IT consultant with Toronto

QUESTION: Hi, I am an IT consultant incorporated in Toronto. Now I am
offered by a US company for a corp-to-corp  9 month contract in San Jose. I
may need to spend the first 1 month in US. Then I can work remotely from my
Toronto home office. I am a Canadian citizen. I know I need to apply for TN
visa for this. Here is my question:
1. Is it legal for me to pay my wife as my office assistant? She is a landed
immigrant of Canada. She will not travel to US.
2. If the answer to the first question is yes. Then should she file US tax?
3. What kind of US tax I and my corp need to pay?
david ingram replies:
1.	If your wife is working for you, you can certainly pay her a fair salary
for answering the phone, shredding, filing, making coffee and generally
making your life and work easier.
2.	If she performs her duties in Canada, she has no US tax liability unless
she is a US citizen.
3.	You will have to file a US 1040NR and a non-resident 540NR return for the
state of California.  Your company will have to file a 1120F federally and a
State return as well.
However, you may not qualify for a TN as an IT Consultant unless you are
going as a computer system analyst.
Read this prior similar question from Montreal for some other ideas. It also
gives the details for getting a TN visa
I have several questions for you... First, I am a Canadian Citizen and owner
of a small Canadian Company in Montreal, Quebec. I have recently been
offered a 6 to 10 months position in Illinois on a Corp-to-Corp basis. With
this said, here are my questions...
1. Do I need a TN visa since I will be collecting my pay from a Canadian
company or do I still need to get one because the services are being
rendered in the US?
2. Who would need to supply me with the letter that I show to INS to get the
Visa? my company or the US company?
3. What forms do I need to fill out and what forms does my company need to
fill out??? The company in Illinois said that all they needed was a W40. How
do I go about getting that?
4. Would I still need to file taxes in the US since I am being paid in
dividends in Canada?
5. Does my company need to file for taxes in the US?
I would like to know how to make this happen. Any information you can give
me would be very helpful. I thank you in advance and hope to hear from you.
david ingram replies:
I have never heard of a W40.  I expect that you mean a W4 which is NOT a
corp to corp document, it is a US employee deduction form for the US which
means that they would be paying you directly for your services which, in my
opinion, is the proper way to deal with the situation.  You can find the W-4
(analogous to a Canadian TD-1) at:
You mention being paid out as dividends.,  In My opinion, this is the wrong
way for ANY Canadian to set up their remuneration from their own company.
Paying dividends means that you do NOT get to contribute to the Canada or
(in your case) Quebec Pension Plan which is a BIG mistake.  I know dozens of
people today living on handouts because they did not pay into, did not
believe, or just plain objected to paying into the CPP.  back in 1972 when
was worth millions and controlled some 700 offices in 30 states and
provinces, I was quoted in many magazines and newspapers with figures
showing how the CPP was silly and would never work.  You might want to pay
yourself a combination of salary and dividends but you should always pay
yourself (and your spouse) enough that you pay the maximum into CPP or QPP.
Today, at 63/64 I am looking forward to collecting CPP in a couple of years
after a $5,000,000 bankruptcy and worse divorce.
Don't worry, I am doing very well again but I know a dozen people who used
to keep their turboprops or jets at the south terminal of the Vancouver
Airport and have nothing left today. An RRSP can be seized in most
bankruptcies.  The Canada and Quebec Pension Plans can NOT be seized.
There - that is off my chest.
If you are working in the US and providing services on location in the US,
you need to file a US tax return and pay tax in the US. If you are not
working in Florida, Nevada, Washington, Texas, Alaska, Tennessee or New
Hampshire, you will have to file a State tax return as well.
Because you are a resident of Canada, you will also have to report the
income to Canada again and calculate the Canadian and Quebec income tax as
well.  However, you get credit on your Federal (Sched 1 - line 431) and
Quebec (Sched E line 409)returns on (usually) a dollar for dollar basis.
Note that the lines given are just a hint about where to start, you need to
fill out the relevant schedules referred to at those lines.
If you are there working for your company (which is possible), your company
will need to file a US 1120F foreign corporation return as well.
I am not sure what TN visa you will be obtaining.  If you are going down as
a personnel person in the health field or as a DHTML computer programmer,
you will not qualify for a TN - If you do not qualify under the definition
below, you will need an H visa which will likely take over a year to obtain
at this point.
The following is from my 13 year old BORDER BOOK but there are no changes
that I know of.
On December 8, 1993, President Clinton signed the NAFTA  Agreement, which
took effect on  January 1, 1994 under 101(a)(15).
