Contract-to-hire income tax issue under TN visa - international non-resident cross border income tax help estate family trust as

Date:           Sunday February 25, 2007
Time:           11:59 PM -0500
QUESTION:
My situation: 
I am a Canadian working in USA under TN visa. I worked in USA less than 180 days in 2006. The first 3 months I worked as contractor, then converted to employee. 
My wife and kid are still living in Canada. So, for US income tax purpose, my tax filing status is non-resident alien and I should fill form 1040NR. 
My question to fill US income tax form:
The employer sent me a Form 1099 - MISC which listed my contractor income as Other Income. That income looks should be treated as a self-employment income. But 1040NR does not support such an income type. My questions: 
A. Where should I report my contractor income in Form 1040NR? In line 8 wages/salaries or line 21 Other Income? Should social security/medicare tax be calculated on this income? If yes, where?
B. I has registered 401K plan after converted to an employee. Can I deduct my contribution to this plan? (If can, which line?)
C. Where to report the withheld Social security and Medicare tax in Form1040NR? Can this tax be deducted as foreign tax when filling Canadian Income Tax?
Thanks a lot.
Gary
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david ingram replies:
A.    The 1099 income goes on line 13 as business income.  fill out Schedule C.
B.    If you are still living in Canada and paying Canadian tax, get out of the 401(K) plan.  It is NOT deductible on your Canadian return and yet you will have to pay tax on it when you take it out.  If the employer is paying part, get them to give you the money as salary and put it into an RRSP.
C.   Medicare and Social Security are NOT a deduction for an employee.
And, filing a 1040NR does NOT result in Social Security being owed to the US on the 1099 income.
The federal, state (if any), social security and medicare taxes you have paid are a foreign tax credit on line 431 and 433 of your Canadian T1.
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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. If you forward this message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
David Ingram gives expert income tax & 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 $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or a phone consultation is in Canada.
This is not intended to be definitive but in general I am quoting $800 to $2,400 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
$1,000 would be the same with one rental 
$1,200 would be the same with one business no rental
$1,200 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.
$1,500 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 
$2,400 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 $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely $450
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 $800 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.
Just a guideline not etched in stone. 
This from "ask an income trusts tax and immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. 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
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