Corp-to-Corp Question for TN Visa Holder -

 
Hi David,
 
I have been sorting through many of your Question and Answer pages regarding several tax issues regarding Canadian/US Employment issues.  I was wondering if you could assist me with a similar inquiry for a consultant I am trying to assist.
 
I am working with a Consultant that is a Canadian Citizen and owns a Canadian Corporation for consulting purposes.  He will be attaining his TN Visa for a 6 month project in Nevada.  I sent him the W-9 form we traditionally use for US Consulting Corporations, but he said that there may be a different form that needs to be filled out instead.  Last time he used a W-9, he was being paid on a personal basis and was subject to personal taxes in the US.  This did not work out for him.  Is there an alternate form for Canadian Corporations that is comparible to the W-9 used for US Corporations? 
 
Any assistance on this matter would be much appreciated.
 
Thanks David,
 
 

 

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david ingram replies:

I do not have good news.

If you are hiring his corporation and his corporation is obtaining a visa for him to work in the US and your corporation is not providing any paperwork for his obtaining the visa, then you can just pay his corporation.  This could work if the fellow owns a Canadian corporation and is a Green card holder or a US citizen. Of course, in that case, he or she would have to file forms 5471 (penalty min $10,000 US to a max of $50,000) for his failure to file.  Since the Canadian Corporation is also operating in the US as well, he needs to file form 1120F.  Think of a Transport Truck with all those licences for every state in which the truck (or bus) is operated.

If you are providing a letter for him to get his TN, then he is working for you and you pay him, not his corporation.   Even if he deposits the money to his corporation, he is still taxable in the US on that actaul money earned.   In either case, if he is working in the USA, he has to file a US tax return.

The terms of a TN visa are specifically limited to employees or maybe a contract employee with no benefits but a TN visa holder can not be self-employed.

That does not mean that I do not know of people workjing as he desires but it is not correct.  You should be getting a W-9 or Maybe a W8-IFC but he is taxable in the USA and is an employee or contract employee of your organization if you are providing the documentation for the TN visa. 

You shoul dlikely check with the IRS and Homeland Security if not sure still.

Your potential employee will squeal because he knows someone else who is doing what he wants to do but that does not make it correct and Homeland Security has NOT given him permission to work in the US for his corporation.  He has been given permission to work for 'you'.

Furthermore, even though a Canadian Corporation 'can' apply for and get a TN for its own employee to work on a project in the USA, a TN visa is not supposed to be issued for the owner of the corporation.  This was specifically told to me and others by Jacqui Bednarz (former head of the whole dept in Washington) at a conference in Vancouver.   In other words, your fellow's corporation could hire someone else and get a TN visa for the employee to work in the US at your location but can NOT get one for himself (although, they have been issued in error - no one is perfect).  In either case, the peson working in the US with the TN MUST FILE A US RETURN.

The Canadian Corporation must also file a US 1120F tax return (and likely a state return) because it now has business operations in the United States.

You 'can' pay your employee on a 1099 as a short term consultant but then he or she has to pay both sides of SOCIAL SECURITY AND MUST BE MADE AWARE OF THAT.  You can, of course, adjust the contract aso that your company pays him the employer share as an extra.

Hope this helps.  It qualifies as tough love but half the people involved in this are not doing it right.  I sometimes

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On November 10, 2007, David Ingram wrote:

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This is not intended to be definitive but in general I am quoting $900 to $2,900 for a dual country tax return.
$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,100 would be the same with one rental
 
$1,300 would be the same with one business no rental
 
$1,300 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.
 
$1,600 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

$1,700 would be for two people with income from two countries

$2,900 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 two or three slips and no capital gains, etc. for $200.00 up.
 
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
 
A Business for $400 - Rental and business likely $550 to $700
 
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 $900 and up.
 
TDF 90-22.1 forms are $50 for the first and $25.00 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.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be $150 to $500.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc.

Just a guideline not etched in stone.
 
 
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