Getting Paid to the incorporated company while on TN Status in US -

My_question_is: Applicable to both US and Canada
Subject:        Getting Paid to the incorporated company while on TN Status in US....
Expert:         [email protected]
Date:           Tuesday January 22, 2008
Time:           02:04 PM -0000



I have a TN Visa and I am working on a 1-year contract in US (state of New Jersey). The US Company who has hired me is giving me two options for the pay. The first option is to be on the hiring company’s payroll and file individual tax with W2 and my SSN (usual procedure). The second option is to incorporate in US and it will pay to my incorporated company and I will NOT receive any money directly on my personal name. My question is:

1.        Is it legally possible for a TN holder foreign worker in US to incorporate and get paid to his incorporated company (to take advantage of small business related additional tax savings!)?
2.        Do I need to file my personal tax return in US even if I do not have any personal income? Do I still need to apply for my personal Social Security Number and Card?
3.        What additional procedure related to Canadian Revenue Agency?

An early response will be highly appreciated. Thanks in advance!


david ingram replies:

Theoretitcally you can have a Subchapter S US corporation EXCEPT -

1.   the terms of the TN Visa are that you are working for the company who wrote the letter that got you the visa. If that company pays another company, 'you' are not working for the compnay for which your visa was issued.  Since a One Man company does NOT qualify for a TN, don't do it.

2.   Even if you did that, a Subchapter S corporation is a flow through entity.  The company does NOT pay US tax and theoretically, if you are working at the employer's place with the employer;s tools, you will not have any real tax deductible expenses.  Filing a tax return and claiming expenses might go through but one of the other rules of a TN is that you can NOT be self employed.

3.   If you are truly just there for a year and that s part of two years and you have left a wife and children behind, you will need to report the income to Canada.  If you are intending to stay in the US and are effectively leaving Canada with your family following later, you may file a factual resident return (until your family joins you) but will not be taxable in Canada becasue of Article IV of the US Canda Income Tax Convention exemptions.  If you are single, you have likely left.

The folowing older question might help

My_question_is: Applicable to both US and Canada
Subject:        Taxation
Expert:         [email protected]
Date:           Wednesday January 16, 2008
Time:           08:37 PM -0000


Hello There,
I was wondering if I could get some guidance.
I had left Canada in 2000 to work in the US on an LI (spec knowledge)Visa. I had lived there and work there and still do since then. However in 2002, My wife pursued her grad studies in BC,Canada and we exchanged visits.
Here are some facts:
1. I spent more than 10 months in the US (for residence determination).
2. I have had permanent residences in 2 separate states in the US all these years.
3. I have filed and paid US taxes and have been deemed a US resident for tax purposes.
4. I have maintained a bank account in Canada to pay for my wifes Tuition.
5. Every year since 2001 at Canadian Tax time (when my wife files her Canadian Tax return), I call revenue Canada and give them these facts and asked them if I have to file a Canadian Tax return and they respond with a No I do not have to do anything. However they ask me to call the International tax office and confirm. I do just that and they respond that I do not have to do anything as i am not a resident. (I wish I had taped them).

In any event I have recently received a letter from CCRA stating that I owe taxes from 2002-2006. I have informed them that i am a resident of the US for tax purposes. However because of my significant ties (My Wife, and bank account) I have been determined to be a factual resident.
Here are my questions.
1. What form do I need to fill out?.
2. Do they expect me to declare all my US income, after converting it to Canadian dollars (when I did not have the luxury of using all that converted amount which was very high in the former years), as I had spent most of it in USD living in the US.
3. How can I be a resident of two separate countries for tax purpose that have a tax treaty?.
4. CCRA refuses to listen to my questions (besides trying to find out what form to fill out) and simply states that inspite of being  a US tax resident, due to my significant ties, i am a factual resident of Canada and have to file and pay the horrendous amount of taxes assessed. I checked all the forms and they are correct
6. I have a CCRA collections officer chasing me, while i am trying to get answers to my situation.
What are my options besides filing, which I intend to do as I do not want to face criminal charges.
Any help or advice would be appreciated.

Thanks and Cheers
david ingram replies:

I agree that you are a factual resident of Canada BUT, and it is a BIG BUT, you are A FACTUAL RESIDENT SUBJECT TO THE BENEFITS OF A TAX TREATY as described in the government's own T1 General guide.

For the 2005 year it is the top left hand paragraph "D" on page 10.

1.    File the Canadian returns and report all of your income and exempt it all on line 256 under Article IV of the US / Canada Income Tax Convention (Treaty).
2.   yes

3.   You can't be under the treaty  - However, intent is important.  If your wife is just studying and intending to move to the US when finished and you have a greeen card application in process, you are absolutely (in my opinion) only taxable in the US.  It also helps if she spends as much or more time visiting you in the US as you spend coming up to Canada to visit her. I tell people in your position to stay out of Canda and have your family visit you in the US.

4.    I disagree if you are intending to stay in the USA.      -- If, onthe other hand,  there was never any intention to stay in the USA and you are intending to come back to Canada in a year and your wife never visited you in the USA and you made no effort to get a green card, the CRA might have a point but only might. Your physical presence in the US clearly makes you a taxable resident of the US. Your job means that your financial affairs are in The US.  It would help if you had filed a factual return each year since you left.

