My husband has been in California on a TN since June, on a corp to corp basis so our corp in Canada is directly paid with no with-holding so clearly in this case he is a non-resident of the US. The contract is for 6 months only.
However, he has been offered another contract for 1 year in New York State and they want to pay him by W2, starting in November. He would leave the US first and re-enter with another TN. He, nor I, wish to become non-residents of Canada. He intends to return to Canada at the end of the contract. I may not even live with him in the US for any length of time. We own a condo in Canada and another business, as well as other financial ties such as credit cards, RSP.
How should we expect to handle the tax filing requirements in this situation, and will the time he has spent in the US since June under a corp to corp arrangement be added to the time he will spend on a W2 (but still a temporary contract) because he will have been in the US for more than 183 days in a 12 month period, or will the two situations be treated differently when it comes to taxes?
And what effect will all of this have on my own tax status? I am paid an income from our Canadian corp as business manager.
Canadian on IT contract with TN
Moderator: Mark T Serbinski CA CPA
Just a note of caution to start with: the manner in which a company PAYS you does not determine residency. It may determine taxability, but not residency.
You could be paid on 1099 or corp-to-corp and be considered a resident of US and , and you could be paid on W-2 and still a resident of Canada .
Now, to your specific case, regardless of any other ties he might have in US, if he spends more than 183 days in any 365-day period working in US -- even as a non-employee -- that is considered a Permanent Establishment in US, and the income from that PE would be taxable in US, so be careful that next year he doesn't trigger taxation for this year. he should be safe if he is a w-2 worker (which of course will be table in US) that should not trigger tax on his current contract.
In no caser are you becoming a US tax resident. He is however, so would need to ma ke atreaty claim that he is not a US resident, by treaty, even though he (a) meets SPT, and (b) spends more than 183 days in US in 2016 (maybe) and 2017 (for sure).
You could be paid on 1099 or corp-to-corp and be considered a resident of US and , and you could be paid on W-2 and still a resident of Canada .
Now, to your specific case, regardless of any other ties he might have in US, if he spends more than 183 days in any 365-day period working in US -- even as a non-employee -- that is considered a Permanent Establishment in US, and the income from that PE would be taxable in US, so be careful that next year he doesn't trigger taxation for this year. he should be safe if he is a w-2 worker (which of course will be table in US) that should not trigger tax on his current contract.
In no caser are you becoming a US tax resident. He is however, so would need to ma ke atreaty claim that he is not a US resident, by treaty, even though he (a) meets SPT, and (b) spends more than 183 days in US in 2016 (maybe) and 2017 (for sure).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing