TELECOMMUTING - Can I work for Canadian company while on a TD status in US? -

Hi David,
As you know, I sold my business to my colleague before I left Canada in 2007 and now I have TD status in the US. My colleague has just called me asking for some temporary help that I will be able to do on-line for her. Am I allowed to work for her Canadian company here in the US even though I have the TD status (the work I am doing is strictly for Canadian companies)?  I will claim this income in Canada on my 2008 return.  What happens to the income as far as the US is concerned?  Currently, Pawel is the only one working in the US and submitting a tax return in the US.  Let me know what I need to do so that everything is legal.

Thanks David,

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david ingram replies:

You can do any work you want down there on line for a Canadian, French, Polish or South American Company as long as it does not have a US Nexus.   In other words, if the State of California or the State of Nevada or a company in New York hired your old Canadian company to do work, you could NOT do the work in Arizona or anywhere else in the US. 

However, if the work is for the Province of BC or the Province of Manitoba
or the Government of Saudi Arabia, you could do the telecommuting from your home in Arizona.

BUT , since the work was performed 'within' the US, it is NOT taxable in Canada and does NOT go on your 2008 Canadian Income Tax return unless you are coming up to Canada to do some of it in which case, it would be pro-rated.  You would fill out a USA self-employed Schedule C on what would now be a joint tax return with your husband.

Since your ITIN is not valid for working in the US, we would attach a note stating that the money was NOT earned working for or doing services for a US entity.

This does not stop your old company accepting a US contract.  the person who bought your business could do the US contract  in Canada and you could look after Canadian business in the US.

-----------------
QUESTION:

Hi David,

I am a TN visa holder working in Seattle, and my wife is on a TD visa and she is citizen of China. We are determined as non-resident to Canada.

Can she telecommute from the US, and providing software consulting service to Canadian company? Is she allowed to work remotely while being a TD visa holder?

Does she need to file taxes to CRA?

Thank you very much.

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david ingram replies:

She is not supposed to take a job away from a legal US resident.

Telecommuting to Canada does not take a US job away and should not be a problem.

The Canadian Employer should not withhold any Canadian tax either.

She does NOT owe tax to Canada if she provides all her services from the USA.

She will / does owe tax to the US on the earnings and it should be reported on a schedule C on your joint 1040 US tax return.

She will also owe FICA (Social security tax) and should. send in form SE as well.

Hope this helps
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QUESTION:

I am currently living in Illinois.  I am about to come off of maternity leave from my Toronto company and I
intend to continue to work for them through the Internet.  My US immigration has not gone through yet.  Do I
 need to wait until I have US status to work or can I start right away since I'll be working only for my Canadian
 company?
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david ingram replies:

You can telecommute. You will owe tax to the US NOT Canada.

You might want to send the returns here.
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SUGGESTED PRICE GUIDELINES - Aug 5, 2008
 
david ingram's US / Canada Services
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pert  US Canada Canadian American  Mexican Income Tax  service and help.
David Ingram gives expert income tax service & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
 
Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST for in person or if you are on the telephone in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 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.
 
$1,200 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

$3,000 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 two or three slips and no capital gains, etc. for $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
 
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 from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund.

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance.

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.

--IRS Circular 230 Disclosure:  To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.--

-Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at www.centa.com or www.garygauvin.com.  If you forward this message, this disclaimer must be included." -


 





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