I am a Canadian who will be moving to the US when my Green card process is complete ( sometime in the next 6 months or so). I am currently employed in Canada but will become a consultant ( self employed) at the end of September. Most of my work and income will be Canadian based at least until I establish US clients when I move. I anticipate living in Washington State ( Olympia) and traveling back to Vancouver when necessary to meet clients local and do work. I am seeking some advice on a number of issues
1) as self employed in Canada and then the US am I best to set up a business entity?
2) What expenses should I be able to claim as legitimate cost of doing business as I set up and operate the business in Canada and then the US, e.g. immigration costs? Relocation costs?
3) What strategies do I employ to minimize tax in both jusridictions particularly in light of the upcoming move between jurisdictions?
I was previously a Green card holder. I formally gave that visa up when I was transferred back to the states??, so I had a social insurance number etc and paid taxes in the states when living there. I do have some rudimentary understanding of the things I need to do to minimize tax such as selling RRSP assets and buyback to raise book value to market prior to relocating but I need some professional advice and guidance.
Do you do this kind of work for individuals? How do you bill and at what cost?
Regards
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david ingram replies:
Sounds like a marriage to me.
1. Until you find out how well you are doing, you are likely better off to just keep your position as a self employed consultatnt and file Scheduel T2032 in Canda and schedule C on your US return. There is NO tax advantage to you to have a corporation in the US and a lot more accounting costs for a very dubious hint of personal liability protection with a Subchapter S US corporation. The reason is that a one person Subchapter S coreporation is run by yourself, the work is done by yourself, and if there is a problem, you are responsible as the person who did it. So, just as I would sue you, the driver, who had a collision with me and the car was owned by a corporation, I would suse you the operator or worker who did something for the corporation.
2. Moving expenses are dedcutible if you move closer to a place of employment. Your description has you moving further away from Vancouver BC (although closer to Vancouver, WA). Canada does NOT allow moves in or out of the country except for students and members of the Armed forces and since yuo are moving away from the job, there is no relocation fee deductible for Canada. You can file US form 3903 to claim moving expenses to the US but only against income in the new location. Immigration costs are not deductible in either country.
3. Beats me, I do not have enough information. I have sold some 700,000 books on the subject but they are sold out. Sandy Botklin, a US based CPA and former IRS agent has a Canadian AND an American audio course on the subject. They are $249.00 each at.
http://taxtips4networkmarketers.com/?gclid=CK7D69u-xo0CFRY9YQodVUs7HA
If that is too rich for your blood, you can buy a 2002 version which statres that it includes Canada and the US on ebay for $114.00 at
http://cgi.ebay.com/Tax-strategies-CD-Set-Sandy-Botkin_W0QQitemZ110022414226QQihZ001QQcategoryZ29792QQrdZ1QQssPageNameZWD1VQQcmdZViewItem
What you want is what I do, either in person or 50% of the time by LD phone. I charge $400.00 Cdn per hour plus GST if you are in canda at the time of the phone consultation or in person.
You will find more pricing information inthe following disclaimer.
I think you got the countries wrong in your question. I am assuming that you meant Canada where I have enlarged and printed the States in red.
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CEN-TA Cross Border Services - Tax, Visas, Immigration
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