TD - Spouse or Child of NAFTA Professional under 214(e)(2) (TN holder)
TN - NAFTA Professional - (North America Free Trade Agreement) PROFESSIONAL
A professional is defined as a person with a minimum of a bachelor's degree,
who applies for a position, which requires a degree as its minimum
entry-level requirement unless otherwise specified.
This is the one we heard about in the news. To meet this classification
which is unique to Canadians, you must have a bone fide job offer and all
licenses and degrees in place for your profession.
CHECK LIST for the TN Visa
    * An applicant for admission must establish Canadian citizenship
    * The applicant must be entering the United States to engage in a
profession or occupation at a professional level under NAFTA
    * The applicant must be in possession of an offer or contract of
employment from a United States employer stating:
        1)     The professional activity to be engaged in
        2)     Purpose of entry
        3)     Remuneration
        4)     That the position is temporary in nature and will not exceed
one  year  (although it can be renewed)
* The applicant must provide documentation of his or her educational degree
or professional qualifications
* The applicant must meet all licensing requirements
* Employment need not be full-time
* Permanent residence abroad is not a prerequisite
* Maximum period of admission of a TN is one year
* TN dependants accompanying the principal TN will be admitted under the
"TD" classification for the same amount of time as the principal
* A $56 U.S. fee is required ($85.00 for renewal by mail)
* TN applicants are not permitted to enter as a professional to participate
in any way to circumvent a strike
The following is a partial list of some who qualify under a TN Visa. Please
note that extensive experience can equal a degree in many cases. All need a
Bachelor or Baccalaureate degree unless otherwise noted. In some cases, 3 or
4  years of practical work in a discipline can count for one year of a
University degree.  Therefore if the University BA requires 3 years, you
need 9 or 12 years of work experience to qualify.
* Accountants - RIA or SIA or CPA or CGA or CMA or CA
** Actuaries (this is one of two classifications added since 1989)
* Agriculturalists
* Agronomists
* Animal Breeders
* Animal Scientists
* Apiculturist
* Architects - BA or state / provincial license
* Astronomers
* Biochemists
* Biologists
* Botanists
* Chemists
* Computer Systems Analyst - BA or Post-secondary Diploma or Post-secondary
certificate and three years of practical experience. This does not get you
to the USA, if your job is programming a computer.  An Analyst might spend a
day a month working on some modifications (in a testing mode for instance),
but they better not be thought of as a "programmer" within the company.
**** Computer Software Engineer *** This is NOT here as an approved
occupation.  However, Jackie Bednarz (US head of the NAFTA Section 16
Working group in Washington stated specifically that if a recognized
University was to offer the degree, she would consider computer software
engineers under the ENGINEER classification when a recognized University
granted the degree.  My understanding is that SFU and McGill are now
granting such degrees and that the Professional Engineers of British
Columbia have recognized graduates as members of their professional society.
Note that TC and TN's were being granted for this category on a sporadic
basis until the INS realized that no such "official" degree existed.
Jackie Bednarz also pointed out (She was part of the original negotiating
team when the original FTA (Free Trade Agreement) was being negotiated in
1985, 86, 87 and 88, there was no such thing as the INTERNET, "web masters"
and "web sites". When negotiating the job titles, no thought was given to
the computer revolution, other than the computer system analyst designation,
which at the time meant a main frame analyst for a $1,000,000 computer.
(Thanks to Stuart Lynne and Richard Pitt) (, the CEN-TA
Group was an official member of the internet as far back as 1986 and thanks
to Bill Gates himself (he told me to use Microsoft Xenix as my operating
system) and Radio Shack Model 16 computers, CEN-TA was using "email" between
offices in Toronto, Ottawa and Vancouver as early as 1983.
As another aside, Stuart Lynne and Richard Pitt went on to found WIMSEY, the
FIRST ISP in CANADA. Bill Gates became quite famous as well.
* Dairy Scientists
* Dentists - DDS, DMD, or state / provincial license
* Dental Technicians
* Dietician
* Disaster Relief Insurance Claim Specialists - (claims adjuster employed by
an insurance company located in the territory of a party or an independent
claims adjuster) - BA and successful completion of training in the
appropriate areas of insurance adjustment pertaining to disaster relief
claims; or, three years experience in claims adjustment and successful
completion of training in the appropriate areas of insurance adjustment
pertaining to disaster relief claims
* Doctors - (see physician further on)
* Economists
* Engineers - BA or state / provincial licensing
* Entomologists
* Epidemiologists
* Forester - BA or state / provincial licensing
* Geneticists
* Geochemist
* Geologist
* Geophysicists  (including Oceanographer in the United States)
* Graphic Designer - BA or post-secondary diploma and three years
* Hotel Managers - BA in hotel / restaurant management; or,
post-secondary diploma or post-secondary certificate in hotel / restaurant
management and three years experience in hotel / restaurant management
* Horticulturist
* Industrial Designer - BA or post-secondary diploma or post-secondary
certificate and three years experience
* Interior Designer - BA or post-secondary diploma or post-secondary
certificate and three years experience
* Journalist BA plus three years experience - (This category is no longer
valid and has been left in to explain the circumstances. As I understand it,
journalists in general took it as an insult that they had to have a BA
degree, because, "most, if not all," of the best known journalists do not
have a BA degree.)
