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Canadian telecommutes for U.S. company

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    Canadian telecommutes for U.S. company

    Taxpayer was born in U.S (citizen), moved to Canada as a child, and lived in Canada for past 45 years. Been working for U.S. company for past several years as independent consultant (technical writer), 100% telecommuting from Canadian home.
    Taxpayer did permanent move to the States in July 31 without changing jobs and will file a Schedule C as sole proprietor - "consulting business".
    1. Must taxpayer file 1040NR for 7 months and 1040 for last 5 months?
    2. Can taxpayer deduct her Canadian home office expenses on Fed Form 1040 for the 7 months she lived in Canada and telecommuted?
    3. Can taxpayer deduct all of her reimbursed business expenses (travel, business meals & ent, etc.) for the 7 moths she lived in Canada?
    4. Interesting comment from taxpayer who said she spoke with Canadian Tax Authorities and was told she doesn't have to file a Canadian Tax Return for 2011 because she wasn't a Canadian resident as of Dec 31, 2011. Makes sense?

    Also said she "declared" her U.S. citizenship in March, 2011 but wasn't approved until October 2011 at which time she also received her social security number. Kinda implies that she never got a SSN when she lived here as a child, even though she should definitely be a U.S. citizen because she was born here to U.S. citizen parents before moving to Canada.

    getting a social security number

    The only part of your post on which I can shed any light is on your apparent surprise that she did not get her social security number at or shortly after birth. I believe that was not a routine practice until some time after 1991 when it became necessary to have a child's social security number to claim them as a dependent or get tax credits based on them. I do not remember what year that was but I clearly remember it being put in place and being new some year after I became a tax professional. I trained for my first season in the fall of 1991 and did 1991 taxes starting in January of 1992. It might have been that year that the requirement was put in or it might have been one of the next several. I do recall that by 1996 when I passed the SEE every taxpayer I had dealt with in some time was aware of the requirements and brought me a social security number for every dependent they tried to claim. I was born in 1959 but it never occurred to my parents that I would have any use for a social security number until I needed it for work. I think the old rule was that if the child had a social security number it was to be listed but if not the thing to do was to leave the space blank.
    Last edited by erchess; 03-06-2012, 04:31 PM.


      Yes, I didn't get a social security number until I was 14 or so; my parents got all us kids SSNs about the time my older brother was getting his first job. I was born in 1960.

      She would not file an NR since she is a citizen. Technically she should have been filing US returns all along. And yes, the US is the only country which taxes it's citizens worldwide; all other nations only tax their residents. Watch out for any additional filings she may need to make regarding RRSPs.


        Appreciate all the editorial comments about the Social number, but can anyone address my tax questions? .

        Just to clarify... FBAR does not apply here.
        Taxpayer's net SE income (Sch C) will be approx $72,000 (assume $6,000 per month) after Home Office and other deductible 2106 expenses. My approach is to prepare two separate Sch Cs and use Foreign Tax Credit exclusion for ($42,000) representing 7 months of Canadian residency.
        Taxpayer will pay then pay income tax only on remaining $30,000 of Sch C income (five months at $6,000 after returning here)? Reminder that company is California based and telecommuting was from Arkansas home beginning Aug 1.

        I am, by the way, aware that SE tax must be paid regardless of Foreign Tax Credit and Exclusion. Also, taxpayer has never filed Form 1040 (until now) because she was unaware of requirement as U.S. citizen. Thanks again.