Working in Canada while living in the US

I am in the US on an H1 and we are in the process of filing for permanent residency and a VISA. This could take another year. My husband would like to return to work and could do so for a Canadian com...

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Canadian Expatriate and Travellers Forum Index -> Canadians in the USA -> US Visas and Immigration

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ccairns
New Member

Joined: 01 Sep 2008
Posts: 1
Location: San Mateo

Posted: Wed Sep 03, 2008 6:43 am

I am in the US on an H1 and we are in the process of filing for permanent residency and a VISA. This could take another year. My husband would like to return to work and could do so for a Canadian company in the area of remote or even telphone sales. We live in California but also have a place in Canada. We travel back and forth on a frequent basis. My questions: 1. Can he work for a Canadian firm while living in California? 2. What conditions need to exist for him to do this legally?
3. Are you aware of any recruitment firms that recruit for this type of role (remote sales/call center or other)?
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Steven
CanuckAbroad VIP

Joined: 28 Sep 2007
Posts: 1637
Location: Calgary

Posted: Wed Sep 03, 2008 11:13 am

I assume from the sounds of it he's on H-4? If you get PR status while he's outside the country that's going to cause problems if he's not listed as your spouse on the application, you'd have to sponsor him for him to get back in which would take years.

I suppose technically speaking if he keeps his H-4 visa up-to-date and you list him as living with you as your spouse on the AOS paperwork you could get away with it.

The tax situation will be a real mess though as you have to file jointly in the US, but he won't be living there. I suppose he would have to file a non-resident T1 in Canada and claim the foreign tax credit in the US with the 1040, but the CRA I think are going to be highly suspicious of a Canadian who lives in Canada working for a Canadian employer filing as non-resident. Might get away with it for six months but longer than that and he's going to start getting interesting phone calls from them when he files his non-resident return.

And you have to file jointly in the US for the immigration paperwork, IIRC, so he can't move his tax home back to Canada.

Can't think of a way around that one I'm afraid, unless he wants to pay taxes twice.
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Steve.

CalGreenCard
CanuckAbroad Regular

Joined: 16 Feb 2008
Posts: 65

Posted: Wed Sep 03, 2008 2:11 pm

Steven wrote: I assume from the sounds of it he's on H-4? If you get PR status while he's outside the country that's going to cause problems if he's not listed as your spouse on the application, you'd have to sponsor him for him to get back in which would take years.

I suppose technically speaking if he keeps his H-4 visa up-to-date and you list him as living with you as your spouse on the AOS paperwork you could get away with it.

I don't think there is any problem there. People get their I-485's approved while outside the country on a regular basis. They do not put travel plans on hold just because the I-485 is getting close to being approved and might be approved in their absence. They just make sure they have a current advance parole and/or H-1B/H4 visa--if they do all should be well.

I do not think he plans to live in Canada--I think he wants to work for a Canadian company while living in California. If he were living in Canada while pretending to live in California that could be a problem but I do not think that is his plan.

The real issue is that to do what he wants to do--work for a Canadian company while living in California--he needs either to have a visa in his own right (unlikely for the kind of work he may be doing) or to have an EAD as a derivative on his wife's I-485. Even if both he and the company are Canadian, if he wants to work in the USA, he needs work permission in the USA in some form. When he does get his EAD, there is no reason for him to restrict himself to Canadian employers unless he wants to.

Steven wrote:
The tax situation will be a real mess though as you have to file jointly in the US, but he won't be living there. I suppose he would have to file a non-resident T1 in Canada and claim the foreign tax credit in the US with the 1040, but the CRA I think are going to be highly suspicious of a Canadian who lives in Canada working for a Canadian employer filing as non-resident. Might get away with it for six months but longer than that and he's going to start getting interesting phone calls from them when he files his non-resident return.

And you have to file jointly in the US for the immigration paperwork, IIRC, so he can't move his tax home back to Canada.

