Is it legal to for a Canadian to work in US for a Canadian company without working papers?

November 23, 2007 3:47 PM

Is this illegal? I'm a Canadian living in the US legally but not allowed to work. I run an online business based out of Canada (use a Canadian address for all payments, bank account etc...). I suppose I'm working for a Canadian company (my own) but living in the US. Additionally, and I haven't done this yet, would importing revenues from the business to use for living expenses affect the legality?
posted by anonymous to work & money (10 comments total)

I think you might owe US taxes, but only a lawyer or accountant could tell you for sure.
posted by Steven C. Den Beste at 3:55 PM on November 23, 2007

this sounds like you're on an F-1? (you know, including that kind of info would help...) if so, the regulations, IIRC, say that off-campus work is not permissable. since you are doing it in the country and merely using off-shore accounting, I'd be weary.
posted by krautland at 4:07 PM on November 23, 2007

Another thing you don't mention is whether your company is incorporated (in which case it is a separate legal entity from yourself) or whether it's just a sole proprietorship. I don't know anything about the US rules, but that might make a difference.

As an aside, if the situation were reversed (you were an American living in Canada without a work permit or permanent residence, and were working for an American company), this would be completely legal. You would have to pay Canadian income taxes, though.
posted by Emanuel at 6:56 PM on November 23, 2007 [1 favorite]

The US has a tax treaty with Canada. Take a look at the business profits section in both the treaty and the technical explanation.
posted by acoutu at 9:31 PM on November 23, 2007

I've been asked (a canadian who visits the states) at the border whether I'm going to be doing any work while I'm in the states, whether for a canadian or american company. So I would assume there are some sort of restrictions on that, or they wouldn't ask.
posted by blue_beetle at 10:58 PM on November 23, 2007

"...would importing revenues from the business to use for living expenses affect the legality?"

Can't comment definitively but I'm an American living and working in London with cash flow producing assets located in the US.

I pay US taxes on the income those assets back in the United States generate, and if the money stays there nothing further must be done. But if I chose to bring any or all of that money into the UK then I have to pay UK taxes on that cash.

So I suspect the US will want their portion as well.

That's the letter of the law. However technically, its the total amount of money and the transfer mechanism that will cause a problem.

I've got a debit card tied to my brokerage accounts back in the US and if I chose to bring over a thousand pounds or so, they probably aren't gonna do anything even if they knew about it. The amount of tax owed would be too small to warrant an investigation and demand for taxes, even considering penalties.

But change that to £50K and they'll definitely come after me. And in this day and age, larger sums attract more attention.

I never bring any cash into UK but working in banking I've got lots of friends who have assets parked off shore for tax deferral, and use debit cards to access their money. Contrary to what many people think, there are fundamental differences between tax deferral (legal) and tax avoidance (not legal).

Many folks get away with never declaring the cash they've brought into the UK, however I know of a few very, very messy situations where folks got caught. Oftentimes, the back taxes, interest, penalties and fees for representation dwarf the total amount brought in.

So you'd best talk to a professional to figure out just how large a problem you may or may not be making for yourself.
posted by Mutant at 1:46 AM on November 24, 2007 [2 favorites]

"I've been asked (a canadian who visits the states) at the border whether I'm going to be doing any work while I'm in the states, whether for a canadian or american company."

I've been asked that at the border as well when going down on business trips, but I always took it to mean "Are you working for an American company (like an employee), or are you doing work in America for an American company on behalf of your Canadian company(contractor)"

The general gist of it seemed to be to me that they were only really worried that I was going to be doing something in the states that an American could do for money instead of me. So under that context, if I was living in the US, but running/working for a Canadian company, only working for the Canadian company as they service their Canadian (or other non-US clients), I can't see the US caring, as your fingers aren't in their pie, so to speak. If you are working for your Canadian company as a sales agent for new business in the US or to service existing American clients, that I am sure would be... bad.

That being said, I really have no ideas of the legality of such. Talking to someone who is experienced in labor law in the US would be an excellent idea. To avoid impropriety during your enquiry, you may wish to say something along the lines of that you are living down there and took a break from your Canadian company for X reason, and now the company needs you, and is working like this a bad idea?
posted by barc0001 at 2:06 AM on November 24, 2007

Ever heard of Borland software? Famously Philippe Kahn started the company because he was in the US and didn't have a work permit, so stayed legal by building his own business. There are other examples of well-known brands starting out that way.

Get expert advice, but you may well be fine -- there is no class of visa that requires you to sit around with a totally vacant mind.
posted by Idcoytco at 3:47 AM on November 24, 2007

Yes, get expert advice. My accountant could answer this for you definitively as he specializes in cross-border tax stuff.
posted by dobbs at 8:21 AM on November 24, 2007

If you are an F-1 or M-1, you can email [e-mail] and get an nice, official answer that you can print out and staple to your I-20 for when la migre comes a knocking or your DSO tries breaking your balls.
posted by Pollomacho at 4:15 PM on November 26, 2007