* Land Surveyor - BA or state / provincial licenses
* Landscape Architect
* Lawyer (including notary in the Province of Quebec) - LLB, JD, LLL, BCL
degree (five years); or membership in a state or provincial bar
* Librarians - MLS or BLS (for which another BA was a prerequisite)
* Management Consultants - BA; or equivalent professional experience as
established by statement or professional credential attesting to five years
experience as a management consultant, or five years experience in a field
of specialty relating to the consulting agreement.  I must make it clear
here.  A Management Consultant is NOT a manager.  The surest way to lose
your management consultant renewal is to show up at the border with a
business card with the title General Manager, Western Region, or Human
Resources Manager, or, or, or.  A management consultant could consult with
the actual sales manager about sales techniques or about selling into
Canada.  A management consultant could be advising the actual human
resources manager in hiring techniques or even suggesting that one candidate
is a better fit than another one.  A management consultant can do market
research, gather and assemble data and write a report to give to the
manager. This is likely the hardest TN visa to get but is also a very
important one when it comes to serving the needs of the US company.
Note that the management consultant does NOT need a degree, just five years
experience.  This is the perfect job description for the person with 23
years of job experience who has never gone through the formal process of
getting a university degree in the discipline.
* Mathematician (including statistician)
* Medical Laboratory Technologist (Canada) / Medical Technologist (U.S.) -
BA; or post-secondary diploma or post-secondary certificate and three years
* Meteorologist
* Nutritionist
* Occupational Therapist - BA; or state / provincial license
* Organic Chemist
* Pharmacologist (Pharmacist) - BA; or state / provincial license
* Physician - (teaching or research only), MD or state /provincial license.
To work as MD, a doctor must pass his MLE (medical licensing exam), which
has three, parts written over a year.  After passing, he or she would enter
the U.S. under an H-1A.
* Physicist (including oceanographer in Canada)
* Physiotherapist/Physical Therapist - BA; or state     /provincial license
* Plant Breeder
** Plant Pathologists (This is one of two professions added since 1989)
* Poultry Scientist
* Professional (most recognized professions)
* Psychologists - state / provincial license
* Range Conservationist
* Recreational Therapist
* Registered Nurse - state / provincial license
* Research Assistant (working in  post-secondary educational institution)
- * Scientific Technician - Possession of: (a) theoretical knowledge of any
of the disciplines: agricultural sciences, astronomy, biology, chemistry,
engineering, forestry, geology, geophysics, meteorology, or physics; and (b)
the ability to solve practical problems in any of those disciplines, or the
ability to apply principles of any of those disciplines to basic or applied
* Social Worker
* Soil Scientist
* Sylviculturist
* Teacher (College, Seminary, or University) (Post Secondary level only)
* Technical Publication Writer - BA, or post-secondary diploma or
post-secondary certificate, and three years experience
* Urban Planner (including geographer)
* Veterinarian
* Vocational Counsellor
* Zoologist
This list is subject to change at any time. When talking to Dennis Olsen
about updating the rules, I mentioned a nurse who had found out that nurses
could go south instantly in the late 1970's.  She got a job offer from a
Hawaii hospital, came back to Vancouver, quit her job, sold her house,
kicked out her husband, gave away the dogs and showed up at the airport to
move to Hawaii, only to find out that they had closed the quota for nurses.
And then, as I was writing this exact section of the book in March, 1995, I
received a call from a Doctor who had a job offer from the U.S., sold his
house and Canadian practice, only to be told that he did not qualify when he
showed up at the border because although a practicing family physician in
Canada and fully qualified to go south with a Green Card (a resident alien
immigrant visa), he did not qualify as a TN (can only teach or do research)
and he did not qualify as an H-1B because he had not written an MLE. This
medical licensing exam is written in three stages over a one year timetable.
I guess he has to sue his immigration attorney in Los Angeles.  This
attorney knew he did not have his MLE, but charged him significant monies
and told him he could get in now!
Remember, NONE of the foregoing confers permanent status. For permanent
status, you must still stand in some sort of line.  However, it seems to be
true that if you are in the U.S. as an H or L-1 visa holder, your line moves
much faster than if you start from out of the country.
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
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
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