USA / CANADA Taxes, Residency, Spouses - all so confusing

[Creature]

Hello everyone - I think I have a very unique situation here and I really don't know how to proceed. I will try to make this as clear as possible to avoid confusion (which seems to be the par with moving to the USA).

My question is this: what are my options?

This is my situation: Me, my wife, and our 2 children are moving to the USA as soon as we sell our home here in Alberta. If all goes well, we plan to spend the rest of our lives in the USA. My wife is a Registered Nurse and has done all the necessary paperwork to obtain her TN visa. As soon as we sell our home she will start taking interviews at hospitals in the US. I am a computer programmer / web developer. I am currently working for a Canadian company in my hometown. They are aware that I will be moving to the USA soon and have suggested that I continue working for them from the USA. My entire workload is completed via internet now anyway. My original idea was to have my wife claim USA residency status and I would claim Canadian status. A fellow at Revenue Canada told me that my wife and I can not claim separate residency statuses. So my options are to either claim Canadian or USA residency, but which one is best? If we keep our Canadian residency, I believe my wife will have to pay income tax on both sides of the border. If we give up our Canadian residency, my wife will be fine, but what hoops am I going to have to jump through to be able to work in the USA for a Canadian company? The company I am working for doesn't want me on their payroll as an employee when I move, but rather contract me for my services. This is all so confusing.

Any help would be greatly appreciated.

Thanks ^^

[Reba]

You will need a work authorized visa in order to be able to legally work while on US soil, regardless of who your employer is. If your wife is on TN visa, you'd be on derivative TD, which is not work authorized.

Also, TN is only temporary, not permanent. You have to sort of not have intent to stay permanently in order to be eligible for the TN. And she would have to find a hospital that will sponsor the TN, she can't just get it on her own without first having an employer.

[Steven]

What you're suggesting is not a practical idea for a number of reasons:

First of all you aren't allowed to work in the US on TD, the fact that you're working remotely for a Canadian company is irrelevant, it's where you physically are that matters.

The second problem is that you'd have to set up your own company in the US from the sounds of it, and you need an SSN to get an EIN for the company, so even if you wanted to do it illegally, you can't, because you can't get an SSN on TD. (Although you can probably get an ITIN).

The third problem is your tax status, because the most likely category is non-resident alien self-employed person and that has got to be the worst filing category to be in, it's extremely rarely used, generally only a handful of people with E visas use it (even most people on E move their tax home to the US).

Your spouse is a residential tie for tax purposes as the CRA have no doubt told you, which basically means you need to file in the same country (although if there is a compelling reason why that is not the case, say your wife is in the US working and you are in Canada you might be able to make out a reason they will accept, but even then, you could still file jointly on T1 and she files a 1040NR).

So basically you and your wife either file jointly on T1 and 1040NR, or you both move your tax home to the US and file jointly there on 1040.

Given that it's the middle of the year you would have to file dual-status for 2009 if you wanted to move your tax home to the US, IRS publication 519 explains how to do this. Also your T1 for 2009 would be pro-rated.

As far as your work authorization problem goes, the only thing I can think of is E-2, which is for treaty investors, but it requires a "substantial investment" which a remote worker probably wouldn't be making and it also requires you to be in control of the investment but not self-employed per se so that usually means you have at least one employee to satisfy that requirement.

E visas are very complex, have a read of: http://toronto.usconsulate.gov/content/ ... ment=evisa

Although people on E visas technically aren't self-employed, everyone I've met who had one basically was, e.g. people who run B&Bs in Orlando and the like. One guy I know in Florida did it by having his wife as the one who was technically making the investment so she got the E-2 visa and then he got the E-2 spouse employment authorization and worked for the company he set up.

[Creature]

Thank you for your responses. We are aware that the TN is a temporary visa - it needs to be renewed yearly - however, the 3 job offers my wife has had to turn down already (due to the fact that we haven't sold our house here and do not want to pay on 2 properties in different countries) all wanted her to sign a 3 year contract. I understand that 3 years is not "permanent" but it is definitely a good start and would give us a great opportunity to sort the long-term thing out. Some hospitals actually offer to help you obtain a green card (for spouse as well) if you are willing to sign a long enough contract. This is all really not overly concerning for us. Our main concern is my employment situation. Financially, I do not need employment; our move to the USA will happen as soon as we sell our house here - regardless of my employment situation. I was just hoping to keep this job as I really enjoy what I am doing there.

When my wife does obtain her TN visa, do I automatically fall under a TD category or can I not apply for a different visa?

What if I convinced the company I work for to keep me on the payroll as an employee? Is there no other Visa I could apply for that would allow me to work for a Canadian company (as an employee) while in the USA?

Thanks again for the responses - it is much appreciated.

[Reba]

When my wife does obtain her TN visa, do I automatically fall under a TD category or can I not apply for a different visa?

You would be eligible for the derivative TD status, which you would have to apply for, either at the same time your wife applies for the TN (which is 3 years now btw), or after she gets her TN.

