Can I get paid as contractor on a TN Visa?

I'm a Canadian and just started working for two photojournalists, based outside of the US. I'm currently in the US where my Canadian fiance is living and working on an O1 Visa. Since the people I work...

Canadian Expatriate and Travellers Forum Index -> Canadians in the USA -> US Visas and Immigration

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Web Betty
New Member

Joined: 09 Jul 2008
Posts: 9

Posted: Wed Jul 09, 2008 3:43 pm

I'm a Canadian and just started working for two photojournalists, based outside of the US. I'm currently in the US where my Canadian fiance is living and working on an O1 Visa. Since the people I work for are not a US based company, the agency they founded (the two I work for and several others founded the agency in the states where it operates) are willing to sign my TN Graphic Design visa and my payment will go through the agency. However, the agency does not want to take me on as an employee but would rather have me sign the W9 form and pay me on a contract basis every month. Is this legal and will it send and red flags come tax time?

Any advice would be greatly appreciated.

AgentHubcap
New Member

Joined: 08 Jul 2008
Posts: 4
Location: Oregon

Posted: Wed Jul 09, 2008 4:12 pm

I don't know specifically about the W9 thing, but I've worked as a contractor as a W2 on a TN

Web Betty
New Member

Joined: 09 Jul 2008
Posts: 9

Posted: Wed Jul 09, 2008 5:14 pm

Thanks. It seems like the same thing. Basically, I was told that if I was on a freelance/contract basis I would return a W9 to them and they would issue me a 1099 in January and that if I was on the payroll they would have sent me a W4 for tax withholding.

From what I understand Canadians are not allowed to freelance in the US but if I work on a freelance/contract basis and get paid by the same employer every time, is this considered freelance or can it be applied to the TN? In other words, I don't need to be on a payroll, do I?

Steven
CanuckAbroad VIP

Joined: 28 Sep 2007
Posts: 1582
Location: Calgary

Posted: Thu Jul 10, 2008 10:46 am

What is your status in the US? Not clear from your post. O-1 and TN-1 cannot be self-employed and O-3 cannot work.

Essentially you would have to register as self-employed to do what they're suggesting.

It's not uncommon generally speaking for US companies to do what they're suggesting, but the IRS doesn't like it if you are only working for one company and you are under their control. That is not "independent personal services" as defined in the Internal Revenue Code, that is "dependent personal services" which requires they do withholding and issue you a W-2 (the equivalent of a T4).

How many people they actually go after every year for it though I don't know but I'm sure it's tiny. The IRS consider it evasion by the employer of paying social security, employment insurance and medicare by the company by off-loading it onto the employee.

Your real problem is that it's not allowed under your immigration status.
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Steve.

Web Betty
New Member

Joined: 09 Jul 2008
Posts: 9

Posted: Thu Jul 10, 2008 11:57 am

Thank you for that reply. That answers all my questions. I was curious as to why they couldn't put me on the payroll and now I know why - makes sense. Time to look for a new job.

On that note (maybe I should post a new topic for this), if I obtain an O3 when married, can I work for individuals NOT in the US and not US citizens on a freelance basis and claim my taxes in Canada? Does the O3 visa state that its holders cannot work at all anywhere or just in the US?

Steven
CanuckAbroad VIP

Joined: 28 Sep 2007
Posts: 1582
Location: Calgary

Posted: Fri Jul 11, 2008 4:14 pm

Only if you physically perform the work outside the US. Even unpaid volunteer work can require work authorization in the US if the work would ordinarily be paid.

It sounds to me though you're in this situation that travel writers and IT guys get into when they start doing work on their laptops.

Bear in mind there is a thing called the "Fifth amendment" - if you are the only person who knows you are performing work in the US, you cannot be forced to be a witness against yourself.

Purely on the tax side of it, have a read of this: http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html

Essentially you file a T1 for wherever you live in Canada every year, you file a 1040NR and an 8840 or 8833 (depending on whether you meet the substantial presence test) with the IRS to pay tax on your US-source income and you claim a foreign tax credit in Canada on tax paid in the US to avoid dual-taxation.
_________________
Steve.

Web Betty
New Member

Joined: 09 Jul 2008
Posts: 9

Posted: Sat Jul 12, 2008 2:25 pm

Ah. thanks for the link. There's a lot of useful information in there, giving me a couple of ideas on how to best approach this and what my options are (.scarce). Yes, that is in fact the situation I'm in.

Thanks again. I'm in better position to make informed decisions now, which I feel is half the battle.

atish
New Member

Joined: 13 Jul 2008
Posts: 8
Location: Wisconsin

Posted: Sun Jul 13, 2008 5:35 pm

Another way could be that you ask them to pay your canadian registered business and you deposit that in the canadian bank and file canadian business income, this can be done if you are not interested in renewing the TN dont know if this could have implications with the TN visa. This is some thought and want others opinion if this is doable or not

Thanks