Elena Lapitsky-Hanson is the Managing Director of Hanson Crossborder Tax Inc, a private international tax advisory based in Toronto. Elena helps international clients with cross-border taxation issues, investment structuring, and trust and estate planning.
“I’ve been doing it for over 20 years and I think I’ve seen pretty much everything,” Elena happily announced on the webinar. When asked about Canadians working in the US returning home, Elena added, “We’ve had several brain drains in either direction, so it’s very welcome to now see Canadians coming back home.”
Elena is an expert on complicated tax issues and offered invaluable advice to Canadians crossing America’s northern border.
Working Remotely in Canada on a Short Term Basis
“Working remotely, from a tax perspective, is a bit more complicated because borders are very much present and they matter when it comes to taxes,” Elena explained early in her presentation.
Elena stressed the importance of communication with your employer and clarified that working remotely doesn’t necessarily mean you can work from anywhere without restrictions.
“When we have people working remotely and they sneak to Canada without telling their employer and now all of a sudden they’re working out of Canada,” Elena noted. “They may get personally in trouble and they may get their employer in trouble.”
Your US employer has a responsibility to collect and remit taxes based on where services are performed, so they need to register, collect income taxes, and remit it on a periodic basis to the Canada Revenue Agency (CRA).
She went on to explain that there are two main concepts in taxation, the source of income and residency taxation.
For example: If you stay in Canada on a short-term basis — and you’re not planning to establish residency in Canada — but you continue to work for a US employer, your pay for those services is considered Canadian-sourced income and is subject to Canadian income tax.
Your US employer has a responsibility to collect and remit taxes based on where services are performed, so they need to register, collect income taxes, and remit it on a periodic basis to the Canada Revenue Agency (CRA).
“The reality is that there is no threshold in Canada under the domestic law. It’s not like, okay, if I made $5,000 or $10,000 Canadian only then does my tax reporting arise,” Elena explained. “No, tax reporting arises from the first dollar you generated in Canada.”
Becoming a Remote Employee Permanently
So, you returned to Canada temporarily (or so you thought), but you’ve remembered how much you love Canada and have decided to stay. Now that you are actually a Canadian resident again, that means that you are subject to Canadian taxation on your worldwide income.
If this is your situation, then your US employer needs to register with a CRA and withhold and remit. Elena warns Canadians that as you re-establish your residency in Canada it’s important that you take stock of your IRAs, 401ks, and other investments.
There are Canadian institutions — such as Raymond James — that will handle this for you, but the US custodian of these plans may demand that you collapse and liquidate your plans upon returning to Canada.
If you have questions about taxation, check out Hanson Crossborder Tax Inc online or contact Elena at 1-855-640-1730.
Are There Any US Immigration Implications if I Want to Move Home to Canada and Keep My US Job?
Sophie Alcorn is the Founding Attorney at Alcorn Immigration Law, which helps, among other clients, many Canadians with their US immigration.
Sophie is Board Certified as a Specialist in United States Immigration and Nationality Law, and she shares her expertise in a weekly immigration advice column in TechCrunch called Dear Sophie.
Sophie is an expert on all aspects of US immigration law, and during the webinar, she chatted about TN visas, H-1B visas, and green cards.
Returning to Canada While on a TN Visa
When you come to the US on a TN visa, you’re authorized to work for a specific employer in a specific role for a specific period of time. So if you return to Canada when you were in the US on a TN visa and you’re ready to re-enter the US, you’ll need to answer some questions:
- Did the expiration date of your most recent TN visa pass?
- If it did not yet pass, then are you still working at that same company?
- Are they still willing to let you into the United States and continue to work for them in the exact same capacity as stated on the original TN application?
“I would strongly recommend that you get an updated letter from your company stating that this is still a valid offer according to all your original terms and conditions, and you should be fine to return,” Sophie explained.
Sophie added that if the job has changed, if the I-94 (a US entry document that you get when you enter the country) has expired or if you get a job at a different company, you’ll need to apply for a new TN visa in order to re-enter the US.
Returning to Canada While on an H-1B
When someone in the webinar chat asked if they’re still covered by an H-1B if they go to Canada, Sophie explained that “if you’re outside of the United States, US immigration law does not control you.”
Simply put, if you’re a Canadian citizen and you were in the US on an H-1B, and you’re going back to Canada, you can be in Canada.
“You can normally take a vacation when you’re on H-1B,” Sophie explained. “You don’t have to be in the United States all the time.”
