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Author Topic: Working While Travelling  (Read 10432 times)

sj1980

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Working While Travelling
« on: August 21, 2012, 01:42:04 AM »
Hi everyone,

I have a quick question that I hope someone here can answer. I work for a company that allows me to work from the comfort of my home. No, no, this is not a scam that I'm posting here....LOL. Truly, it's a legitimate company and I am the administrative assistant. Anyway, what I'm wondering is, while we're in the states for six months, can I still do my work and earn an income without having to file income taxes in the United States? Basically, it's a Canadian company which only does business in Canada, and all the clients I would deal with are Canadian.

Anyone have any answers for that? I'd call the IRS, but, well, they're the IRS and I don't like dealing with them.... :D

Thanks!
sj1980

camperAL

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Re: Working While Travelling
« Reply #1 on: August 21, 2012, 04:46:16 AM »
Hi sj1980,

Not a lawyer or tax accountant but I am a business person. As long as you don't make any sales to Canadians on US soil then I would think that it would not be a problem since you are not living here. Once you make a sell to someone in a state of the US, then the state sales tax must be collected (you need to get a merchant certificate from said state)  and federal tax form would have to (should be) filed. Obviously people make small sales without collecting sales tax but you are taking your chance if you have an inventory and transportation in that state.

I am sure there would have to be forms filled out since your not a citizen here if you made sales here. My opinion (which might be wrong) is that you can conduct business in Canada from the US without violating any laws.
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COMer

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Re: Working While Travelling
« Reply #2 on: August 21, 2012, 06:10:23 AM »
Sorry, but if your income is EARNED here, the IRS will want a share.  You should get in touch with them and explain the situation and see if there are ways to work around it.  In addition the state where you are will also want to ding you.  I've had that experience and states where I have been feel that if you reside in their state, you owe them regardless of where the income comes from.  I guess you would want to check out residency status where you will be and if they have a state income tax.  There may be ways around some, or most, of this but you need to have it checked out before you get here so you do it right.
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Tom

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Re: Working While Travelling
« Reply #3 on: August 21, 2012, 08:37:33 AM »
I'm not a tax professional, just someone who has been through this. Bottom line is you'll be required to pay Federal income tax and, depending on the state(s) where you work, you may also pay state income tax. Some easy reading:

http://www.irs.gov/pub/irs-pdf/p519.pdf  Tax guide for aliens (you'll initially be classed as a non-resident alien).

If you'll be paid in Canada, you might also pay taxes in both countries, then figure out how to get relief for one or the other.

You're supposed to obtain a Sailing Permit before leaving the US as proof you paid taxes, although I was never asked to produce one. More here:

http://www.irs.gov/businesses/article/0,,id=207261,00.html

Good luck.
« Last Edit: August 21, 2012, 08:46:15 AM by Tom »
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Gary RV_Wizard

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Re: Working While Travelling
« Reply #4 on: August 21, 2012, 08:51:59 AM »
Technically I suppose you are earning the money while in the USA and it is taxable here. But I suspect you are being paid in Canada, into your Canadian bank account, as if you were home in Canada, and realistically nobody is going to know the difference as long as you keep all your activities inside the "home". 

I used to travel internationally on business, and didn't file a tax return in any country that I happened to visit for a few days or weeks in the course of my duties. But six months is stretching it...

There are some subtle distinctions that might conceivably exempt you, e.g. your principle work location is still your home in Canada, since you are on a vacation (of sorts) in the US. And the "work" you are doing may actually be in Canada, on a Canadian computer, accessed remotely.  I wouldn't begin to try to advise guess on that sort of thing - even tax professionals would probably scratch their heads (and probably disagree with each other).
« Last Edit: August 21, 2012, 09:06:17 AM by Gary RV Roamer »
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Ken & Sheila

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Re: Working While Travelling
« Reply #5 on: August 21, 2012, 09:11:25 AM »
The real question here for both Federal and State income taxes comes down to whether "legally" you are working in a state. As a consultant for a few years I would travel to State X and work at their offices and my company (me) would be paid by them. I had to file taxes in every state I worked in along with a my federal taxes.

