TN work - if more than 6 months

Sujane80 · Post by **Sujane80** » Fri Jun 03, 2016 11:18 am

My husband is about to accept a contract in the US. We have a Cdn corp and have done corp to corp before but if this contract is for longer than 6 months, is it better that he go W2? Should the client deduct US payroll taxes at source and if so, how much as a NR of the US. I will remain in Canada and we have significant ties including a condo and businesses. Thanks.

nelsona · Post by **nelsona** » Fri Jun 03, 2016 5:57 pm

Regardless of the length of the contract -- for SE tax purposes -- he remains a Cdn resident. he would get a letter of compliance from CRA if necessary, he may have done this in the past.

For US TAX purposes, if he spends more than 183 days in US in any 365 day period, the income becomes taxable in US, but not subject to SE tax.
He should put aside 25% of his earnings from this contract to cover any US income tax, if that becomes necessary. he should be able to avoid the 183 days if he regularly comes back home, and not have any US tax to pay.

For this and many other reasons (that made you do corp to corp in the past), he should probably not become an employee, which would make him subject to SS tax and US Income tax immediately. If he does, the firm will determine withholding, per the W-4 he submits.

Sujane80 · Post by **Sujane80** » Sat Jun 04, 2016 10:46 am

Thanks. What do you mean by SE? And by a letter from CRA regarding compliance - what kind of letter do you mean? That we pay taxes in Canada? We always file a W8BEN with the client though, to enable them to not deduct any withholding.

nelsona · Post by **nelsona** » Sat Jun 04, 2016 12:58 pm

SE is Self employment tax, which the equivalent of both sides of SS, just like a self-employed in Canada pays both ends of CPP.

Search CRA for letter of compliance for social security purposes. I thought you said your spouse had done business in US before, I was merely explaining the difference between les/more than 6 months, and 1099 vs W-2. I though the rest was already familiar to you

Sujane80 · Post by **Sujane80** » Sat Jun 04, 2016 1:18 pm

Ok, thanks. No, he's never had to do a letter re social security because the billing is done directly from our corporation, not as an individual. Nor is it 1099 when done that way since he isn't a self-employed individual.

nelsona · Post by **nelsona** » Sat Jun 04, 2016 1:20 pm

So, then Iwould suggest, as I said from the outset to continue this way, just making sure HE does not physically stay in US more than 183 days in any period.

Has he been filing a protective 1120-F corporate return in US?