K1 Visa: Working remotely, taxes, and CDN bank account

[nobu 9]

Hey y'all!

I had a question about working remotely for a Canadian company while living permanently in the US (I'm going to be entering the states on my K1 visa this July). I will get paid in Canadian dollars and have a Canadian bank account open to have my wages deposited in here. Is this allowed according to the rules of the k1? Also, the company in which I work for is Canadian, has international offices overseas but not in the states.

My fiancée is concerned that working remotely will complicate things down the line such as filing my taxes, however, I disagree. I don't have major assets in Canada.

I've never really filed taxes by myself, and always had my dad do it for me but it shouldn't be too difficult. I know that when I file my taxes for this year I will have worked half the year in Canada and the other half in the states, does this still mean I file as a non-resident? 

I've also read somewhere that if you have a tax-free savings account and physically reside/work outside of Canada, the funds in this account are subject to be taxed up to 50%. Is this true?

Does anyone have any information regarding this? I would appreciate any help thank you!

[Crazy Cat 41,894]

Working while inside the US without a valid EAD is not legal.   Here is an article with a good discussion.

 

https://www.nationofimmigrators.com/courts-on-immigration-law/immigration-lawyers-arguing-can-i-work-from-home-for-a-foreign-employer/

Edited May 18, 2020 by Lucky Cat

[geowrian 22,337]

The circumstances you noted as a grey area between tax law and immigration law. There is no clear ruling on if it is considered unauthorized work or not as the immigration laws have not been updated to address it yet.

You could ask multiple people (including immigration lawyers) and get very different responses - all valid ones, even.

 

If working is important shortly after entry (idk if it is or not for you...working may be a plus but not a necessity or strong priority), a K-1 was not a good fit.

 

I can't speak for Canadian taxes. I will defer to others there, or suggest to seek a qualified CPA.

As for US taxes, by entering in July you would not meet the substantial presence test to be required to treated as a resident alien based on that alone. However, the test takes into account time from the current and prior years, so you may still meet it, depending on how much time you've spent in the US before your entry in July.

If you do meet the test, you must file as a US resident. You would have to claim all income on your US taxes. This is separate from anything with Canadian taxes.

 

Alternatively, if you do not meet the test, (once you marry) you can choose to be treated as a resident alien for the entire tax year.

This means you must report your worldwide income for the entire tax year. You may be able to use the FEIE (Form 2555/2555EZ) to exclude the taxes from that foreign income.

This is not a clear benefit...you will likely end up owing the taxes on that income to either Canada or the US.But depending on the specifics, I cannot say clearly which one it will be at this time.

The benefit of being/being treated as a resident alien for the entire tax year is you can file jointly with your spouse. So you get double the standard deduction if you do that.

if you do not claim your worldwide income (not a resident alien), you would only be able to file separately. Jointly filing requires being/being treated as a tax resident for the entire tax year.

 

If you've never done taxes before, I suggest getting a CPA for at least this transition year. The above is just the US side of things, but it gets more complicated if you throw in Canadian taxes too. Everybody wants their cut.

 

55 minutes ago, nobu said:

I've also read somewhere that if you have a tax-free savings account and physically reside/work outside of Canada, the funds in this account are subject to be taxed up to 50%. Is this true?

I'm unaware of any such provision (at least on the US side).

You are liable for taxes on any interest earned as this is income, at least on the US side of things.

You are responsible for FBAR and FATCA filings, based on the total value of the foreign assets, which can have very severe penalties if you fail to file. Filing does not have an tax or penalty involved...it's just a reporting thing.

 

Again, seek a qualified CPA for assistance.

Edited May 18, 2020 by geowrian

[Lucky2Lucky 2,526]

You are unable to work without a valid EAD or green card regardless if it is remote. It will be approx 6 months before you receive the card. As others stated if work was a priority you should not have gone the k1 route- CR1 is best. Please have your fiancé and yourself review the forms needed for AOS (adjustment of status) prior to arrival in US.

[Damonlee 91]

The existing funds in a TFSA are not taxable in Canada however you cannot make new contributions once you become a non resident. Any earnings within a TFSA are subject to US taxation however as the TFSA has never been entered into the Canada-US tax treaty.