Can't think of a way around that one I'm afraid, unless he wants to pay taxes twice.

Well he's not going to be living in Canada so this won't be an issue. If he were then there would be nothing wrong with filing as a resident in both countries and claiming the Canadian taxes as a credit on the US return. Dual US-Canadian citizens who live in Canada do so all the time. It's perfectly fine from a tax perspective but in this case it wouldn't be honest from an immigration perspective so I'm glad that is not his plan.

Steven
CanuckAbroad VIP

Joined: 28 Sep 2007
Posts: 1637
Location: Calgary

Posted: Wed Sep 03, 2008 4:33 pm

Quote: If he were then there would be nothing wrong with filing as a resident in both countries and claiming the Canadian taxes as a credit on the US return

This is illegal. You can only claim one tax home at a time as per the tax treaty. If he files as resident in Canada he cannot claim a foreign tax credit in the US as he doesn't qualify for it.

Quote: It's perfectly fine from a tax perspective

No it's not in this situation as he's not a US citizen and anyone who does it will be in deep trouble if the IRS or the CRA get wind of it. If you claim a foreign tax credit on Form 2555 and you meet the substantial presence test in Canada and are filing in Canada as resident you are violating US federal law by claiming a deduction you are not entitled to. Do not do this. This is why the non-resident T1 and 1040NR forms exist.

The only exception to this rule is if you are a non-resident US citizen living in Canada, you still have to file a regular 1040 return but as a non-resident and a T1 in Canada, if they meet the IRS non-resident test they can still file Form 2555. The same does not apply in reverse, a Canadian citizen (or a dual-citizen of both countries) who is resident in the US and filing as a resident cannot file as a resident in Canada simultaneously.

You can only claim one country as your permanent residence. If you have income from the other country you must file as non-resident and make a tax treaty claim (with the exception of US citizens resident in Canada).

As to the immigration issue, sorry I misunderstood the question, the answer is obviously "no" he can't, because he's on an H-4 visa. You can't even legally look for work on H-4.

He's have to be sponsored by a US employer, whether or not the employer is Canadian-controlled is irrelevant, they become a US employer if they have a US establishment.
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Steve.

CalGreenCard
CanuckAbroad Regular

Joined: 16 Feb 2008
Posts: 65

Posted: Wed Sep 03, 2008 5:03 pm

Steven wrote: If you claim a foreign tax credit on Form 2555 and you meet the substantial presence test in Canada and are filing in Canada as resident you are violating US federal law by claiming a deduction you are not entitled to.

In the hypothetical situation where he truly were living in Canada, he would file Form 1116, not Form 2555, to be safe. In most cases it will have the same effect on his taxes and doesn't have the same restrictions as does Form 2555.

s_khandoo
New Member

Joined: 03 Sep 2008
Posts: 2
Location: California

Posted: Wed Sep 03, 2008 11:11 pm

Is it possible to do the following:

He works for a Canadian company from the US while on H4. He received income in Canada, files for taxes in Canada, does not file for taxes in the US.
In that case, can he file for taxes in Canada as a resident?

Reba
Moderator

Canuck in NC

Joined: 16 Jul 2004
Posts: 1488
Location: North Carolina

Posted: Thu Sep 04, 2008 3:00 am

He can't work in the US without a work authorized visa, even if he is telecommuting for a Canadian company. If he's on US soil and working, he needs US work authorization.
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s_khandoo
New Member

Joined: 03 Sep 2008
Posts: 2
Location: California

Posted: Thu Sep 04, 2008 8:27 am

And if he's on H4 and goes and stays in Canada for 6 months on vacation, and while he's there, works for a Canadian firm, gets salary, files taxes there.

I don't understand this because, you can be on H4, and have real estate in Canada which can be rented out. Or you can sell stocks in Canada and earn money that way.
I am not able to find any place where the law states this. I'm just getting a lot of opinions, and at least 1/3rd of them say 'yes you can work'