TN -> Moved Jan'20 -> Now Possibly Staying in Canada; Register LLC?

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cdnabroad
Posts: 3
Joined: Tue May 05, 2020 10:34 am

TN -> Moved Jan'20 -> Now Possibly Staying in Canada; Register LLC?

Post by cdnabroad » Tue May 05, 2020 10:47 am

I moved to the US on a TN Visa in January 2020. I liquidated assets, closed most of my bank accounts, and took steps to reduce ties and be considered a non-resident. When COVID developed, I moved back to Canada in March to be closer to my older parents and continued to work remotely for US Corp. I still have an established residence in the US.

1. I'm considering staying remote in Canada indefinitely.
2. I'm paying US Medicare and SS; if I stay in Canada is it possible to switch to paying into CCP / EI instead? There's a significant cost difference.
3. Alternatively, I'm considering registering an LLC and moving to a contract basis; I understand this would require me to give up the TN, but I can see significant potential tax savings by keeping most earnings in Corp.
4. I'm contributing to a 401k; what are the tax implications if I stay in Canada?
5. I hold stock and investments through a US brokerage (fidelity); I had to close my Quest account when moving and liquidate holdings. What are the implications if I decide to stay in Canada?

cdnabroad
Posts: 3
Joined: Tue May 05, 2020 10:34 am

Re: TN -> Moved Jan'20 -> Now Possibly Staying in Canada; Register LLC?

Post by cdnabroad » Tue May 05, 2020 11:11 am

Few points of clarification:

I understand that if I stay in Canada, I won't have stayed in the US long enough to be considered a US resident for any years; and will remain a Canadian resident for tax purposes (even though I've declared myself as a non-resident in January).

Perhaps this simplifies the situation.

The option to register the LLC is to reduce tax liability; it's something I can do immediately if I make that decision. But unclear on all of the other associated implications given my situation and that I've been working as a US employee for several months now.

cdnabroad
Posts: 3
Joined: Tue May 05, 2020 10:34 am

Re: TN -> Moved Jan'20 -> Now Possibly Staying in Canada; Register LLC?

Post by cdnabroad » Tue May 05, 2020 11:49 am

Also; when referring to an LLC, I actually mean incorporating in Canada.

jixca
Posts: 75
Joined: Wed Apr 06, 2016 9:12 am

Re: TN -> Moved Jan'20 -> Now Possibly Staying in Canada; Register LLC?

Post by jixca » Tue May 12, 2020 10:30 pm

You probably should check with the company to see if it's viable first changing you from W2 to 1099. They'll pay less payroll tax too but may consider additional legal hassle and hoops to jump thru and set up unless there already are examples in your company.

Aside from not needing to pay US federal / state taxes and other payroll taxes, you also won't have benefits in terms of health, vacation, 401k, severance, sick days...etc. Also need to think about how you're getting paid, USD in US? or USD/CAD in Canada?

You also don't need to declare departure from Canada until 2021, so technically I think you never became nonresident of Canada. There's still 6 months left to pass SPT, so you can plan your US IRS 2020 return, check your anticipated income and decide to fill full year 1040 or 1040NR or dual status, whichever makes most sense. Keep in mind if you do 1040 then all income (including profit from your liquidated TFSA) will have to be reported, so you're probably better off with 1040NR or dual status.

4. You can keep it and cash out annually about 4k if that's the only US income, or convert to IRA or cash out now but there's penalty unless you're old enough. https://www.advisor.ca/columnists_/meli ... to-canada/, but check with your plan admins as some don't like keeping non US residents.
5. Do the same for US investment accounts. Most brokerage don't allow non us resident to keep accounts, few allow IRA/401k. They'll know residency change when you change address.

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