But it’s a different story if you’re returning permanently to Canada. If you’re on an H-1B visa, your employer is required to notify US Citizenship and Immigration Services that they are withdrawing your H-1B.
There’s an official letter that your company needs to send to USCIS to officially let them know that you’re done with your H-1B visa.
Sophie explained that if you want another H-1B one day, it depends on how much total time you’ve spent in the US on your first H-1B and where you are in the green card process. You can keep renewing the TN visa indefinitely for life, but the H-1B typically has a six-year maximum unless you’re in the green card process.
So keep your H-1B timeline in mind if you decide to return to Canada, especially if you think that someday in the future you might want to live and work in the U.s. again.
If Your Green Card is in Process – Wait Until You Get Your Advance Parole
If your Green Card application is in process and you decide to leave, Sophie explained that you want to make sure that you’re not abandoning it.
“If your I-140 has been approved, you get to keep your priority date,” Sophie explained. “So you’ll save your turn in line.”
But if you leave before you get your combo card with advance parole, which would allow you to exit and re-enter the US prior to getting your actual Green Card, you’re going to jeopardize the entire I-485 (Green Card application) process.
“So please wait until you have your combo card or advance parole before deciding to leave the country,” Sophie warned.
Getting Rid of Your Green Card
If you want to get rid of your green card, there are solutions. Sophie described how sometimes abandoning your US permanent residence happens accidentally, specifically, if you’ve been out of the US (in this case in Canada) for more than six months and you didn’t do anything before you left to protect yourself. “I’d really love for you to all, to avoid that situation,” Sophie added.
“You can, of course, do it on purpose, but just know that if you want to become a permanent resident in the future, you’ll have to restart the whole process from scratch,” Sophie explained.
You need to be deliberate if you definitely know you want to give up your US permanent residence, and there are ways to officially give it up at a consulate or by mail.
Keeping Your Green Card
If you know you want to keep your green card before you leave to go to Canada, Sophie stressed how important it is to get a re-entry permit. You need to be in the US when you apply for it and before you go to Canada since it will be sent to you by mail. Your re-entry permit will be valid for two years, and then you can return to the US to keep seeking one-year extensions.
Sophie did clarify, “If you want to become a US citizen, you still need to usually spend at least 50% of the time in the US each year, but when you do finally become a US citizen, then you could go back to Canada for however long you want without having any issues returning to the United States.”
If you have questions about visas or green cards, you can learn more at Alcorn Immigration Law online or reach Sophie at 1-855-546-0015
How Can I Legally Keep My US job and Work Out of Canada for My US Employer?
For many Canadians living in the US, it’s very clear that there are two very different stories happening in the United States vs. Canada, particularly when it comes to COVID.
As the CEO of Syndesus, a Canadian professional employer organization (PEO), we make it really easy for Canadians to return and continue to work for US companies.
Overview of Syndesus’ PEO Model
As a PEO, Syndesus will legally hire workers of US companies in Canada, however, they continue to work for their US employer. It’s that simple.
How Does it Work?
The first step in working with Syndesus is that the US employer signs a contract with us.
Next, Syndesus creates an offer letter for the worker based on information supplied by the US employer client. This letter is usually identical to what the employee has in the US, the only difference is that it’s in Canadian dollars and takes care of any additional Canadian legalities.
Syndesus will duplicate everything: If you had unlimited vacation, if you had five weeks vacation, whoever your manager was, what your title was – nothing changes.
Lastly, the employee receives the offer letter, reviews it, signs it, and gets to work. But Syndesus’ role doesn’t stop there! We onboard the employee onto our payroll, provide a supplemental health plan as needed, handle taxation and even handle many HR and training responsibilities.
How to Discuss Using a PEO with Your US Manager
If you’re a Canadian living and working in the US and this sounds good to you, now is the perfect time to talk to your US manager about working with Syndesus.
First, and most simply, share this webinar with them.
If you’d like back-up from an expert, then schedule a call with me and we’ll discuss everything over Zoom.
In my experience, these calls go very fast, and usually, US employers are wowed by how simple and straightforward it is to legally employ their Canadian workers back in Canada. Honestly, it’s a very simple conversation.
Do You Have Questions About How to Move Back to Canada but Keep Your US Job?
The Covid-19 pandemic has changed so many things about our lives: How we socialize, how we travel, and even how we work. As we rewrite our “new normal,” many Canadians living and working in the US are longingly looking north and planning their routes home.
It’s possible, with help from the right experts, to return to Canada without totally upending your career in America.
If you’d like to talk to me and learn more about Syndesus, I invite you to book a free consultation!