I currently consult for just one company and I'm paid by that company, but for 7 months out of the year I travel in my motorhome and do my work from the coach via the internet (actually connecting to my computer at work). I do NOT consider myself to be "working" in the state I happen to be located in at the time, since I am just "remote" working at my company's office in AZ. I am not doing anything in the state I happen to be located in that would be considered as work in that state. ALL my work is via the internet to the office in AZ.

Think of it this way. You are a business person vacationing in country X, you call your office every day to check on how things are going at home. Are you working in country X?

Then as Gary said, how is anyone going to know? You are paid in Canada and assuming you have no business contact in the US (except to "home" via the internet).

I would consult a tax expert, but if you have NO business contact with anyone in the US while you are in the US, I don't think you are "working" in the US. There is a legal concept called Nexus, which defines (some vaguely) what constitutes a "taxable" situation. So the legal question is whether you have done anything in the US that gives the IRS the right to tax you. This (as with many tax issues) may be a "gray" area that is not well defined.

ken
« Last Edit: August 21, 2012, 09:22:49 AM by Ken & Sheila »
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Tom

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Re: Working While Travelling
« Reply #6 on: August 21, 2012, 09:23:26 AM »
Interesting interpretation Ken; I hadn't considered the 'working remotely' aspect. If sJ can legally not pay taxes in the U.S., things would be far less complicated.
« Last Edit: August 21, 2012, 09:25:07 AM by Tom »
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Kim (skyking4ar2) Bertram

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Re: Working While Travelling
« Reply #7 on: August 21, 2012, 09:41:44 AM »
I can complicate this even further. When working for Blue Cross South Carolina in South Carolina, I paid South Carolina taxes, even though I had a house in Arkansas, and maintained an Arkansas residency. When I returned to Arkansas, and worked remotely for BCBSSC, I paid Arkansas taxes because I no longer maintained my office in SC and my work product originated in my "office" in Arkansas. My tax attorney fully concurred.

Then I transferred to a Dallas subsidiary of BCBSSC, had an office space, established residency in Texas via Escapees, and then worked remotely, i.e. from wherever I am parked. Texas has no state income tax which simplifies things immensely.

The problem, especially for non-US residents, can get complicated in a hurry. This is one of those problems that has more than one answer. I strongly suspect that as more and more people work remotely, there will be revisions to the tax code with case law. The desire to squeeze tax revenue in these days and times is pretty strong.

I would think the Canadian consulate and/or work visa people would be the best source of information for you as they have surely seen this question come up.
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Ken & Sheila

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Re: Working While Travelling
« Reply #8 on: August 21, 2012, 09:51:22 AM »
I just reviewed an article in the Journal of Accountancy. It was concerning tax issues between states for "remote" work. The various states are at odds as to whether taxes are collected based on the state of the "company" or the state of the residency of the worker. Nothing was said about taxing remote worker except either the state of residency of the worker or the state in which the company was located. But it does show that this is a relatively new issue that hasn't been resolved.
I still think my previous discussion is valid. BUT every state (and the IRS) are always looking for new ways to collect taxes.

Personally I am a resident of SD (I don't need to worry about tax issues between AZ and SD because SD has no income tax), but I pay my taxes based on the location of my work (or in my case the company that I work for from where ever).

ken
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BernieD

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Re: Working While Travelling
« Reply #9 on: August 21, 2012, 09:56:12 AM »
There were some good personal pieces of information provided as well as some personal opinions. However, none of them seem to relate specifically to your issue nor would be a defense if IRS decided to do something different. The best advice you got was to talk to a tax advisor or the Canandian consulate.

Many times the quick answer to a quick question can lead to a long problem. :-X
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Gary RV_Wizard

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Re: Working While Travelling
« Reply #10 on: August 21, 2012, 09:56:29 AM »
Some years back I watched a panel discussion on the concept of working remotely and the tax aspect - are you working where your body is located or working at the location of the data being manipulated. The IRS itself wasn't represented, but a lawyer participated and brought up the key points, both yea and nay.  In my experience the IRS tends to be very literal and I suspect the location of your body is the key point for them. But maybe a good tax attorney somewhere has convinced them otherwise in the past.

