to
live in a contiguous country and commute to work into the United
States is available to both daily and seasonal commuters.
Although there is no specific statutory authority for alien
commuter status, the Immigration and Naturalization Service (INS)
and predecessor agencies have traditionally permitted resident
aliens who reside in contiguous countries to commute to work in
the United States. (Note: Contiguous territory is any country
sharing a common boundary with the United States; because the
nations and territories of the Caribbean are considered "adjacent
islands" their citizens are not eligible for commuter status.) In
1985, the last year for which the INS collected statistics, there
were almost 50,000 alien commuters traveling between the United
States and Mexico, and approximately 7,500 between the United
Sates and Canada. With the recent publication of regulations
authorizing the expansion of dedicated commuter lanes and other
programs to speed border crossing by frequent, low risk
travelers, alien commuter status is likely to become even more
attractive. For details of these regulations, see the November 1,
1995 Immigration Law Report (ILR).
The administrative practice underlying alien commuter status
dates from 1927, when the Bureau of Immigration, then a division
of the Department of Labor, ruled that commuters who became
immigrants could cross the border without the usual residence
restrictions. According to Vol. IV, No. 13 of Interpreter
Releases (May 2, 1927), prior to this ruling, non U.S. citizens
who habitually crossed the border could obtain identification
cards that assured them easy entry and exit, and were not
required to conform with quota or other immigration restrictions
then in effect. After the Bureau of Immigration's 1927 policy
took effect, such aliens seeking to enter the United Sates for
purposes of employment had to do so as immigrants. Although
native-born Canadians and Mexicans were not subject to quota
limitations because they were natives of the Western Hemisphere,
they were subject to literacy requirements - a burden which fell
more heavily on Mexicans than Canadians. The new policy had an
even greater impact on third country aliens resident in Canada or
Mexico, generally of European birth, who were subject to quotas.
Nearly fifty years later, the Supreme Court in Saxbe v. Bustos,
419 U.S. 65, 74, (1974), upheld the administrative grant of
"alien commuter" status based on longstanding tradition and on
Congressional acquiescence to the practice.
Current administrative practice regarding alien commuters is set
out in the form of regulations and operations instructions (OIs),
primarily 8 C.F.R. 211.5 and OI 211.3 and 211.4, which cover how
alien commuter status may be gained and lost as well as required
documentation. These rules incorporate several administrative
court rulings that form the parameters of alien commuter status.
Key considerations
All alien commuters must have employment in the United States
that is "regular and stable." The INS interprets this to mean
that the commuter is not required to have full-time employment,
but may have part-time or even intermittent work if it is regular
and stable. An alien commuter who has been unemployed in the
United Sates continuously for more than six months may lose LPR
status, despite any entries made into the United States within
that six-month period; however, if the unemployment results from
a reason beyond the alien's control, such as illness, the alien
does not lose resident status. Upon loss of LPR status, the alien
must relinquish Form I-151 or I-551, Alien Registration Receipt
Card, or I-688, Temporary Resident Card, to an immigration
officer.
Potential benefits
In addition to enjoying unrestricted employment authorization,
some alien commuters residing in Canada may avoid paying
thousands of dollars in U.S. social security taxes by seeking
coverage under the Canadian Pension Plan. Both Canada and the
United States have social security systems that are supported
through taxation and afford benefits to their respective
residents. The U.S.- Canada Totalization Agreement rescues many
people who are covered by the Canada Pension Plan from paying
U.S. social security tax for work performed in the United States,
although there is debate about whether the U.S. Medicare
contribution must still be paid by these individuals. Unlike the
North American Free Trade Agreement, the Totalization Agreement
may also benefit third country nationals who reside in Canada.
Under the rules of the U.S. - Canada Totalization Agreement,
self-employed persons are taxed according to their place of
residence, while those who are employed by others are normally
taxed based on place of employment. Alien commuters resident in
Canada may be employed by others are normally taxed based on
place of employment. Alien commuters resident in Canada may be
employed in both Canada and the United States. Additionally, when
employees are transferred from one country to the other on a
temporary assignment of five years or less, they may be still
taxed according to their place of normal employment. Thus,
self-employed commuters, commuter employees of Canadian
businesses transferred to work in the United States for less than
five years as well as commuters who work for both a U.S. business
and a Canadian business may, under some circumstances, remain
exclusively subject to Canada Pension Plan payments and seek
exemption from U.S. social security taxes.
This is an important consideration because U.S. social security
tax may be several thousand dollars higher than its Canadian
counterpart. The exemption from U.S. social security taxation
under the Totalization Agreement is not automatic, generally, one
seeking the exemption obtains a Certificate of Coverage from
Revenue Canada to present to the Internal Revenue Service (IRS).
Additionally, an individual spending fewer than 183 days in a
calendar year in the United States may be exempt from U.S. social
security taxation. Practitioners may desire to refer a client who
is considering assuming or abandoning "alien commuter" status to
an international tax specialist for an assessment of the tax
consequences of such a move. For more on the tax implications of
commuter status, see page 178.
Problem areas
Alien commuters do not enjoy the full rights enjoyed by
traditional permanent residents. There are three major
limitations:
* Time spent in "alien commuter" status does not count toward
residence requirements for naturalization purposes. 8 C.F.R.
211.5(C); 8 C.F.R. 316.5 (b)(3).
* Alien commuters may not petition for immigration benefits on
behalf of relatives. 8 C.F.R. 211.5 (c).
