Can I work on a 1099 under a TN status?

Can you file taxes in US with an 1099. Of course.

The question is "should you"? If you live in US and not canada: yes.

If you live in Canada and not US: Probably not, due to the treaty exemption, at least for 2008.

But if you are asking can you WORK as a TN and be paid on a '1099' basis (ie. a contractor). Definitely. The exact form you should get is debateable, but TN contracting is allowed.

Hello Angelson i have a Canadian Corporate as well. 2 years ago i was living in the US and filing taxes through the Canadian Corporation can you please let me know if its legal? Problem is you go to ask advice and suddenly people feel bad and they try to help you out by tweeking things here and their.

This is the reason why i come to this board i just need to know if Legally i can work through my Canadian Corporate.

In other word. COmpany in Canada pays me in the US then at the end of the year goes back and dumps it in my corporate....

Do i make sense?

Thanks

"A corporation is located where the work of the corporation is ordinarily performed" so if you have a Canadian corporation and you work for it in the US, it must get an EIN, file an 1120-F every year, pay US corporation taxes (if any are due) have a US payroll and so on.

I assume your corporation is a CCPC, so provided you remain a tax resident of Canada (which is legally required for a CCPC if you own it) then you must in essence set it up as a US corporation to work for it in the US. Rarely any point in going to all this hassle, makes more sense to set up a US corporation otherwise the paperwork becomes a total nightmare.

But your business cannot sponsor you for TN-1 obviously otherwise you are self-employed at that point which is illegal.

If you move your tax home to the US you may expose yourself to departure tax on the CCPC if it's worth anything.

"But your business cannot sponsor you for TN-1 obviously otherwise you are self-employed at that point which is illegal."

Correct, but the illegality is not self-employment, but self-sponsorship. CBP would not grant the TN in the first place.

Very few people are using CCPC, steven.

Ok so in other word both You guys think 1099 is ok.

I do. You may or may not get a 1099 at end of year, but you will not get a w-2, and that is fine.

The reason why i asked this is because now a days a lot of company ofcourse they want to save money and why give 7.5% SS and EI when you can just hand over the 1099 and let the person pay taxes.

I'll let my company know to go ahead on a 1099 my question is that is their any other way besides a 1099 the company won't give me a W2.

Just wondering.
Thanks

Of course, when you accept to be paid on contract basis, you shpuldbe getting 20-40% more than as an employee.

"But your business cannot sponsor you for TN-1 obviously otherwise you are self-employed at that point which is illegal."

Correct, but the illegality is not self-employment, but self-sponsorship. CBP would not grant the TN in the first place.

Very few people are using CCPC, steven.

The question was:

This is the reason why i come to this board i just need to know if Legally i can work through my Canadian Corporate.

I doubt it's a regular corporation if it's small.

I think this question of "self-employment" and "self-sponsorship" needs clarification, because self-employment on TN-1 is illegal but it's basically defined as not being an arm's length situation with the sponsor:

As with the CFTA, admission as a TN under section 214(e) of the INA does not imply that the citizen of Canada or Mexico would otherwise qualify as a professional under section 101(a)(15)(H)(i)(b) or section 203(b)(3) of the INA. Note too that Section D of Annex 1603 does not authorize a professional to establish a business or practice in the U.S. in which the professional will be self-employed. Section D of Annex 1603 is limited to the entry of a citizen of a Party country seeking to render professional-level services for an entity in another Party country.

Self-employment also clearly conflicts with the intent of the NAFTA Implementation Act and its accompanying Statement of Administrative Action, which states, at page 178, “Section D of Annex 1603 does not authorize a professional to establish a business or practice in the U.S. in which the professional will be self-employed.” In this regard, Section B of Annex 1603, which deals with “traders and investors,” establishes the appropriate category of temporary entry for a citizen of a Party country seeking to develop and direct investment operations in another Party country. Canadian or Mexican citizens seeking to engage in self-employment in trade or investment activities in the U.S., therefore, must seek classification under section 101(a)(15)(E) of the INA.

Although the issue of self-employment was never specifically addressed under the regulations promulgated by the INS pursuant to the CFTA Implementation Act, the bar on establishment of a business or practice in which the professional will be self-employed is consistent with the intent of the U.S. and Canada in entering into the CFTA. Since entry into NAFTA was not intended to substantively change the treatment of professionals, this explicit bar merely clarifies existing law.

Note that the bar on establishment of a business or practice in which the Canadian or Mexican citizen will be self-employed is in no way intended to preclude a Canadian or Mexican citizen who is self-employed abroad from seeking entry to the U.S. pursuant to a pre-arranged agreement with an enterprise owned by a person or entity other than him/herself located in the U.S. On the other hand, a Canadian or Mexican citizen is precluded from entering this country in TN classification for the purpose of rendering pre-arranged services for a U.S. corporation or entity of which he or she is the sole or controlling shareholder or owner or over which he or she holds de facto control.

-- Thu Sep 10, 2009 1:13 pm --

Ok so in other word both You guys think 1099 is ok.

I don't think that's really the issue frankly, as I mentioned further back. In your case the 1099 is just a bit of paper that is the equivalent of a receipt for your bill. Could be a 1042-S instead. Could be a handshake for all it matters.

I think you need to be a bit more clear on what the structure of your company is, that's the relevant point, as a CCPC having employees in the US (which appears to be your situation) is a very complex situation to be in and I don't recommend it although legally it is possible.

You end up with two payrolls (possibly), two sets of corporate withholding, two returns for the corporation 1120-F and T2, and then you have all the personal stuff to do to depending on whether you've paid yourself in Canada for anything, i.e. two personal tax returns and a whole crapload of claiming foreign tax credits, both for you personally and for the corporation and if you're exposed to US corporation tax because the CCPC rate is lower in Canada, a schedule 21 application won't recover all the tax you paid in the US.

Ad naseum (tax treaty claims on 8233 and 8833 perhaps). Not recommended. Not recommended frankly even for a large company, better to have two corporations, which is why they generally have a separate corporation in each country they operate in.

For a small company you're basically working as an accountant at that point. Most accountants frankly don't understand it because it's a cross-border situation, another reason to have the two businesses separate so it's a standard situation for an accountant on either side of the border to deal with.

It would be better to be on their payroll and get a W-2 so you or your company doesn't have to do the withholding, regardless of what is legally possible.

I guess we will have to disagree on this. I would encourage any who are comfortable being a contractor, and who live in canada, to embrace this method of work arrangement.

I know a guy who had 14 TNs at once on this arrangement -- and he was living in US. This would be even easier if living in Canada.

The more clients (and TNs) you have, the easier it is to prove "no fixed base" in US.