Like Ken, I never considered that I was working in another state or country. My job involved giving advice on technical matters to others and reporting back to my office on the status of projects worldwide.  I was always working for & at my home office, regardless of where I was. And paid taxes accordingly.  But if I actually worked as a consultant somewhere, as I did after retirement, then I was working in that temporary location and paid taxes there.

Another example is an author gathering data for a book.  As I understand it, he is not "working" at the "fact finding" location during that phase, but if he actually writes a chapter of the book somewhere then he is considered to be working at that location. The bizarre thing is that the cost of the research travel is considered a deductible expense for the book writing income!
« Last Edit: August 21, 2012, 09:59:25 AM by Gary RV Roamer »
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SeilerBird

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Re: Working While Travelling
« Reply #11 on: August 21, 2012, 10:01:31 AM »
If you pay the US income tax and state tax you are doing the legal and morally right thing to do. If you do pay US income taxes then I don't think you would also have to pay Canadian income tax. You will be paying income tax either way so why not do it the correct way?
I would like to apologize to anyone I have not yet offended. Please be patient and I will get to you shortly.
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Re: Working While Travelling
« Reply #12 on: August 21, 2012, 10:01:44 AM »
Kim,

But when you work remotely from Oregon, do you think you are "working" in Oregon and need to pay Oregon taxes? I don't think so.

ken
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Kim (skyking4ar2) Bertram

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Re: Working While Travelling
« Reply #13 on: August 21, 2012, 10:08:21 AM »
Ken,

If I was living in Oregon, working remotely, yes, I would be subject to Oregon taxes. The last two Fortune 1000 companies I have worked for have handled it that way. Since I am traveling through Oregon, no. That's on the advice of my tax attorney.

Again, since I am legally domiciled in Texas and working for a Texas corporation, I have a very legitimate tax status.

Kim
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Re: Working While Travelling
« Reply #14 on: August 21, 2012, 10:10:32 AM »
Tom,

Unfortunately doing the "morally" right thing doesn't necessarily keep you out of tax problem anymore. It's just too complicated with many competing factors. I been involved in several international/US corporate tax fights as well more than my share of issues between states trying to collect taxes. Being a corporate CFO is no fun when dealing with tax issues. Since states are prohibited (by Federal Law) from collecting income taxes on out of state companies without clear Nexus, the state of Michigan has done a "end around" and created a VAT (value added tax) tax on out of state manufacturers who sell product to retailer in Michigan. This one still hasn't made it to the Federal courts and my company isn't big enough to pay for the fight so we just pay the tax.

ken
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COMer

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Re: Working While Travelling
« Reply #15 on: August 21, 2012, 10:22:28 AM »
From the IRS manual:

"A resident alien's income is generally subject to tax in the same manner as a U.S. citizen. If you are a resident alien, you must report all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income on your U.S. tax return. You must report these amounts whether from sources within or outside the United States."



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SeilerBird

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Re: Working While Travelling
« Reply #16 on: August 21, 2012, 10:32:56 AM »
Unfortunately doing the "morally" right thing doesn't necessarily keep you out of tax problem anymore. It's just too complicated with many competing factors.
I agree with you completely. I think that in his situation the odds of getting caught are virtually non-existent so I think it just comes down to doing the morally right thing. He is working in this country so he should pay income tax just like the rest of us do.
I would like to apologize to anyone I have not yet offended. Please be patient and I will get to you shortly.
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Re: Working While Travelling
« Reply #17 on: August 21, 2012, 10:43:21 AM »
Quote from: COMer
A resident alien's income is generally subject to tax in the same manner as a U.S. citizen. If you are a resident alien ...


Based on the info provided, it appears that the OP will be considered a non-resident alien. Still subject to our tax laws (and loopholes), but there are some subtle differences. Having been both resident and non-resident aliens, in one case very similar to the original question, I'd say that life would be simpler if the OP could legally avoid US taxes.

FWIW the U.S.has a tax treaty with many other countries, but it can be a pain to get both countries to comply with the respective treaty.
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Tom

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Re: Working While Travelling
« Reply #18 on: August 21, 2012, 11:02:25 AM »
Quote from: SeilerBird
If you do pay US income taxes then I don't think you would also have to pay Canadian income tax.

