Canadian Resident - Employee to Partner in US LLP

calldave · Post by **calldave** » Tue Aug 23, 2011 9:35 pm

I am currently a Canadian resident and cross the border each day to work in the USA at an Limited Liability Partnership (a law firm) under a commuter green card. I am a W2 employee and deduct my American taxes on my Canadian tax returns. I hope to be elected partner shortly and will no longer be a W2 employee.

I understand this change in status will impact my tax situation in Canada and the credit I currently receive. I was hoping someone could direct me to a good resource on this issue (I searched prior posting, but couldn't find much) or could provide a brief overview. Thank you!

nelsona · Post by **nelsona** » Wed Aug 24, 2011 6:10 am

What type of incom will you be recieving?

calldave · Post by **calldave** » Wed Aug 24, 2011 8:19 am

Nelsona,

Thank you for the prompt reply. I have not yet seen the partnership agreement (and won't likely see it until an offer is made) and am not sure what you mean. My law firm appears to be a typical LLP, with all legal income flowing through and allocated among the partners using a complicated formula that changes each year.

nelsona · Post by **nelsona** » Wed Aug 24, 2011 8:44 am

"Not sure what you mean".

Will you get dividends, shares, options, etc?

Taxes, and their cross-border treatment are all based on the type of income you will get.

Since you seem to think that your Cdn taxes will be impacted, you must have some idea of what type of income you will now be getting.

calldave · Post by **calldave** » Thu Aug 25, 2011 8:53 am

Nelsona,

My firm is a traditional LLP with no shares and with all firm income/losses passed-through to the partners' individual tax returns. I believe I would be filing a K-1 / Form 1065. Thank you.

nelsona · Post by **nelsona** » Thu Aug 25, 2011 9:24 am

Because you are both becoming a US permanent resident (GC-holder) and becoming a partner, your US and Cdn taxes re about to get a whole lot more complexe.

You will now be required to file a full 1040 reporting world income, as well as continuing to report world income to CRA.

Someone will be making a good sum of money on doing this for you. I suggest you contact a cross-border pro directly.