Hypothetical Establishing US Residency Question

[iggyntangs]

Originally Posted by Fuzz

I have a friend who works for a US software company that pays him in USD into a US account, but has always lived in Canada. I don't see how it is illegal. Company policy, maybe. I'd imagine for their tax purposes it gets more complicated, as would paying out things like benefits, EI etc.

Is he a contractor? I do know of individuals who do that as contractors.

I was inferring from this company that this was an issue because it was a employee classification.

But if your friend is an employee of the company, then, maybe that settles it that this is HR policy vs. an actual legality issue.

[Fuzz]

Honestly not sure. He's been working for them for over a decade.

[Enoch Root]

Originally Posted by iggyntangs

The hiring manager is willing to pay me 125k USD or 125k CAD.

Personally, I'd prefer to live in Canada and get paid USD.

The only reason I brought up the 'residency' aspect was because the hiring manager said HR was telling him, it's illegal to pay me in USD unless I live in the US.

So I was wondering are there options around this, or is this truly a legal issue or a HR policy issue.

When HR told him it was "illegal" I was trying to understand what specifically was illegal in their mind and why.

It is not illegal. HR at most any firm will tell you they can't do it because the payroll system they are using is simply incapable.

But it is not illegal.

[Enoch Root]

Originally Posted by opendoor

While TN visas are non-immigrant visas, holders of them can still be deemed to be US residents (for tax purposes at least) if they pass the substantial presence test (i.e. they're in the country often enough and have generally severed ties to their home country). Someone who works full time and lives in the US on a TN visa can certainly be considered a Resident Alien for tax purposes.

Yes, if you passed the substantial presence test, you would be deemed a US resident.

But if you were working and living full time in the US, you shouldn't be on a TN visa.

[Northendzone]

Count me as stunned that the hiring manager is willing to pay you in your currency of choice - does he not realize that the two are not equal?

[GGG]

Originally Posted by Northendzone

Count me as stunned that the hiring manager is willing to pay you in your currency of choice - does he not realize that the two are not equal?

I'd suspect they have two bases of operations that the mobile personal can be tied to. And for the manager hiring it doesn't matter if iggytangs is tied to the US office or tied to the Canadian office. Then the company has to pay grids one for the Canadian office and one for the US office. So then from an HR perspective you would have to be legally allowed to work in the US to be hired by the US office and receive the higher wage.

[Reaper]

I still don't see how this wouldn't be considered working the system and somewhat shady. You're going to live in Canada and maintain residency there. Unless you'll be handling all of your tax, ei and cpp premiums yourself why would payroll go through the extra steps of submitting your pay from a USD payroll to Canada Revenue Agency?

Also, if your taxes and deductions are going to be made to a State or Federal government then you aren't contributing to Canada. You're not contributing to our health care system and social programs. So, basically, you'd be the guy on Canada's couch who contributes nothing to the household.

Make no mistake. You are trying to cheat the system. You are trying to get an advantage in order to make financial gains. Stop trying to justify it to everyone by going "it might not be illegal, guys". Legality and ethics do not always match perfectly.

[iggyntangs]

Originally Posted by GGG

I'd suspect they have two bases of operations that the mobile personal can be tied to. And for the manager hiring it doesn't matter if iggytangs is tied to the US office or tied to the Canadian office. Then the company has to pay grids one for the Canadian office and one for the US office. So then from an HR perspective you would have to be legally allowed to work in the US to be hired by the US office and receive the higher wage.

I think that's exactly it.

Originally Posted by Reaper

I still don't see how this wouldn't be considered working the system and somewhat shady. You're going to live in Canada and maintain residency there. Unless you'll be handling all of your tax, ei and cpp premiums yourself why would payroll go through the extra steps of submitting your pay from a USD payroll to Canada Revenue Agency?

Also, if your taxes and deductions are going to be made to a State or Federal government then you aren't contributing to Canada. You're not contributing to our health care system and social programs. So, basically, you'd be the guy on Canada's couch who contributes nothing to the household.

