Cdn Resident with Green Card Tax questions

[msncookie]

I have read over several forums but I am looking for clarification on a few specific questions.

My husband is a Canadian citizen who has been working in the state of Wisconsin for the last 18 years. He has a green card and has been working for an American company for 12 years. We recently married and he returned to live in Canada and was told by his company he could work remotely as he is in IT. He contacted the IRS and Immigration and was told that as long as he switched to commuter status on his green card and filed taxes in both the US and Canada this would not be an issue.

His current employer has now said they cannot keep him as this will trigger a tax liability for them. He has another employer in Indiana that also wants to hire him but says they were told they would need to set up a company in Canada to pay him.

Our understanding was that the US/Canada tax treaties covered all of this and that all we had to do was file in both countries and they could continue to pay him in US dollars. He will pass the SPT this year but not in future years, as he lived the first half of this year in the US and only returned prior to our wedding.

Essentially my question is this: As a green card holder, can he work for a US company, earn his salary in US dollars, while residing in Canada as long as he files his taxes appropriately in both countries? If so, what if anything does his employer need to do?

Many thanks in advance for any insight you can provide.

MSNCookie

[nelsona]

Since he will be working in Canada he MUST be paid as a Cdn worker, meaning that the company would have to set up a CDn payroll for him. This *might* cause problems for the employer, but it certainly doesn't have to.

The solution is to make him a contractor, not an employee. Benefits from a US firm for CDn employee are almost of no value anyway, so this should be an attractive option for both he and the employer. This might jeopardize green card however.


Would have been so much easier if he had gotten citizenship.

[msncookie]

Thank you for the reply. We are considering the contractor route but need to know how income from the US should be paid to a Cdn contractor and what the tax implications are.

Should he be paid in US currency into a US bank account and file taxes in the US? According to immigration there is likely no risk to green card status if he continues to file taxes in the US.

Or, should he be receiving his income on the Cdn side (regardless of currency)? Do we still need to file taxes in both countries if he is receiving all his income in Canada?

Thanks again for your input.

[nelsona]

With any type of green card you continue to need to report WORLD income to IRS.

As a Cdn resident, you report WORLD income to CRA.

There will be a series of tax credits that will result in you paying the Cdn rate on all this income, and Cdn CPP instead of FICA or SE tax. I won't go into detail on that here.

The manner and currency in which you are paid does not matter.

Now, to your Green card situation. That is an immigration issue, not tax. Any living in Canada on a green card ALWAYS risk confiscation each time they cross the border and anwer the question "where do you live". Only a commuter GC protects you from this long term -- which is why it was suggested to you.

The problem with commuter GC is it is for just that- commuting to US to work for a US employwer. You won't be doing this. In fact, if you switch to contractor status, you are technically not an employee of the US firm and are thus not entitled to commuter GC.

I would have a serious discussion with a US atty familiar with commuter GC and GC maintenance before making a final decision.

He REALLY should have gotten his USC.