On TN, did freelance (how to fix?)

V

valiot

New Member
I have a serious problem that I think will affect my current and future status. Last year I did freelance work outside my current TN. Which resulted in $1800 of income. The company issued a 1099-MISC form which I ended up filing on my US taxes recently.

It has only now occurred to me that this is illegal. I don't know what I was thinking. I am stupid! Is it too late to correct this? Can I ask the company that issued the 1099 to help me reverse this income?

On top of this, I am currently applied for H1B for this year. Will that be affected as well?

I really want to reverse or get rid of this income on my record somehow. My TN is up for renewal in June. If I exit the country, will this erase my past history and will I start "fresh"? I hope...
 
You cannot get rid of income. You have already ran through the stop sign. To try to avoid taxation would only make it worse.
 
From what I understand, there is no relationship between the IRS and CIS. As a matter of fact on the news the other day, the IRS wants nothing to do with CIS as they would lose all of the revenue from illegal immigrants that file using and individual tax ID number.
 
valiot said:
I have a serious problem that I think will affect my current and future status. Last year I did freelance work outside my current TN. Which resulted in $1800 of income. The company issued a 1099-MISC form which I ended up filing on my US taxes recently.

It has only now occurred to me that this is illegal. I don't know what I was thinking. I am stupid! Is it too late to correct this? Can I ask the company that issued the 1099 to help me reverse this income?

On top of this, I am currently applied for H1B for this year. Will that be affected as well?

I really want to reverse or get rid of this income on my record somehow. My TN is up for renewal in June. If I exit the country, will this erase my past history and will I start "fresh"? I hope...
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Sometimes in life we make stupid things not thinking of the consequences, but I think if what you have done was an honest mistake, there's nothing to be concerned about. When the time comes USCIS finds out about it, just be honest with them. Although what you have done was an apparent violation of TN policy. I know through this forum that it is allowed by law for a TN holder to have a part time job but one must apply for another TN for that particular job. All documents you have submitted to USCIS, IRS or any other government institution for that matter are permanent records, and you cannot do anything about it even if you leave the country for good.

Good luck!
 
Where were you when working on this 1099 job? Were you working on this project when you were physically in Canada? Or were you in the US? If you were doing the actual work for this project inside Canada, then you might be OK as far as immigration is concerned. Taxes is a differnet issue.

I used to be a contractor. 1099 jobs are for self-employed people and foreign nationals without a green card are not allowed to be self-employed. You cannot get paid in 1099 even on TN. TN requires you to be employed by an employer. You relationship must be an employee-employer one with W2 income. I have always avoided 1099 contracts.

This is an awkward situation. You might want to seek some lawyer's advice.
 
CanadianKam said:
1099 jobs are for self-employed people and foreign nationals without a green card are not allowed to be self-employed.
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This is an excessively broad and incorrect statement. TN holders can certainly be self-employed, they merely cannot be self-petitioned. My own entity cannot petition for a single TN to cover all of my activities - I need each of my clients to get a TN on my behalf.

You cannot get paid in 1099 even on TN.
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Wrong.

TN requires you to be employed by an employer. You relationship must be an employee-employer one with W2 income.
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Wrong again. While this statement is true for H-1B holders, there is no corresponding restriction for TN holders.
 
TheRealCanadian said:
This is an excessively broad and incorrect statement. TN holders can certainly be self-employed, they merely cannot be self-petitioned. My own entity cannot petition for a single TN to cover all of my activities - I need each of my clients to get a TN on my behalf.



Wrong.



Wrong again. While this statement is true for H-1B holders, there is no corresponding restriction for TN holders.
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I totally disagree with you RealCanadian. One of the documents required to get a TN status is an OFFER OF EMPLOYMENT. The following is straight from the Department of State's website. It explicitly says self-employment is not allowed. Sorry, no loop-holes in this one! ;)

http://travel.state.gov/visa/temp/types/types_1274.html#3

"Employment Letter

The employer in the U.S. must provide to the applicant a Letter of Employment in the United States. The letter must indicate that the position in question in the U.S. requires the employment of a person in a professional capacity, consistent with the NAFTA Chapter 16, Annex 1603, Appendix 1603.d.1.