Make no mistake. You are trying to cheat the system. You are trying to get an advantage in order to make financial gains. Stop trying to justify it to everyone by going "it might not be illegal, guys". Legality and ethics do not always match perfectly.

I think that's pretty brutal to read into what I've been saying and coming up with that interpretation but alas you're open to have your opinion.

Basically I'm looking for something that's the most financial lucrative opportunity for myself while being legal. So call that whatever you feel like I guess.

I know people in this thread have brought up taxes a lot and maybe that's showing my naivety on the subject, but I'm completely willing/expecting to pay the higher of two taxes as again I assume I'd be subject to Canadian taxes and have to go through some paperwork to demonstrate to the US (and Canada) that I'm paying taxes. Not sure what you're going off about sitting in Canada and not contributing to anything here but I guess it's nice to assume things like my intentions, it's certainly easier that way for sure.

For everyone else who has weighed in though, I really do appreciate your thoughts and advice (and past experience).

[ernie]

Originally Posted by Enoch Root

Yes, if you passed the substantial presence test, you would be deemed a US resident.

But if you were working and living full time in the US, you shouldn't be on a TN visa.

Depends. Short term appointments or positions in the sciences usually go in on a TN visa despite living 100% of your time in the US for the duration of the TN. But it is in tended to be a short term type thing (about 2 years at most. Mine ended up being about 21 months).

[Northendzone]

Originally Posted by GGG

I'd suspect they have two bases of operations that the mobile personal can be tied to. And for the manager hiring it doesn't matter if iggytangs is tied to the US office or tied to the Canadian office. Then the company has to pay grids one for the Canadian office and one for the US office. So then from an HR perspective you would have to be legally allowed to work in the US to be hired by the US office and receive the higher wage.

seems like a complicated compensation model and could potentially lead to some big variances in pay for similar roles.

I hope the op comes back to tell us how this ended though

[EldrickOnIce]

Originally Posted by Enoch Root

Yes, if you passed the substantial presence test, you would be deemed a US resident.

But if you were working and living full time in the US, you shouldn't be on a TN visa.

TN visa holders can remain/reside in the US for up to 3 years per issuance. L1 visa is the same term also. We opted for L1 instead of TN, so spouse could potentially work under L2 visa.

[BigNumbers]

Of course the company can pay you in whatever currency they want. Unless you do as mentioned and cut all ties to Canada (which you're not) then you'll just report the income on your canadian tax return.

This is purely an issue for your company - not you. If they're dumb enough operationally to allow this kind of arb, then do it! No rules that you have to be paid in Canadian currency as a Canadian....

[EldrickOnIce]

Originally Posted by Northendzone

seems like a complicated compensation model and could potentially lead to some big variances in pay for similar roles.

I hope the op comes back to tell us how this ended though

In my experience, pretty much all multinational corps have similarly 'complicated' compensation models with significant variance in salary, benefits and vacation based on country.
Example, from wiki, 35 paid days vs 16.

By law, every country in the European Union has at least four work weeks of paid vacation. Austria, which guarantees workers the most time off, has a legal minimum of 22 paid vacation days and 13 paid holidays each year. The average private sector U.S. worker receives 16 paid vacation days and holidays.

Going back to OP, there is nothing illegal or immoral in trying to do this, it is just incredibly unlikely to happen due to the HR policy of the company - specifically the part that is supposed to insure all employees in same/similar positions fall within the same range of compensation. Which is why they told him at the outset that it would most likely require moving to the US.

[BigNumbers]

This request, as an employer, would just piss me off. I'd be careful as the OP of political repercussions of such a request.

[iggyntangs]

UPDATE:

I've accepted the offer, in CAD.

The option to get paid USD is open, should/when I decide to relocate to the US.

It is an HR policy and not a 'legal' issue.

Thanks for everyone's input and advice!