Is it possible for TN Visa holders to function as independent contractors (1099 or W2)? The answer lies in the complexities of compensation and self-employment, intricately defined by USMCA (formerly NAFTA) and USCIS guidelines. Let’s unravel the nuances to ensure a smooth journey on your TN Visa.
Understanding “Self-Employment” in the TN Visa Context:
“Self-employment” for TN Visa professionals occurs when they offer services to a US entity they either own or control substantially (50% or more). USDOS Foreign Affairs Manual and Handbook, 9 FAM 402.17, explicitly state that a TN visa cannot be used for self-employment or establishing a business in the US. If self-employment is your intention, exploring visa categories like Treaty Trader (E-1) or Investor (E-2) might be more suitable.
Key considerations for substantial control:
- Establishment of the US entity.
- Sole or primary control/ownership.
- Primary recipient of business income.
If it’s challenging to distinguish personal interests from those of the US entity, E Visa or L Visa might align better with your needs.
Situations Not Classified as “Self-Employment”:
Owning a foreign company that contracts with a US entity doesn’t qualify as self-employment. TN Visa holders can have majority ownership in a foreign company, a common scenario for self-employed IT professionals and management consultants.
Being an independent contractor doesn’t automatically indicate self-employment. TN Visa remains valid if work is performed under a pre-set contract or employment agreement with a US employer/entity, where the US entity has control over employment.
Payment Arrangements under a TN Visa:
Flexible payment methods exist for TN Visa professionals, provided they avoid self-employment. Wage arrangements with US contracting parties can be structured on a W-2 or 1099 basis. Many IT professionals and management consultants prefer the 1099 payment method through their foreign companies.
Guidance for the Deemed “Self-Employed”:
Foreign professionals have faced entry denials due to perceived self-employment owning a US company. If you are self-employed or own 50% or more of a US company, consider alternative visa options like L-1, E-1, or E-2 Visas. E-1 and L-1 Visas can be better suited for those with multiple US clients.
Navigate the complexities of compensation and self-employment for TN Visa holders with our comprehensive guide. Ensure a smooth and compliant journey with expert insights.
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