That might be good in theory but, as someone who legally and morally paid taxes in two countries concurrently, I can say it was a real pain to get relief from, in our case, the U.K. When it finally arrived (in the form of a large refund check), we again did the morally and legally right thing i.e. we reported it as income and mailed a check to the IRS for tax on the 'income'. That started a fiasco lasting months, during which the IRS was days away from seizing property from us.

It finally got resolved when our then-tax pro visited the IRS in person and got them to agree we didn't owe any taxes, interest, or penalties, and correct their file. The IRS agent then told the tax pro "If your client wasn't so honest, we would not have known about that refund check, and he would not have had to pay tax on it, nor would he have gone through this fiasco".

I second the suggestion to get some tax advice although, in our case, it didn't avoid tangling with the IRS.
« Last Edit: August 21, 2012, 11:04:01 AM by Tom »
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Re: Working While Travelling
« Reply #19 on: August 21, 2012, 11:10:33 AM »
I agree with you completely. I think that in his situation the odds of getting caught are virtually non-existent so I think it just comes down to doing the morally right thing. He is working in this country so he should pay income tax just like the rest of us do.

But I don't think that morally he is working in this country by using the computer to work at the company in Canada (of course the IRS could take a different view). As Kim said he is just "traveling" through the US, not working here. Now if there are any business contacts made it the US that would make him working here.

ken
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Re: Working While Travelling
« Reply #20 on: August 21, 2012, 11:27:28 AM »
As he explained it, he is "working" from the comfort of his home.  He wants to bring his home here so he can "work" from it.  Sure sounds like the IRS would have a case if he is "working" here and therefore earns his income here.  The fact that his company is not, doesn't seem to impact the fact that he is here, working and earning.
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Re: Working While Travelling
« Reply #21 on: August 21, 2012, 01:55:05 PM »
It would not be wise to confuse state and federal tax law with a logical explanation.  8)
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Re: Working While Travelling
« Reply #22 on: August 21, 2012, 03:27:01 PM »
As he explained it, he is "working" from the comfort of his home.  He wants to bring his home here so he can "work" from it.  Sure sounds like the IRS would have a case if he is "working" here and therefore earns his income here.  The fact that his company is not, doesn't seem to impact the fact that he is here, working and earning.

I still wouldn't do it. To legally work in the US requires a work permit. That is another can of worms. And I still don't think he is working in the US.

This issue not only takes a tax expert, but one who has knowledge if this area of the law. We are not going to solve it.





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Re: Working While Travelling
« Reply #23 on: August 21, 2012, 03:35:25 PM »
Good point Ken. I assumed the OP was being sent here by his company, in which case a B1/B2 visa would suffice. Re-reading the original message, I'm now not sure of the intended arrangements.

Here's the USCIS page on tempoary (non-immigrant) worker visa requirements.
« Last Edit: August 21, 2012, 03:45:40 PM by Tom »
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BernieD

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Re: Working While Travelling
« Reply #24 on: August 21, 2012, 06:50:12 PM »
We keep on assuming (and you know what kind of trouble that gets you into) that the IRS plugs morality, logic or other factors into the equation. The IRS does what the IRS, in it's not so humble opinion, decides is compliance with US tax law. Everything else is poppycock. I'll say it again, talk to a tax expert and/or the Canadian consulate.

By the way, there are tax treaties between the US and Canada. If the Canadian files a US tax return and pays US taxes, I would expect that the income would be reported to Canada and the US taxes paid credited against the Canadian taxes. But of course, Canada may say that the income belongs to Canada and the tax should be paid to Canada.

