Tax Implications of Independent Contractor vs Employee

[oranges]

My husband is being transferred from Canada to the [b]California[/b] by his employer. Our plan is for him to get an L1 visa, and for me to get the L2 visa, with the EAD.

I currently work as an independent contractor [IT consultant] in Canada. I am incorporated.

I am trying to figure out what my best options are for working in the United States in IT.

With Canada's high taxes, it has been much smarter for me to work as an independent contractor [as opposed to an employee] in Canada. Now that my husband is being transferred to the United States, I don't know if it's smarter tax-wise to be:

1 - An independent contractor, incorporated, using my existing Canadian company
2 - An independent contractor, as a sole-proprietor
3 - An independent contractor, incorporate a new company in the United States
4 - Work for an American company as an employee.

My understanding is that income tax in the United States are much lower, so it might not be worth it to work as an independent contractor. Perhaps it is smarter to work as an employee so that I qualify for health benefits [so that we're not 100% dependent on my husband's health benefits].

Any advice or input would be greatly appreciated!

Thank you so much.

Tatum



Can I:
a) Continue to do consulting work for my Canadian clients [Canadian companies], working remotely from the US? If so, will I have to pay US taxes on top of Canadian taxes?
b) Do consulting work for American companies, from within my Canadian corporation?

I would greatly appreciate any advice/input!

Thank you!

Tatum

[nelsona]

Since you will now be taxable in US, it makes no sense to have any Cdn attachment at all.

You will be able to work as a contractor in both counties.

It is still advantageous to be a contractor in US (not as much as in canada, but still better). As an employee, you may get benefits, but, in my opinion, the differnce between your salary and your contractor income will be much more than the worth of those benefits.

Since your spouse is working, his benefits will cover you, probably cheaper than 2 separate plans.

The better reason to become an employee would be to be allowed to stay in US if he loses his job. At that point your EAD would die, so you would quickly need to shift to TN.

But, if you are used to being a contractor, I would be persuing this.

[oranges]

Thanks so much for your insight, Nelsona. I really appreciate it!

What do you mean when you say that "Since you will now be taxable in US, it makes no sense to have any Cdn attachment at all."?

We plan to keep our Canadian house, and rent it out while we're in the US. And although it's hard to say now, we will likely want to move back to Canada in about 3 to 10 years. Does that change things?

Thank you!

[nelsona]

No, I meant the Cdn corporation.
Your house is merley a rental property and will be handled thru the special section 216 return.

You will become non-resident on day spouse moves to US.