You can get some other sort of work authorized visa yourself, but if you're employed by a Canadian company who has no US presence, I don't know of one that would be for situation. There aren't any really.

What if I convinced the company I work for to keep me on the payroll as an employee? Is there no other Visa I could apply for that would allow me to work for a Canadian company (as an employee) while in the USA?

Unfortaunately no. Not unless they already have an existing US office that they could transfer you to.

Have a look thru the Department of State website for info on temporary workers

http://travel.state.gov/visa/temp/types/types_1271.html

[flames fan]

Just read your posts and let me say, it isn't easy... so do not take this decision lightly. My husband and I just moved from Calgary to the US with our children and here are some things to consider from experience and the research we had to do initially. A TN visa, in my opinion, is a risky move for a family. We considered my getting a TN visa as our way in. A TN visa should be sponsored by a US employer, which is relatively easy. However, even with all of the paperwork prepared by a US attorney (hired by my now employer) you cannot have a TN determined in advance and it must be done at port of entry, and is only good for 1 yr. So at the airport when about to fly down, you find out if you are in or not. This might work for a single person without kids and a property, but the last thing you want to do is resign your jobs, sell your house and then find out you can't get in.
Now, say your wife does get in on the TN visa... basically, you can't work. So, if coming to the US is important enough that you can go to single income, that's likely what you are facing. This may work for you if you've sold your house in Ab, but in our case, our house is still on the market. Selling a house in Alberta isn't as easy as it was a couple years ago.
If your company has a US branch or office, my suggestion is to see if they will transfer you and sponsor an L-1 visa. Your wife can then apply for an L-2 and work as a nurse after a 3 month wait period. She can't apply for the L-1 as it's designed for companies who have offices in both Cda and US to be able to transfer back and forth. This is good for 3 yr min. and can be renewed and offers far more security than a TN visa.
In our situation I wanted to accept a new job (like your wife) and the only way we were able to do it is by my husband's employer trasferring him to their US office for an opening they had in the same area. His company hired the immigration lawyer to prepare the paperwork. For this, you need to be a Manager with direct reports or a specialist of some type.
Word of advice if you do get the visa sorted out and do haul your family to the US, choose an area that's less expensive than Calgary, not more. Despite the recession, certain areas are still very expensive to live in. Do alot of research regarding available housing and the schools/neighbourhoods first. The little things you don't ever hear about are that you have zero credit when you move here, so new residents do not qualify for mortgages, loans, credit cards, cell phones etc. You start all over like your 18 yrs old again. We were lucky in that we use an Intl bank rather than a Cdn one, so we were able to "transfer" our excellent Cdn credit status to our US affiliate, but in general this doesn't happen. This helped with the house, new cars and credit cards, however things like hooking your utilities and getting a cell phone all still require substantial cash down as they do not see your Intl credit status, just that you have zero US credit history. If you lease or finance vehicles in Canada, don't plan on bringing them... not allowed to leave Cda with a car unless it's paid for 100%. We had to unload 2 great cars and buy new ones. Now, we have the delightful task of filing taxes in 2 countries.
Long and short, consider all angles before you uproot yourself and family and make sure that the net effect is a positive one. We do not regret the choice as the experience is worth it for all of us. Despite all of the positives of being here, we will definitely come home to Canada eventually.

[Steven]

it needs to be renewed yearly

Three years now, the limit was raised in October.

When my wife does obtain her TN visa, do I automatically fall under a TD category or can I not apply for a different visa?

Entirely up to you, you qualify for TD, to qualify for anything else you must meet the requirements.

What if I convinced the company I work for to keep me on the payroll as an employee?

Doesn't help you because it depends on where you physically are, unless they have a US office they can transfer you to and do L-1B.

Is there no other Visa I could apply for that would allow me to work for a Canadian company (as an employee) while in the USA?

Not unless they have a US office, like I said, E-2 is probably your best option but it's very complex.

[fshwear]

Regarding taxes, I highly recommend Steve Sherman of crossbordertax.com in Toronto. I went to Charlotte, NC to get my taxes done there, but they messed it all up. Thank God I didn't send it in - I got another opinion. It paid off. Even though Steve's services cost 7x more than the guy in Charlotte, I am going to receive 10x the money back that the guy in Charlotte said I would. Plus, the guy in Charlotte didn't know how to handle the Canadian side of things. I would have had to go somewhere else to get that part done. But Steve really knows his stuff on both sides of the border (he's worked in both the US and Canada, so he understands how to do things right so you don't get overtaxed on either side of the border)- it's worth it! He is very, very thorough and sends you everything you need. Basically, just sign it and send it away. I can't say enough how impressed I was.

Also, remember that health care is very expensive in the US - you are completely on your own. Make sure you factor that into your monthly budget. Most plans down here have a $3000 deductible, but it still costs $600 per month to have it. Eat lots of veggies and you won't have to use it!

I am currently in the renewal process for a 3-year term. It's like everyone else says: it's nerve-racking knowing you could have to leave. Be prepared for some emotional rollercoaster rides.