Can I work on a 1099 under a TN status?

Well the problem is really the CCPC. If there were no CCPC then s/he would not need to be non-resident in the US for tax purposes. And the next question was paying through a CCPC. Shouldn't have a CCPC because they're working in the US, shouldn't pay through the CCPC even if they want to keep it because of the huge volume of paperwork involved. Easier just to file a 1040NR and pay the tax based on the invoiced amounts. Start using the CCPC again when they're back in Canada.

There is no form 1099 or even 1042-S in that situation because Canadians are exempt from NRA tax. All they have to do is file an 8233 with the client which basically is proof the client doesn't have to issue a 1099 or 1042-S. If they issue one it's a pointless piece of paper.

Even US citizens in the US have problems with 1099s because it's used as a way of offloading social security matching onto employees. Canadians being more naive about this get caught out by it, seen it mentioned various times on here.

And like you were saying in the other thread, why are accountants recommending CCPCs to people anyway, especially if they're going to be working in the US?

It's all people getting tricked by unethical employers and accountants as far as I can see (although there are occasions where corporations and things like 1099s make sense). My basic principle with accountants is to use them when I'm really stuck, not because I'm too lazy to look up the information.

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.

Sorry for the delay let me ask this.

Can i file as a NRA from Canada and then just file taxes on 1099 in the US?
It seems like this is the option i have currently W2 is not an option as of right now

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.

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So basically from an immigration standpoint one is on TN (company sponsors and company specific) but since one is not on the company payroll, one is self employed from a tax perspective (file in US or Canada wherever the base is).

It is also easier from Canada (other than the tax issue) in that if the TN ends one does not have to move back right away and so the whole uprooting thing is not there.

The important question to answer is that if the work is done in the US, will the company pay for the accomodation etc.?

I have to say I'm getting utterly confused here so let me just clarify a few things:

As a Canadian who owns a CCPC, you MUST have your tax home in Canada, Canadian law requires it. If you're working in the US pretty much indefinitely, there is no point in having a CCPC because it just causes you problems and you should probably dissolve it (which may expose you to departure tax but face the reality!)

You can if you want file as a non-resident in the US, but the IRS will start asking questions if you do it for years on end. You file a 1040NR and an 8833 in the US if you're there for more than 183 days, 8840 if it's less than that. This only makes sense for a long period if you have a CCPC or for some other reason you must keep your tax home in Canada e.g. exposure to lots of departure tax. Eventually if you're filing a 1040NR with a US address on it every year, the IRS will write you a letter asking for proof of residential ties abroad.

You can if you want have a CCPC in Canada, but work as a self-employed person or directly employed person on an entirely separate payroll in the US and this is advisable to avoid the CCPC having to file a ton of paperwork in the US and having a US payroll.

The question about "working on a 1099" is a bit disingenuous, because if you're a non-resident alien there is no 1099, it's not a relevant form for NRAs. Payment is made on 1042-S but this is optional because there is no NRA tax so in fact there is nothing, all you have to do is prove your status to your client which is done on Form 8233 and they keep that in a filing cabinet somewhere in case they're ever audited. If you're directly employed you state on the W-4 that you are an NRA (find the instructions that tell you to do this, I dare you, they are fantastically obscure) and they just give you a W-2, it's as simple as that.

BUT really the better option if you're doing TN-1 in the US for a long time is to simply scrap all the NRA stuff, close down your CCPC because you clearly don't live in Canada and do your taxes like any other American does.

I was advised by the IRS many years ago that it is unwise to file as a non-resident alien self-employed person because it's the rarest filing category (hint, hint, nudge, nudge, audit, audit), so basically not a good idea to either have a CCPC and set up a US payroll for it because of the paperwork and not a good idea to have a CCPC and file as a non-resident alien self-employed person in an attempt to avoid that paperwork - get rid of the CCPC and file as a US resident.

Okay, that's the NRA bit covered.

There's another issue which goes to whether you can be self-employed on TN-1. I've had this discussion in depth with the IRS legal dept. if you can believe it and although the IRS doesn't care if you file that way, there are various international treaties involved (tax treaty, NAFTA) and legally it's very confusing, which is why I quote the bit from the CBP manual which is slightly less confusing. Essentially your sponsor must be arm's length from you, you cannot in any way control them or their company.

Assuming you're okay with what CBP may think when they ask you if you're self-employed then from a tax standpoint you can do what agnelson suggests - get 1099s once you are a US tax resident which does make sense in the example he gave, a guy with 14 TN-1s because it's impractical to be on 14 payrolls.

But don't be a naive Canadian and meekly accept a 1099 when this person is your only client - employers do it in the US to offload social security matching on to you and then you have to do all the self-employment stuff as well. If you're working principally for one company then really you should be on their payroll and getting a W-2.

This is advice the IRS gives to Americans employed in the US, let alone Canadians.

You know I've been dealing on departure questions for nine YEARS and I've encountered ONE with CCPC, and this poor soul was living in US and made a fake return to canada to set it up (that is what I mwan by moronic advice) and has been paying for it ever since.

I know DOZENS of TNs self-employed and living in US, being paid on 1099. It simply is not a problem. Neither with IRS nor with DHS.

How else does a TNer get multiple clients without going thru an agency: 1099. Living in US. US corporation if necessary, self-employed.

-- Sat Sep 19, 2009 10:19 pm --

This CCPC is really a red herring.

But the original questioner has got one. So that makes two I guess. And I've seen various threads on here where people on TN-1 asked about it.

Cedartie never said he had a CCPC. Having a corp in canada doesn't make it a CCPC.