My_question_is: Applicable to both US and Canada
Subject: US citizen self-employed living in Canada part time
Expert: taxman at centa.com
Date: Monday May 29, 2006
Time: 06:45 AM -0700
QUESTION:
As a self-employed consultant and not eligible for landed immigrant status
in Canada because of my age (I don't have enough points for immigration),
how may I live in Canada most of the year while still conducting my business
both in the US and Canada through my US based company? I also have a
Canadian corporation of which I am one of the directors (one other is a
Canadian citizen). Can I work out of the Canadian corporation as well as
the US corporation or should the Canadian corporation be only used for
marketing in Canada and not as a service company in Canada? In other words,
if my work in Canada is billed through my US company, may I live most of the
time in Canada. I will file Canadian taxes, but under what "status" am I
listed? Also, can I get health insurance coverage while in Canada. As a
self-employed person in the US, of course, I am used to carrying my own
insurance because I have not employer paid insurance. Thank you so much for
any help you can give me.
===========================================
david ingram replies:
First of all you need to establish what sort of visa you are working under.
You can NOT just come across the border and work here and the ownership of a
Canadian corporation which you perform services for absolutely makes your
working in Canada illegal.
I hope that the year end of the Canadian corporation is Dec 31. Because,
the ownership of 50% of a Canadian Corporation by an American means that you
have to file form 5471 with the US IRS - failure to file the 5471 has a fine
of $10,000 for the first 90 days and $10,000 every 30 days after for a total
of $50,000.
Whether the work is billed through the Canadian corporation or the US
corporation, you need a status.
It could be that you qualify as a management consultant under NAFTA but you
still need a visa.
Whether you are here legally or not, if you are in Canada more than 183
days, you are taxable in Canada on your world income and your corporation
must also file a Canadian Income Tax return.
You need to have a serious conversation with a Canadian Immigration Lawyer
or member of the Canadian Society of Immigration consultants who deals with
Americans and NAFTA.
If you think you are a NAFTA candidate, I would be happy to help you.
===================
Phone consultations are $400 for 15 minutes to 50 minutes (professional
hour).
This is not intended to be definitive but in general I am quoting $800 to
$2,000 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you
lived in one country only - no self employment or rentals or capital gains -
you did not move into or out of the country in this year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no rental
$1,200 would be the minimum with a move in or out of the country. These are
complicated because of the back and forth foreign tax credits. - The IRS
says a foreign tax credit takes 1 hour and 53 minutes.
$1,500 would be the minimum with a rental or two in the country you do not
live in or a rental and a business and foreign tax credits no move in or
out
$2,000 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection
period) with a three or four slips and no capital gains, etc. for $125.00
up.
With a Rental for $300
A Business for $300 - Rental and business likely $400
And an American only (lives in the US with no Canadian income or filing
period) with about the same things in the same range with a little bit more
if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS
be $400 and up.
TDF 90-22.1 forms are $25 for the first and $10.00 each after that when part
of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales) are likely $50.00 for the first and $20.00 each after
that.
Just a guideline not etched in stone.
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
My Home office is at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 10 PM 7 days a week Vancouver (LA) time -
(please do not fax or phone outside of those hours as this is a home office)
email to taxman at centa.com <mailto:taxman at centa.com>
www.centa.com <http://www.centa.com/> www.david-ingram.com
<http://www.david-ingram.com/>
Disclaimer: This question has been answered without detailed information or
consultation and is to be regarded only as general comment. Nothing in
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and all non-contractual duties are expressly denied. All readers should
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