Live in Canada, Work in the USA?

October 5, 2006 3:21 PM

How to live in Canada, work remotely in the USA in one easy step?

You may remember me from such questions as "How do I as a Canadian live and work in the USA?", "I was turned down for TN status!", and "Building a credit history in the USA". Well, for the past year I've been living south of the border. Now my one year TN status is expiring, and won't be renewed. I'd like to move back to Canada but continue to work remotely for my Utah-based employer. With no longer having TN status (NAFTA-related work approval) can I maintain US employment, even though I can't live legally live there anymore?

My employer has offered to keep me as an employee and while I won't be within commuting distance, and all work would be done via remote (terminal server) connections. The technical-side is fine, but what about the legal side? Please help me to understand what needs to be done.

posted by blue_beetle to Work & Money (9 answers total)

Best answer: I've done this as a consultant, where I've been based in the US and done work in the US for overseas and Canadian clients. In my case, my clients' payroll/billing departments treated me (well, my one-man corporation) essentially as a vendor, and then the corp treated me as a local employee. Nothing to it beyond having a corporate bank account that could deal with multiple currencies.

Is that a possibility in your situation, or must you remain an "employee".
posted by toxic at 3:31 PM on October 5, 2006

Best answer: You won't be an employee. Your current employer does not want to deal with the hassles of Canadian law: withholding, filing income taxes, etc.

However, you can be an independent contractor who supplies services to the U.S. company that are suspiciously like the services you now perform. You will have to handle all the paperwork yourself: you'll have to withhold income taxes and CPP, make those payments to the government yourself, etc. You can, but do not have to, start a Canadian corporation to do this. You may wish to retain an accountant or bookkeeper to assist you.

Have fun.
posted by jellicle at 4:39 PM on October 5, 2006

Best answer: Oh, and if/when you get caught up in trying to figure out whether the service you provide to the Utah company is taxable for GST, I'll save you some time: it isn't. It's a service for export, and hence is zero-rated - not non-taxable, but taxable at a rate of zero percent. (That will make sense to you later.)

That's actually good - you can claim GST refunds on supplies that you purchase for your business, without having to pay GST yourself.
posted by jellicle at 4:56 PM on October 5, 2006

Response by poster: Hey, thanks for the information guys! And thanks to Yorrick for an informative email. At his request, here's a bit more info:

I have not been refused TN status, and did attempt to renew the status. There's two ways to renew a TN status, either by having your employer fillout an I-189 (petition for status extension) then pay $200 and mail it to the nearest processing center, OR you can leave the country and reapply at the border (cheaper, and faster, but a bit riskier if you get turned down, and more of a hassle unless you live near the border). I opted to renew by mail. The instructions for submitting the I-189 indicated that you should send the application 45 days before the current status expires, so I played it safe and submitted it 70 days before. Unfortunately there seems to be about a 6 month backlog at the processing station (which I didn't find out about until afterwards), hence the renewal papers didn't get processed before my status expired, and may not for several months. Due to this, and various other personal issues, I decided to return to Canada, and avoid the hassle of being a non-resident alien in the United States. Building a credit history, buying a home, cars, etc can be difficult if you can't make any commitments beyond the expiry date of your work visa. Returning to Canada removes many of these concerns.

From what has been said here, and a bit of research on the internet, it looks like I can telecommute as long as I form a canadian corporation (done) and sign a contract with my former employer to provide services for them. I will receive no employment benefits other than what I pay for for myself. This is actually quite an attractive idea for me, as I have worked previously as an independant consultant for canadian businesses.

Thanks for all the info so far, and feel free to add anything that comes to mind!
posted by blue_beetle at 6:14 PM on October 5, 2006

Response by poster: Also: I've setup an appointment with an accountant to work out the details, thanks again!
posted by blue_beetle at 6:18 PM on October 5, 2006

Blue_beetle, it's a bit late for this bit of insight, but FWIW: I had a new TN issued each year (I was told it's not really a renewal), by leaving and re-entering the US. (3 or 4 times total as I recall.) I was in Seattle for a while, so it was pretty easy to do by car, but I also had to fly from FL back to Canada. In Seattle there were quite a few Canadians making similar treks back each year, with no problems as far as I know.
posted by yqxnflld at 8:36 PM on October 5, 2006

You don't need to set up a corporation. You can just be a "sole proprietor". Hardly any paperwork involved at all, although you should register for a GST # so that you can get back GST you pay for business expenses (and you're also supposed to do so if you make more than I think $30,000/year - but like somebody else said, you don't actually need to charge your American client any GST). You can do that here: http://www.businessregistration.gc.ca/

There are other reasons you may want to form a corporation, but I've been working this way for years as a sole proprietor with no problems.
posted by Emanuel at 10:14 PM on October 5, 2006

... what I find kind of ridiculous is that I've been working for Americans for years this way, but if I happen to take a vacation in the US, I can't legally do a lick of work for them (e.g. if they call me in an emergency, I'm not allowed to do anything except talk about work, and even that is iffy). Particularly annoying as my wife is American, so I visit there a lot.

... and while I'm venting about immigration, if we want to move to the US, we have to go through the whole damned sponsorship rigamarole (and my wife isn't elegable to sponsor me because she doesn't have US income or assets), despite the fact that I will just continue to work the same job I've always had.

... and for some stupid reason I'm not eligable for a TN visa because in my category a degree is required. Nevermind 12 years of professional experience - doesn't mean a thing.
posted by Emanuel at 10:21 PM on October 5, 2006

jellicle: i didn't think there were any exceptions to GST that were applied at the time of sale. i.e. the customer pays GST and if they shouldn't have to, they apply for a refund/credit.

(i just did a search for "service for export" and most of those terms seemed to apply to Australia.)

I once asked the GST people if i needed to charge GST for a service that was provided in the US, and the answer was, yes. (although, if you ask the taxman if you have to pay tax, i guess the answer is obvious.)

As for getting GST back on expenses - yes, that's true - but you need to have GST income collected. So, if i collect $100 in GST and pay $10 in GST on office supplies, I only need to send a cheque the feds $90. If i collect $0 in GST, then too bad for me.

(really, the GST is an end-user tax. so unless you have GST income, you are paying it.)
posted by kamelhoecker at 11:35 AM on October 12, 2006