Hubby has TN visa, How do I run my online business?

[scrapnqueen]

Hi,

Our family is about to move to the US on my husband's TN visa. I have an eBay store on eBay.ca, but I, unfortunately, did not get a work visa. It is a Canadian Business, which will still pay taxes in Canada, and is all run in "cyber-space" (by drop-shipping), except for where I withdraw money. However, my biggest supplier is American, and happens to now be my husband's new employer. How do I maintain my business legally while living in the US? Do I have to continue to withdraw my salary to a Canadian account, then transfer it to the States where I can use it? I'm very confused.

Thanks for any help you can give!

[Reba]

You cannot legally work in the US (even for yourself or for a Canadian employer) unless you have US work authorization.

[Steven]

You can't as Reba explained, but bear in mind also at the current moment in time if you have an ebay based business that has any business in the US you have to file a US tax return. Any income effectively connected with a US trade or business over $3,400 in the current tax year would do it (unless you use a corporation, in which case the requirement to file is there regardless of the dollar amount, even if there's a loss), and you have to claim a tax treaty exemption.

Once you're in the US you have a "permanent establishment" there and are subject to US income tax and US withholding taxes.

I noted awhile back in the Ebay terms and conditions some mention of "you agree that you are claiming tax treaty benefits and Ebay is not subject to performing non-resident withholding tax" or something along those lines, so be careful.

Bear in mind also that if (he doesn't have to) your husband moves his tax home to the US, he has to file jointly, which means you have to move your tax home there too. Which means you may end up having to file a non-resident T1 return for any Canadian-source income.

In addition, you may be exposed to departure tax if you move your tax home to the US and your business has realised a capital gain over the exempt amount. (i.e. if the business started from zero, and is now worth more than $50,000, and that is your only asset subject to departure tax, you pay 25% of the amount over $50,000 to the CRA).

Read this: http://www.cra-arc.gc.ca/tx/nnrsdnts/nd ... n-eng.html

Also read this: http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html

Also read IRS publications 519 and 597.

These publications are now out-of-date to some extent because of the new tax treaty. The new treaty defines a "permanent establishment" as somewhere where more than 50% of the work is performed or where the business has an establishment for more than 183 days a year (which is important in determining whether you have to do non-resident withholding). In addition, it requires proportional payment of tax, i.e. tax must be paid on the portion of the work performed in each country.

So to pay yourself in the US you have to get an EIN and do social security withholding etc. there, in a similar manner to having a Canadian business number and doing payroll withholding here.

[Blair]

I'm a Canadian English teacher (living in Japan) and am trying to supplement my income by grading English Tests via the internet for an American Company called ETS. Do you need a visa to work for an American company even if its over the web and you don't live there? If so, what kind of visa do you need? Thank you so much if you can help me with this.

[agnelson]

That would be up to Japanese authorities to determine.