TN H1B Questions

I posted another question earlier, thought the case is closed. But my US client wants me to reconsider the whole situation, and willing to take me on as an employee. They are a relatively small company, and never done something like this, in terms of paper work. They want me to find out what is required of them and they will also talk to a lawyer.

1. I have been working for them for 1 year remotely, without TN visa. The Canadian Corp is not at an arm's length, that means I cannot get a TN visa? If I want to pursue the TN visa route, does it mean that I have to find a Canadian company that will do that for me, of course, a cut in my income also. The fact that I have been working for 1 year without TN remotely, will CBP hold that against me? I used to fly in, so all my record will be at the airport, if I go to another CBP by driving, any chance that they may not have my record there?

2. If my client goes the H1B route and hire me as an employee, that means I have to wait for 6 months if not more, can I continue to work remotely for them in the mean time without TN visa? Will the fact that I worked without TN visa hinder the application for H1B?

3. $10,000 limit is mentioned several places, is that the total YTD revenues? If yes, then my case have exceeded that. But I do pay all the proper tax in Canada.

Thanks!

1. I have been working for them for 1 year remotely, without TN visa. The Canadian Corp is not at an arm's length, that means I cannot get a TN visa? If I want to pursue the TN visa route, does it mean that I have to find a Canadian company that will do that for me, of course, a cut in my income also. The fact that I have been working for 1 year without TN remotely, will CBP hold that against me? I used to fly in, so all my record will be at the airport, if I go to another CBP by driving, any chance that they may not have my record there?

Why not just get them to sponsor you for TN-1 and go on their payroll? It's as simple as that.

2. If my client goes the H1B route and hire me as an employee, that means I have to wait for 6 months if not more, can I continue to work remotely for them in the mean time without TN visa? Will the fact that I worked without TN visa hinder the application for H1B?

You're working outside the US, CBP couldn't care less what your status is in Canada while an I-129 is pending.

3. $10,000 limit is mentioned several places, is that the total YTD revenues? If yes, then my case have exceeded that. But I do pay all the proper tax in Canada.

That's to do with your earnings in the US when you are physically in the US doing the work. If you are employed by Canadian company x and working in the US for them (say for example you work for an IT company and are installing some equipment for them for a US client) then they can pay you for the work you are doing in the US up to $10,000 without having to comply with US payroll laws. Over that limit they have to get an EIN, do FICA withholding etc. and you would have to file a 1040NR.

In this situation the far simpler route is to simply be directly employed by your US client, they do all the withholding and just issue you a W-2 at tax time. The only quirk to it really is that because you have a Canadian corporation, you must be resident in Canada for tax purposes, so on the W-4 (equivalent of TD-1) you must state you are non-resident and you file 1040NR to report the US-source income you receive while you are in the US, i.e. whatever is on the W-2.

Thanks Steven.

The fact that US unemployment rate is very high, will it be more advisable to do the TN or H1B, given that the company is willing to do either.

Technically, do one need TN visa while working remotely, and periodically going down for meetings, say once every 1-2 months for a few days. I did ask a lawyer friend before (not immigration lawyer), he said TN visa is not required for that arrangement, everything was fine until I hit this Withholding Tax business.

Wonder if I had done something illegal during the past year, and if I should fess up before the H1B or TN application. Or, don't kick the can of worms, but I will need that last year working relationship for the application also.

The fact that US unemployment rate is very high, will it be more advisable to do the TN or H1B, given that the company is willing to do either.

TN-1 is much simpler, but you must fit into one of the job categories to qualify for it.

Technically, do one need TN visa while working remotely, and periodically going down for meetings, say once every 1-2 months for a few days. I did ask a lawyer friend before (not immigration lawyer), he said TN visa is not required for that arrangement, everything was fine until I hit this Withholding Tax business.

No, you don't need any sort of work authorization, the work is being done in Canada, not the US. Going down for a planning meeting or some company training, i.e. incidental things don't count. As a B-1 visitor under NAFTA you can even go down and do installations without work authorization.

Obviously if you're down there for a few weeks doing an installation and you earn over the $10,000 limit, then your Canadian corporation needs to get an EIN and do US payroll tax withholding.

Wonder if I had done something illegal during the past year, and if I should fess up before the H1B or TN application. Or, don't kick the can of worms, but I will need that last year working relationship for the application also.

I think you're getting worried about pretty much nothing really. There is no work authorization required from what you've said. There are no US taxes due either, although you may need to file some paperwork with the IRS, which is covered in various other threads on here. As you have your own corporation and it's issuing you a T4, provided you're not over the $10,000 limit in the US (which obviously you can fiddle to some extent because you have control over the amount of time you spend in the US and how much you get paid), then the only paperwork I can think of that might be required is that the corp may have to file an 1120-F and an 8833 with the IRS, which is basically a tax treaty claim.

I can never get a clear answer out of them as to when it's necessary, some agents say only if the corp receives over $100,000 active business income from the US, some say it's required regardless of the amount.

In any event, there's no taxes to pay because the work is done in Canada. There is no withholding tax on the US end (which is what your client is getting worked up about) because the business is based in Canada and is exempt under the tax treaty.