All of that said, the IRS usually uses the taxpayer's tax home as the determining factor and where the income earned. In this case, is it in the RV or at the RVer's office in Canada. Of course, the employer is in Canada, the income is reported in Canada (I don't know if Canada has the equivalent of the Form W-2) and any taxes withheld would be in Canada. If it looks like a duck, waddles like a duck and quacks like a duck, does the IRS agree that it is a duck?
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Re: Working While Travelling
« Reply #25 on: August 21, 2012, 07:03:37 PM »
But I don't think that morally he is working in this country by using the computer to work at the company in Canada (of course the IRS could take a different view). As Kim said he is just "traveling" through the US, not working here. Now if there are any business contacts made it the US that would make him working here.

ken

I agree. I think he is working wherever his computer resolves to, in this case his company in Canada. When you go on vacation and take your laptop to do a bit of company work, are you "working" in the state where you're vacationing? Dang, if I went back to school, I could do my doctoral dissertation on this topic !
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Re: Working While Travelling
« Reply #26 on: August 21, 2012, 07:14:34 PM »
I doubt the Canadian consulate will be able to guess how the IRS will see things, any better than folks in this forum  ;D.  I also wonder if a tax pro in Canada would have any better insight into the US IRS  ???  As for tax treaties, based on my experience of such a treaty (summarized earlier), I'd say 'good luck'.

Meanwhile, if/when the OP talks to a tax pro, he should be aware that not all are familiar with the handling of double taxation issues.
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Tom

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Re: Working While Travelling
« Reply #27 on: August 21, 2012, 07:18:12 PM »
Quote from: Wendy
Dang, if I went back to school, I could do my doctoral dissertation on this topic !

If you don't go back to school, maybe you could do enough research to write an article for our forum library  ;D
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Re: Working While Travelling
« Reply #28 on: August 21, 2012, 07:32:58 PM »
If you don't go back to school, maybe you could do enough research to write an article for our forum library  ;D

It could be fun. AND I'd have the beginnings of a great dissertation :)
 
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Re: Working While Travelling
« Reply #29 on: August 22, 2012, 10:00:38 AM »
This makes an interesting campfire discussion but I feel confident that morally no taxes are owed in sj1980's situation but legally (from the IRS viewpoint) taxes are indeed owed. As Bernie says, the IRS is not noted for either moral positions, compassion or logic.  They pick a phrase from the tax code that they feel applies and then stick to it through hell or high water, despite any logical arguments to the contrary.

That said, I would NOT report the income earned in those circumstances. Your mileage may vary!
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Re: Working While Travelling
« Reply #30 on: August 22, 2012, 12:13:10 PM »
If you are working for a Canadian company, being paid in Canadian dollars deposited in a Canadian bank, and are visiting this country but aren't a permanent US resident, I don't think you legally OR morally owe US income taxes. As an accountant, I find this an interesting discussion and I'm doing some research to see if there is a definitive answer. More later.
 
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Re: Working While Travelling
« Reply #31 on: August 22, 2012, 12:59:17 PM »
Quote from: Wendy
If you are working for a Canadian company, being paid in Canadian dollars deposited in a Canadian bank, and are visiting this country...

That would appear to be the OP's case, although I didn't realize that on first reading. Bottom line is that, provided he's not 'employed' in the U.S., he'll be fine. Been there done that (legally) for an extended time.

Quote
... aren't a permanent US resident ....

Wrong term; In my first response I linked to IRS Publication 519, U.S. Tax Guide for aliens (includes resident and non-resident aliens, both of which require the paying of taxes if working in the U.S.). 'Resident alien' and 'green card holder' are equivalent terms used for a 'permanent resident', but folks do not need to be permanent residents (or resident aliens or green card holders) to legally work and pay taxes in the U.S.

When we talk about resident/non-resident aliens, immigrant and non-immigrant status, they're determined by the US Citizenship and Immigration Service (previously the INS, Immigration and Naturalization Service). Each status has it's own process that must be followed. The previously linked UCSIS web site spells much of this stuff out.

IOW residency and immigration status are defined/controlled by a different agency than the IRS, so both must be researched together. I've been around both loops numerous times, personally and for family members and employees, with and without legal (immigration attorneys) and tax pro help, and have lots of horror stories for each scenario.

