Canadian with Canadian Corporation travelling weekly.

[NorthernBubba]

Hi there.

I am a Canadian with a Computer Engineering degree and many years of experience in the field. I have been approached by an American consulting shop to do work in the States. I would leave Sunday nights and come back Thursday nights (there goes the 183 days!!). I have a Canadian corporation that I established in 1999 (where I am the only employee). My head is spinning with all the rules and possibilities. Can I legally work in the US as a contractor for my own corp with with the American consulting shop as my TN sponsor? If so, I would be filing a 1099 with the IRS correct? Otherwise I would get a W-2 as an hourly employee to the consulting shop. The US consulting shop and end client are in the same city, I should still be able to deduct the weekly plane fare and hotel bills regardless of 1099/W-2, correct? They have no preference between a 1099 or W-2 and we can even switch even after I start the contract. What are my tax filings in either scenario (I have a home, RRSPs, etc. in Canada so closer connection is a no-brainer) keeping in mind that I am unable to be in the States < 183 days.
Thanks in advance for all your help.

NorthernBubba

[nelsona]

First, the Monday to Thursday still allows for not exceeding 183 days if you are careful. Sunday to Thursday probably makes staying under 183 impossible.

Yes, you can work on a 1099 basis while on TN, or even corp-to-corp. The important thing is that THEY sponsor you as your client.

Just to clarify, you would be PAID on a 1099 basis, if that is the route you choose. What you file with IRS would be a tax return, a 1040NR (because even if you exceeded 183 days in any 365 day period, and became taxable in US, you would still be Cdn resident). the 1099 payment would likely be subject to withholding because of the 183 day thingy. Corp-to-corp would simply be a check, no withholding. You would be responsible for sending some to IRS every quarter.

You would not be allowed to deduct travel or living expenses from Canada to work if you are an employee, that is not an allowable employee deduction. it would simply be your choice to live far away from home. And even if you were able to claim this on your US tax return, you would not on your Cdn return, so the tax saving in US would serve any value.

Even if you have to file in US, you will not be subject to Self-employment tax as a contarctor, but you will be subject to FCA as an employee.

So, You would be MUCH better off as a contractor, but do make sure they compensate you for them not having to put you on payroll. You should request higher remuneration than you would get as a full-time employee.

[NorthernBubba]

Hi Nelsona.

I was hoping that you would answer my query since you seem very knowledgeable on the topic. So to summarize:
I could get them to sponsor me and then I could do a corp to corp for payment.
I'm confused when you say that I would file a 1040NR, would I not file a 1040 since I would be in the States > 183 days? That would just be for me personally, right? At whatever salary I decide to give myself? Would my Canadian Corp need to file any tax papers in the states? And finally, since I would go through my corp then my travel expenses WOULD be deductable by my corp, correct?
Thanks again for your help, it is GREATLY appreciated.

NorthernBubba

[nelsona]

As a Cdn resident, you could still by treaty file a 1040NR for your employment income, and this would avoid all the other reporting requirements, as well as reporting your world income.

1020-F would be filed for corporate.

Normal expense rules would apply for your corporate expenses in either country.