5.   ??

6.   That is his job.  Hopefully, the arbitrary assessments they have sent you are new enough you can file formal notices of objection - i.e. within 90 days of their issuance.

Get the returns done ASAP.  Glad to to do them for you if necessary.


In 2005 I was living in Ontario, Canada and joined a U.S. company.  I continued to live in Canada through July of this year.  I seem to have significant tax “issues”.  Partly because I know the IRS does not withhold as much tax as Revenue Canada requires (I knew I would owe) and secondly, because I am not an expert tax preparer and I should have gone to the experts.  Revenue Canada has now completely disallowed my tax payments to the IRS as a foreign tax credit and are claiming I owe them a fairly significant chunk of money.

I think I need to go back and have a professional do my 2005 U.S. returns, which I never did.  I also will need some help/support with Revenue Canada to make sure that I get my foreign tax credit for the monies paid.  I will also have a professional prepare my 2007 return when the time comes because in this year, I have actually become a resident alien.  I am working and living in Pennsylvania now under and H1-B.

Can you help?

I will need an estimate of costs – I do not have a large budget but thought I would start by asking

My returns are not difficult at all.  I have simple income/deductions from a T4 and W2 in 2005 and just a W2 in 2006.  I have some charitable donations and that’s about it.  Pretty simple returns (I think).  My wife does not work, and I have two kids, aged 11 and 7.

Please advise if you can help.

Thanks in advance,

david ingram replies:

1.   What you are asking for is what we do.  I can not tell if you  were physically working in the USA in 2005, 2006 and up to July 2007 and commuting or if you were telecommuting and working in Canada.  It is also different if you had a spouse and children in Canada or if you were in the US for most of the time and just kept your old house in Canada while waiting for the issuuance of the H1B, etc.  In other words, if you were in the USA most of the time and came back to Canada sporadically,you may still have had ties to Canada but are not necessarily 'living' in Canada for tax purposes under Article IV of the US/Canada Income Tax Convention.  You may be a FACTUAL Resident exemopt from Canadian Tax under Article IV of the Treaty.

And, if you were not sleeping in Ontario 153 nights a year, you did not qualify for OHIP.  If you did not qualify for OHIP in 2006 for instance, it is not reasonable that you should be taxable in Ontario but having a wife and two children in Ontario guarantees that  the CRA will try and tax you.  However, if your intention was to move and your wife and children were only remaining in Canda until the house sold or until your wife finished a course at Ryerson or something specific, you may not be taxabvle in Canada.

2.   In general, I quote $900 to $3,000 for a US / Canada income tax return and there is more clarity below.  Fixing something generally costs more than preparation in the first place if both countries are invcolved.  If your US return is correct, you are likely looking at $500 or $600 as a minimum and $1,000 to $1,200 as a high to repair the Canadian return.

You should go to and read the US/CANADA Income TAX section in the second box down on the right hand side.

Pay attention to the Wolf Bergelt Case where he was not taxed in Canada when he moved to the US even though his wife and four children were still living back in Ottawa.  You will find this in just about the exact middle of the section. And, on the other hand, David McLean was taxed when he came back after 7 years in saudi Arabia.  It is important to recognize the differences between living in a treaty and a non-treaty country.


On December 25, 2007, David Ingram wrote:

It is very unlikely that blind or unexpected email to me will be answered.  I receive anywhere from 100 to 700  unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients.  Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first.  I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. 
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However, I regularly search for the words"PAYING CUSTOMER" and always answer them first if they did not get spammed out. For the last two weeks, I have just found out that my own email notes to myself have been spammed out and as an example, as I write this on Dec 25, 2007 since June 16th, my 'spammed out' box has 47,941 unread messages, my deleted box has 16645 I have actually looked at and deleted and I have actually answered 1234 email questions for clients and strangers without sending a bill.  I have also put aside 847 messages that I am maybe going to try and answer because they look interesting. -e bankruptcy expert  US Canada Canadian American  Mexican Income Tax service and  help
Therefore, if an email is not answered in 24 to 36 hours, it is likely lost in space.  You can try and resend it but if important AND YOU TRULY WANT OR NEED AN ANSWER from 'me', you will have to phone to make an appointment.  Gillian Bryan generally accepts appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321.  david ingram expert  US Canada Canadian American  Mexican Income Tax  service and help.
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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.
This from "ask an income trusts tax service and immigration expert" from or or David Ingram deals on a daily basis with expatriate tax returns with multi jurisdictional cross and trans border expatriate problems  for the United States, Canada, Mexico, Great Britain, United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas, San Antonio Houston, Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax  Immigration Wizard Antarctica Rwanda Guru  Consultant Specialist Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist expert preparer expatriate anti money laundering money seasoning FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border transactions Grand Cayman Aruba Zimbabwe South Africa Namibia help USA US Income Tax Convention. Advice on bankruptcy  e bankruptcy expert  US Canada Canadian American  Mexican Income Tax service and help .

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