Good luck with your research. If I can share the benefit of having been in various residence/immigrant states and various tax statuses, let me know.
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Ken & Sheila

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Re: Working While Travelling
« Reply #32 on: August 22, 2012, 05:50:58 PM »
>>As Bernie says, the IRS is not noted for either moral positions, compassion or logic.  They pick a phrase from the tax code that they feel applies and then stick to it through hell or high water, despite any logical arguments to the contrary.<<

But they can be defeated in tax court - been there, done that - one case for a very large amount of taxes, when you win its fun but this case took 2 years to resolve - that part was not fun at all.

ken
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Gary RV_Wizard

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Re: Working While Travelling
« Reply #33 on: August 22, 2012, 07:12:21 PM »
I won a substantial one against the IRS too, and it didn't even have to go to Tax Court. I think I surprised somebody when I quoted their own regs back to them chapter and verse. And cited a Supreme Court ruling that pertained as well. Still took many months, though, and lots of formal, written documents. You have to be able to bureaucratese as well as they do.  8)
Gary
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Wendy

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Re: Working While Travelling
« Reply #34 on: August 22, 2012, 07:36:18 PM »
I've won twice vs. IRS and never had to go to court. It's not that hard if you have your paperwork all in order and have checked out the appropriate regs (boring reading, to be sure) AND ARE POLITE AND RESPECTFUL to the auditor, who is probably an underpaid GS-5 federal employee.
 
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SeilerBird

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Re: Working While Travelling
« Reply #35 on: August 22, 2012, 07:38:08 PM »
I have dealt with the IRS in the past and I have been very impressed with their professional manner and with the help they gave me.
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Tom

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Re: Working While Travelling
« Reply #36 on: August 22, 2012, 10:09:11 PM »
I prefer to have someone else represent me in front of the IRS, and happily pay for that.
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camperAL

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Re: Working While Travelling
« Reply #37 on: August 23, 2012, 01:45:22 AM »
Greetings,

Interesting take on this topic and a wide variety of opinions. I tend to agree with Gary and several others on their assessment. I hold multiple merchant certificates in several states so I can conduct business in those states. They simply state if you sell anything (even one item as a business) then you must collect sales tax. I then pay my federal tax when my accountant tallies up all of my items (and subtracts legal deductions).

To me it is black and white. Since the OP said he was only going to conduct business in Canada from his computer here, there should be no concern with filing anything. Otherwise anytime you made a business call while out of your state you would be liable and to me that is just stretching things too far. I agree the IRS might have other views.
CamperAL (Indiana)
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rogerskevin67

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Re: Working While Travelling
« Reply #38 on: January 10, 2013, 07:36:43 AM »
You may need to find a business tax attorney in order to completely answer your question. Chances are that you will owe money to the IRS or at least need to report to them if you are working with the US for that extended period of time.

Edit: Removed commercial link
« Last Edit: January 10, 2013, 08:30:41 AM by Ned »

JudyJB

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Re: Working While Travelling
« Reply #39 on: January 25, 2013, 08:32:45 PM »
I used to work for a consulting company located in a particular state and would travel on business, visiting customers at various sites and teaching seminars.  My employer paid me for this work, but I certainly was never required to pay taxes on this income in each state I had traveled to and/or taught in.  I used my employer's equipment and that employer set up my schedule.  This is pretty typical of every business person who travels to customer sites around the U.S. 

I am currently teaching online while traveling for a college in one state while maintaining a domicile in another state.  I access the college software through the internet and am supervised by a department head and academic dean located in the college's home state. I am assisted in my work by staff located at the college.  I am really only accessing my employer's systems and students remotely.  I do not really think that I am "working" in all of the 23 states I have driven through in 2012.  I cannot see how this is different from when I traveled to Scotland in 2008 and to the Eastern Mediterreanean and remoely accessed my class while on those vacation.

I will have to pay taxes in my domicile state for my social security and interest and other stuff, and I assume some portion for the part-time work I am doing for my employer in the other state.  I can't imagine that I am responsible for those other 21 states.  Otherwise, we would all be declaring income in every state where we checked our email while on business travel!

I think the difference might be in situations where someone is self-employed or working on a commission on sales or who produces a product, although my son is a sales manager earning a partial commision on sales to all 50 states, and he files only in the state in which he lives.  I will certainly ask this question this year of the person I am going to get to help me with my taxes. 
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