* INA 212(c) waivers (discretionary relief available to many
permanent residents who have a continuous, unrelinquished U.S.
domicile of seven years or more who have become excludable) are
not available to alien commuters, as they do not have the U.S.
domicile required for such relief. Matter of Garcia-Quintero, 15
I&N Dec. 244, (BIA 1975).
Procedural considerations
Aliens in traditional LPR or SAW status may convert to commuter
status and "commence" residing in a foreign contiguous territory;
however, there are no rules or instructions regarding procedures
to be followed in such cases. In practice, an alien commuter
surrenders the alien registration card at the Port of Entry,
along with Form I-90 application to Replace Alien Registration
Card, three ADIT-style photographs, and a letter from an employer
establishing qualifying regular and stable employment in the
United States. The alien must write in after Item 2.e of Form
I-90 the following. "I desire to become an alien commuter"
(previous editions of Form I-90 had a box marked "Other" in which
the above was written in, but this has been deleted from the
current version). INS gives the alien a temporary card for entry
to the United States. A new alien registration card reflecting
"commuter" status is processed and sent to the alien in care of
the U.S. employer.
An alien entering the United States as a permanent resident for
the first time who desires commuter status presents the following
to INS officials at the border: the sealed visa envelope issued
by the U.S. consulate, a letter requesting commuter status, and a
letter from a U.S. employer verifying qualifying employment. The
alien will be issued a Form I-551 coded to reflect "commuter"
status.
Alien commuters must satisfy the INS that, absent factors beyond
their control, they have not been unemployed in the United Sates
for more than six months at a time. To this end, every six months
the INS requires proof of regular and stable U.S. employment from
those in commuter status. Often this proof takes the form of a
letter from a U.S. employer confirming continuing employment. An
"alien commuter" may challenge loss of permanent resident status
in exclusion proceedings.
An "alien commuter" may at any time abandon commuter status and
take up actual residence in the United States. To do so, the
alien files form I-90 to obtain a "green card" that is coded to
reflect actual U.S. residence. 8 C.F.R.. 211.5(c); 8 C.F.R.
264.1(c)(2)(H). To become resident in the United States, the
alien commuter must establish a residence in the United States
and must have the intention to reside there permanently. Alien
commuters engaged in seasonal work will be presumed to have taken
up U.S. residence if they are present in the United States for
more than six months during any twelve-month period.
Alien commuters are required to present a valid Form I-151,
I-551, or I-688 at the time of each entry into the United States,
but they are not required to present an immigrant visa or
passport after the initial entry. Aliens must also present a
properly endorsed and dated Form I-178, Commuter Status Card, the
document through which the INS monitors the date when the
commuter must again present evidence of regular and stable
employment in the United States. The I-178 Commuter Status Card
is coded with the alien's "A" number and is also numbered 1
through 12 to reflect the month in which the alien must present
evidence of regular and stable employment. It must be carried at
all times while the alien is in the United States.
As previously noted, an alien commuter is precluded from
petitioning for immigration benefits on behalf of relatives;
however, if an alien originally enters the United States as a
commuter and later converts to traditional LPR status, a
qualifying spouse and children may follow to join. There is no
statutory time limit within which a spouse or child may follow to
join the principal alien. 9 Foreign Affairs Manual (FAM) 40.1,
Note 7. Thus, if an alien opts for commuter status upon original
entry to the United States and later abandons commuter status for
regular permanent resident status, qualifying derivative
relatives may "follow to join" the principal alien in the United
States. Generally, to qualify as one following to join, the
relationship between the principal and the derivative relative
must have existed before the principal alien's original entry
into the United States as a permanent resident. Matter of G-, 7
I&N Dec 731 (BIA 1958); 9 FAM 40.1, Notes 7.1, 7.2.-2. Should a
spouse and children fail to qualify for status under the
following to join rule, a lawful permanent resident who has
abandoned commuter status and assumed residence in the United
States may file immigrant visa petitions for dependents subject
to quota backlogs.
TAX IMPLICATIONS OF ALIEN COMMUTER STATUS
Under regulations adopted in April 1992, the IRS re-affirmed and
clarified two tests for U.S. income tax residency that may impact
many alien commuters. These tests are referred to as the "green
card" test and the "substantial presence" test. For an overview
of these tests and other general tax issues facing non-U.S.
citizens, see the April 15, 1995 Immigration Law Report and
various back issues of the CEN-TAPEDE.
IRS Rev. Rule 76-82, 1976-1 CB 192, holds that since non-SAW
alien commuters from Mexico and Canada are permanent residents of
the United States, they are prima facie tax residents of the
United states pursuant to the "green card" test. However, alien
commuters often avoid U.S. tax residency status and are treated
instead as tax residents of their home countries under special
rules of the tax treaties in effect with Canada and Mexico.
The recently promulgated United States tax residency rules allow
many commuter SAWs to avoid U.S. tax residency under the
"substantial presence" test. Under the new rules, a SAW who
regularly commutes to the United States from a residence in
Mexico or Canada on more than 75% of the workdays spent in the
United states during the tax period is not present in the United
States for tax purposes. 25C.F.R. S 301.7701(b)-3(e)(1).
            Copyright  © 1996-2004 david Ingram
            Updated February 6, 2004, All rights Reserved
            Doing Your Cross-border Tax Returns
            for over 25 Years
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