Working from the US on a contract from home country while waiting for EAD

[A'n'L 735]

11 hours ago, Boiler said:

Ohhhh

 

Does not work that way.

Lol, yes.

 

Or, please inform me how it does not work that way. This topic is very intriguing from a legal perspective, and I'd love to hear your interpretation of the law. I've researched the borderline between immigration, employment and tax law to reach my conclusion. Maybe you have some other perspective?

[goodlulck52 69]

16 hours ago, glmg21 said:

Hello all, I asked this question a while back. Got some really good advice, and the insight is below.  I decided that in the end, for me it's not going to be worth it. Even if you make the money legitimately, it's going to end up on your taxes, possibly in two countries. I didn't really want to risk having to explain where that money came from on my tax returns, at a time I was supposedly in the States without an EAD, whether or not it was legal.

 

We all work very hard to make living in the States possible through this process, so it is up to you to decide whether you want to do it or not. As others have pointed out it is a grey area, with pros and cons, but you must decide whether or not it is worth your time to do it.

 

 

I am not following why this could make filing tax ADDITIONAL trouble. You would have to file tax returns for both countries anyway. Please have a look at my example below.

 

If you worked in country A between Jan and May 2016. Then you move to the US for the rest of the year. Regardless of whether you work in the US for your employer in country A in the rest of the year and regardless of whether you work for a US employer after getting your EAD, you would have to file US tax for the money you made from country A, don't you? This is because US requires residents filling world wide income for the 2016 financial year.  This is in addition to filing tax return for country A.

 

Of course, there might be tax treaties between US and country A, which could save you from being taxed twice. However, you still have to file the taxes and apply the treaty so you are not taxed twice.

Edited June 28, 2017 by goodlulck52

[Loki_Go 126]

Hi, I used my K1 visa back in September 2015 and continued working for my Canadian employer remotely. I still work for my Canadian employer today. I only missed one day of work the whole time, and that was the one day it took for me to move here.

 

As far as taxes go, yes, you will be taxed in both countries. You'll do your taxes as you would in your home country and then declare the same income as foreign income in the US. You won't be taxed quite as much in the US as if it were straight up income, but you'll be taxed. Then again, you'll have extra deductions because you'll be working from home. Overall I paid a bunch but I always did, and to me it was worth continuing employment so I could have income the entire time and not wait for my EAD.

 

I had to hire a very competent tax attorney in both the US and Canada. H and R Block will not cut it.

 

As far as immigration was concerned, I was up front about everything. It never came up during the K1 interview but it did during my AOS interview. Officer didn't care. He asked my husband where I worked and what I did more as a verification of how well we knew each other as opposed to the legality of the situation.

 

I'm only 3 hours away from my work and I return now and then to work in the office. In fact I'll be there on Monday and Tuesday to touch base. Whenever I cross the border and they ask me what I'll be doing in Canada, I tell them I'm there for work. It's never been an issue.

 

[Lemonslice 4,859]

1 hour ago, Loki_Go said:

Hi, I used my K1 visa back in September 2015 and continued working for my Canadian employer remotely. I still work for my Canadian employer today. I only missed one day of work the whole time, and that was the one day it took for me to move here.

 

As far as taxes go, yes, you will be taxed in both countries. You'll do your taxes as you would in your home country and then declare the same income as foreign income in the US. You won't be taxed quite as much in the US as if it were straight up income, but you'll be taxed. Then again, you'll have extra deductions because you'll be working from home. Overall I paid a bunch but I always did, and to me it was worth continuing employment so I could have income the entire time and not wait for my EAD.

 

I had to hire a very competent tax attorney in both the US and Canada. H and R Block will not cut it.

 

As far as immigration was concerned, I was up front about everything. It never came up during the K1 interview but it did during my AOS interview. Officer didn't care. He asked my husband where I worked and what I did more as a verification of how well we knew each other as opposed to the legality of the situation.

 

I'm only 3 hours away from my work and I return now and then to work in the office. In fact I'll be there on Monday and Tuesday to touch base. Whenever I cross the border and they ask me what I'll be doing in Canada, I tell them I'm there for work. It's never been an issue.

 

With the tax treaty, the same income should not be taxed twice though. Having to declare it, yes.

[Loki_Go 126]

15 minutes ago, Lemonslice said:

With the tax treaty, the same income should not be taxed twice though. Having to declare it, yes.

 

Maybe, I haven't gotten my 2016 taxes back in the US yet. We got an extension. But the accountant seemed to indicate I'd get taxed on it. It's not getting taxed as employment income but rather foreign income, which is a different rate. It just doesn't get taxed twice as employment income (or so that's how I understood it).

 

What specific tax treaty are you referring to? Did you have this situation too?

 

[Lemonslice 4,859]

2 hours ago, Loki_Go said:

 

Maybe, I haven't gotten my 2016 taxes back in the US yet. We got an extension. But the accountant seemed to indicate I'd get taxed on it. It's not getting taxed as employment income but rather foreign income, which is a different rate. It just doesn't get taxed twice as employment income (or so that's how I understood it).

 

What specific tax treaty are you referring to? Did you have this situation too?

 

Here:

https://www.fin.gc.ca/treaties-conventions/USA_-eng.asp

 

Same info available as a PDF from the IRS.

 

In my situation, I'm only paying Canadian taxes on my Canadian income, and American taxes on my American income. Yours might be different, I can't advise - however in most situation and until you reach higher income steps, you should not pay taxes twice.  

That's for federal taxes. Some states do not follow the treaty.