1099 contract work and TN

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OttawaSenators

Registered Users (C)
My friend is starting a consulting firm and wants to hire me as a contractor. He said he would pay me in 1099 form and he is ok with writing a letter for my TN.

I appreciate any advice on this 1099 thing and what I should be cautious about. Also, how should he put the 1099 thing in the TN letter? Should he put the total amount or the hourly rate?

Please enlighten me.

Thnx
 
He simply states that he is hiring you as a contractor. He puts for how long and for how much. The length is more important than the amount.

As a contractor, you have liability, so you might want to consider incorporating or professional insurance. Your taxes will be higher on your self-employed income (you pay both sides of FICA), with no benefits, so make sure that is reflected in a higher per hour rate than your regular employee rate. I assume you are keeping your day job and have medical insurance etc?
 
No. Have to quit my day job due to conflict of interest. Also I am already in the US on TN. I've been on it for so many years. I ceased to be a resident of Canada for tax purposes. How would that affect this and what do you suggest? I am assuming you meant I'd be self-employed in Canada and should incorporate there. I don't think I can claim self-employment on my US tax return.
 
Incorrect. TN can always be a contractor. What is forbidden is self-sponsorship, not self-employment. Your client is your sponsor, not you. 1099 is fine, both from a TN and IRS point of view.

Also, there is no requirement that you have any Cdn ties when getting a new TN. Never have been, and certainly not for one who already has a TN. Just make sure that you don't create a status gap, so you might want to secure the new TN before quitting old one, just in case you hit a snag.

Third, if you decide to incorporate, there is no need to do so in canada, and in fact it would not make any sense whatsoever, for either tax or residency issues, to incorporate in canada.
 
Thanks for the clarification Nelsona. My friend is now telling me I can become his partner. But that would fall under self-sponsorship, right?
 
That is correct. You cannot have any role in the ownership/management of your sponsor's company.
 
Receiving 1099 and reporting income on schedule C is construed as self employed. It might conflict with TN since you need to be 'employed' by US employer. Working on 1099 being on TN is gray area. It is best if avoided.
 
It is NOT a grey area. The US client is the sponsor, plain and simple. H1-B forbids self-employment. TN does not. It allows a W-2 employee, 1099 contractor, and even corp-to-corp relationship.

Stick to what you know.
 
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Read 'em all, not just what you were able to find find on the uscis.gov.

Here's a good example, from a legal site, where DHS practically insists that one be a contactor, and TN would be denied as an employee:
http://www.tnvisabulletin.com/independent-contractor-manage/

■One of the more prevalent reasons for a denial of an application for a Management Consultant TN is that U.S. Customs and Border Protection officials allege that the applicant is an actual employee of the sponsoring company or that the applicant is assuming a permanent position within the regular structure of the company. In order to address this concern, an agreement evidencing the independent contractor relationship of the consulting engagement should be submitted with the application for TN status.
Click to expand...

"Most non-immigrant worker categories do not easily allow the freedom and flexibility associated with freelance work. Most, including the TN, require the sponsorship of the employer you provide services to. This means that each company you provide services to would have to file a separate application for a TN on your behalf.... Although U.S. immigration authorities have reservations about this arrangement, I do not believe they are warranted."

You cannot open up your own business in the U.S. and have that company sponsor you for a TN.
Click to expand...
But you can have the US company sponsor you.

From the CBP NAFTA Handbook (in case you never heard of this)
http://spatialnews.geocomm.com/features/tnvisa/naftahan.pdf

Pre-arranged Professional Services. In order to obtain “TN” classification, a businessperson,
including one who is self-employed, must be seeking entry to render pre-arranged professional
services to an individual or an enterprise. If the business activities are to be rendered to an
individual or an enterprise, the enterprise must be substantively separate from the businessperson
seeking entry. Moreover, the business activities must not include establishment of a business or
practice or any other type of activity in which the businessperson will be self-employed in the United
States.
Click to expand...

also, under the definition eligiblity for management consultant TN:
...Management consultants are usually independent contractors or employees of consulting firms under contracts to U.S. entities....
Click to expand...

More?
http://www.greencardlawyers.com/workvisas/TNvisas.html#Self Employment and Contract Employees

Self Employment and Contract Employees
The TN is not available if you set up a business in the United States and then sponsor yourself for a TN visa. The regulations specifically do not allow self-employment for TN holders, unless you perform services for a U.S. entity. TN holders may not be sole owners of, or hold a controlling interest in, their sponsoring companies. If you are seeking to invest in a business in the United States, you may want to consider the E-2 Treaty Investor visa category. The TN applicant does not have to be an employee of the U.S. company; you may be a contract employee under certain circumstances.

So, TN can (and by the way, dozens on this forum have reported getting them) and will be granted to a contractor, as long the sponsor in the independant US firm and not related to the beneficiary.

Again, you may have some area of knowledge, judging by the number of posts you've made, but TN is not one of them. Thanks for dropping by this forum, however. Better success next time.

Ottawa, let us know what happens, I'm 100% confident you will get your TN under the arrangemnt you describe.
 
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The issue started with original post regarding TN visa whether can he treated as an independent contractor which is construed as self employment and paid on 1099 which is what is required to be used for reporting purpose to IRS (Publication 519). If an individual is paid on 1099 technically there is no employer-employee relationship, again a clear violation of basic preamble of TN visa which requires prearranged full-time or part time job with US employer. IRS & various other taxing authorities has clearly defined 'employee' and 'independent contractor'. The defining factor is "Control". Page 49 of NAFTA handbook sent by you clearly says self employment is clearly in conflict with intent of TN NAFTA ACT and its accompanying statement of administrative action, which states, at page 178, "Section D of Annex 1603 does not authorize a professional to establish a business of practice in in the United States in which the professional will be self-employed." Note: Being paid on 1099 is always construed as being self employed which is why this amount is reported on Schedule C Profit or loss from Business on individual 1040 income tax return, and then next para after this also says self-employment was never specifically addressed under the regulations which is what I said in my original post, indeed self employment on TN is a grey area. With all these uncertainties and risk involved, an Individual is better off by being on W-2 employee for TN Visa. Regarding you being judgmental about somebody based on number of posts is without merits instead look at substance of advice being given.
 
Again, ottawa, ignore previous post, you wil have no problem with either CBP, USCIS or IRS. 100's of TNs are in US right now as 1099 and corp-to-corp. That is how some have sometimes 10 active TN's.

Have I ever stered you wrong? No. This other gal just wandered (stumbled) over here, read a couple of web pages, and decided she's an expert. Sorry if she is confusing you. Don't let her.
 
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@nelsona I have been working with an immigration lawyer that doesn't understand that you can be on a TN AND use 1099 status. I am currently on the research physician TN. Do you think you could refer me to a lawyer who understands this?
 
Work with a TN specialist lawyer, they are usually in border towns like buffalo. Google you will find a few. the lack of understanding comes from what NAFTA defines as self-employemnt, which is in reality self-sponsorship, which is not permitted. As long as you have each client sponsor YOU directly, the manner in which you are paid is irrelevent.

But, really, TN is designed to be done without a lawyer. Have the client write your contract and a TN letter (or write the letter yourself and have them sign it) and let the border decide, not some TN-inexperiencced lawyer.
 
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