The applicant must present evidence of professional employment to satisfy the Consular Officer of your plans to be employed in prearranged business activities for a U.S. employer(s) or entity(ies) at a professional level. Part-time employment is permitted. Self-employment is not permitted. An employment letter or contract providing a detailed description of the business activities may be provided from the U.S. or foreign employer, and should state the following:

Activity in which the applicant shall be engaged;
Purpose of entry;
Anticipated length of stay;
Educational qualifications or appropriate credentials demonstrating professional status;
Evidence of compliance with DHS regulations, and/or state laws; and
Arrangements for pay.
Although not required, proof of licensure to practice a given profession in the United States may be offered along with a job offer letter, or other documentation in support of a TN visa application."
 
CanadianKam said:
I totally disagree with you RealCanadian. One of the documents required to get a TN status is an OFFER OF EMPLOYMENT. The following is straight from the Department of State's website. It explicitly says self-employment is not allowed. Sorry, no loop-holes in this one!
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That doesn't conflict at all with what I wrote - I said that for each US entity you work for, you require that entity to write you a TN letter and you need a separate TN for that entity. There's nothing there that prevents me from being self-employed and performing work for companies A, B and C, provided that A, B and C each write me a letter and I get a TN for each one.
 
Very interesting....semantics in terms of how it may be looked at. Most of this is really just IRS related stuff in terms of reporting earnings.
 
Sorry Kam, but in this instance, you're wrong.

Self-petitioning is not the same as self-employment.

Note, thta h1 explicitly requires employer-employeee relation, primarily because an LCA is filed with I-129. Not so for TN.

It's alright not to know something, so cool it; now you know.

Besides, the State department doesn't issue Tn's. CBP or USCIS do.
 
Okay folks here's the deal. I talked to my accountant today because I too have done fiddling and fooling in this arena with respect to 1099's. If you are an employee you would be on the payroll and have withholding taxes, social security blah, blah, blah. The purpose of a 1099 is a reporting method for an employer/company to use to the IRS if you are not a direct employee - you are deemed as an outside contractor. Now here's the weird part. If you work for only one company all year long and continue to do so, you are in actuality an employee (I know it goes on all the time where people are at one company for years). If you work for multiple companies then you are considered a self-employed contractor. So the argument could probably be made that you were 1099'd for income tax reasons (better write-offs etc.) if you worked only for one company but I don't think it would hold true for multiple companies.

I also talked to my accountant about the IRS and CIS and she too said that their is no relationship between the two as the IRS would lose billions not just millions from illegal aliens who send in tax returns using a tax ID number.

So TRC I think you are not correct in your assumption.

And Valiot, don't freak out about the 1099. Just fill in a 1040 and let it go.
 
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The proof is in the pudding. I know several guys with multiple TNs, all getting paid on 1099.

Can we just drop this notion that 1099 is illegal, whether its one sponsor or 20?

From the NAFTA handbook 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.
As used above, to constitute pre-arranged professional services, there must exist a formal
arrangement to render professional service to an individual or an enterprise in the United States.
The formal arrangement may be through an employee-employer relationship or through a signed
contract between the businessperson or the businessperson’s employer and an individual or an
enterprise in the United States. That is the very definition of 1099

...

Engage in business activities at a professional level means the performance of prearranged business activities
for a United States entity, including an individual. It does not authorize the establishment of a business or
practice in the United States in which the professional will be, in substance, self-employed. A professional will
be deemed to be self-employed if he or she will be rendering services to a corporation or entity of which the
professional is the sole or controlling shareholder or owner. That would be self-petitionning, which is forbidden.

From Khanna website:
http://www.immigration.com/faq/canadianvisa.html#311
Q12 Can an individual employed under TN visa classification be on 1099?

A12 Yes. A TN status holder can be on 1099. A formal arrangement must exist to render professional service to an individual or an enterprise in the United States. The formal arrangement may be through an employee-employer relationship (i.e. on W-2 basis) or through a signed contract (i.e. on 1099) between the businessperson or the businessperson's employer and an individual or an enterprise in the United States.

(Posted on 02 March 2005)
 
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Sweeeeet....Where did you find this nelsona? This actually solves a huge dilemma for me. (Dilemma not problem).
 
simsd said:
Sweeeeet....Where did you find this nelsona? This actually solves a huge dilemma for me. (Dilemma not problem).
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Where did I find what? I posted the urls for all my quotes

The NAFTA handbook is THE reference for CBP and is widely circulated. It is somewhere on the USCIS website, although since they overhauled their site things are impossible to find.
 
Thanks nelsona! This is a great source of info for TN. I am not very surprised that Dept of State has a different interpretation of TN (or any other immigration matter). I have seen that in non-Canadian cases that had to deal with a consulate.

I may have some questions about different scenarios of self-employment after I read this document. If so, I will start a new thread.
 
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