Working in canada while residing in usa?

Hello. My wife's company is thinking of transferring her to the USA. It is an oil company with operation in Canada and he USA. I run my own business in Canada. I am self employed sole proprietor. My question, as I have not been able to find it. Can I come back to Canada and work every now and then. Generate commission income (which I currently do) Can this be done while she works for an employer in the USA. Would this have any impact on her employment? I do not want to shut down my business and I think I can maintain it coming back every quarter and working a few weeks. I thank you for your feedback.

Yes you can, because the work is physically performed in Canada. It's going to be messy with your taxes though, because if your wife resides in the US you have a residential tie to the US so you are supposed to file jointly in the same country as your spouse.

The way around this is for you both to file as non-resident in the US and for you both to maintain residential ties to Canada. If it's only a short-term assignment for your wife then this would be the sensible thing to do anyway.

If your wife is in L-1 then spouses of L-1 holders can get work authorization as L-2 anyway (file I-765), so you could even work in the US, so you don't really have a problem from the immigration side of it. It's just the tax situation you have to sort out.

Have a read of this: http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html and also IRS publication 519.

A tip I can give you is that although it's possible, it's not terribly wise to register as a non-resident self-employed individual in the US, although you can do it. The reason why is that it's the most uncommon tax filing method in the US and I was told years ago that this increases your chances of being audited. However if you've got to do it, you've got to do it I suppose.

Hi,

My wife and I are working in the USA. I am on a TN and she first was on a J1 and then on a Q1.

But now, no luck, she exhausted her visas. She cannot apply for a TN because her profession is not listed. She is a pre-school teacher.

We live in Seattle, which is not too far from Canada and our plan is to move even closer to the border and then, she will seek for a job in the Vancouver area.

The big questions are:

1. Will she be allowed to do that: living in USA and working in Canada?
2. Who will she be paying income tax to: Canada or USA?
3. How about healthcare? I can add her to my insurance plan, but what if she needs medical care while she in is Canada?

Thanks for any information I can get on this subject.

1. Yes, she will enter US on TD, dependent of your TN. You will both contiue to be tax residents of US. If she was, in the past, electing to be treated as a Cdn resident (due to her J status), this has ended.
2. She will report only her wages to canada on a BC return. She will also report them, along with all her and your income on your joint 1040, and claim credit there for the Cdn tax she pays.
3. She should be on your healthplan (she should have been already, as soon as her last employment ended). If she is sick in Canada, she will be covered by your plan, out-of-network. Just don't choose HMO coverage. Check with your plan admin.

1. yes, she's on TD and can work in Canada.

2. CRA don't like Canadians working in Canada and saying they're non-resident, bear this in mind because her resident status in the US for tax purposes is largely based on you and the fact you live and work there. The CRA may ask her to fill in an NR-73 to determine her resident status.

She'll file a BC T1 for her Canadian-source income (which I assume will basically be what's on her T4), put a US address on the T1. Files jointly with you on 1040 and claims for a foreign tax credit on Form 1116. Possibly BC tax will be higher (depends, BC has the lowest rates in Canada on the low end) so she won't get it all back by filing a 1116.

3. Because she's not resident in Canada, she doesn't qualify for BC healthcare, so that's something you'll have to work out with your healthcare company in Washington.

Check the procedure on filing the T1 as a non-resident with the CRA, the CRA fiddled with this a few years ago and I'm not 100% clear on the procedure.

There is another way of doing it of course which is that you both become resident in BC for tax purposes, but then your income will become subject to Canadian income taxes. (I assume in this whole post you are already filing as US residents).

Thanks to agnelson and Steve.

Steve, I cannot live in BC for my job in Washington. My employer will not allow me to telecommute from out of the country.

And yes, we both file as US residents.

Jean

Nor would you want to expose your US income, which is now even free of state tax, to Cdn fed and BC prov taxes.

Slightly off-topic, but I find it unusual that a firm could dictate where you can and cannot live. Municipal workers sometimes have a clause requiring they live in that particular municipality, and others have time/distance reporting requirements, but for a company to forbid you to live in one place or another seems a bit over-reaching.

Good point!

My employer is the State of Washington... therefore, they will not allow me to telecommute from out of the state.

What about just plain commuting?

Just a warning, I can pretty much guarantee that your wife will want to register for healthcare in BC. Just to be clear - she cannot do this, it's the #1 thing the CRA look for when determining resident status and if she becomes resident then you could be considered resident and it will cause a wide variety of obvious problems for you and her.

When employers say they want you in one place or another it's usually a payroll issue, I've had that one before.