I'm Peter Roberts, immigration attorney who does work for YC and startups. AMA

Regarding side projects for money, I'll copy my answer I gave elsewhere[0]:

You will get deported and effectively be permanently banned if you receive income from any other source besides your H-1B / L-1 / other-visa sponsoring company/employer. Income from all other sources are prohibited while you are on a visa. With a green card or U.S. citizenship, you have the freedom to sell apps, have income-generating side projects, etc.

Companies are required to report any income you earn while you are in the US. If you make money selling apps, Google/Apple is required to tell the U.S. government about the money you make on the App Store income (primarily for tax purposes).[1] The tax people (the IRS, Income Revenue Service) share income data with the immigration agency. The immigration agency checks to make sure you only got money from the company your visa allows you to work for. If the immigration agency finds out you have income from other sources (app store), they will deport you, and you will effectively be banned. See: http://www.murthy.com/2014/01/28/home-based-businesses-inadv...

If you look at the link above, you'll see a lot of people have inadvertently screwed over by having non-authorized income. An extreme example from the link above are multi-level marketing companies. For example, you recommend your friend that he/she buys some product. Your friend buys it, and for the referral, the company gives you a tiny amount of money (e.g. $5) You could get deported and banned because of this. Because it is considered income, and all income not from your job associated with your visa is completely prohibited.

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Now you might be wondering if you can set up your company and receive income from the App Store in another country, and have it deposited to your foreign bank account. You might be thinking that if you do that, your income likely won't be reported to the US government, and you won't get caught and get deported.

The problem with that is that by having un-reported income in another country (from the App Store) you are breaking two sets of laws: (1) tax laws, (2) immigration laws.

Firstly, if you live in the U.S., you have to pay taxes (~35%) on your total worldwide income -- income that you make in every country. Even on the interest you receive in a bank account in a foreign country. If you do not report your non-U.S. income, you break tax law. The punishment for breaking tax laws is severe. In addition to being deported and banned, they can take money out of your bank account, seize your property (your house, your car, etc) to pay for the unpaid taxes + the severe fines for hiding and not paying taxes.

Secondly, U.S. immigration law generally prohibits H-1B, L-1 and other visa holders from doing any kind of productive work outside their H-1B/other-visa job. Even repairing your own house by yourself, if it involves a lot of work, is illegal for a visa holder. You have to hire a U.S. worker to repair your house. Foreign income for remote work is prohibited. Working on your own app and making money selling it is prohibited.

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[1] I don't know if you are in the U.S. -- so just to clarify: everyone in the U.S. who has permission to work (citizens, LPRs, H-1B/L-1/etc visa holders) is issued a Social Security Number ("SSN"). This number is used to report any income you earn to the government. You have to provide this number to receive income from any company in the US. If you try to set up a U.S. Google App Store account, they will ask for your SSN. Your SSN is used to report your income to the government, and as a general universal personal identification number.

[0] https://news.ycombinator.com/item?id=11974074

EDIT: Updated question.

If a Canadian is currently in the U.S on a TN visa, is it possible to get a green card? Or does one have to switch to a different visa first, as in a H1B?

"A recently published authoritative letter from the U.S. Customs and Border Protection Agency (CBP) addressing the TN nonimmigrant visa category offers new and definite insight on the CBP’s policy for determining immigrant intent. In the letter, dated April 2008, the Executive Director of Admissibility and Passenger Protection Programs details clearly that filing an immigrant petition (I-140) alone is not automatically considered a demonstration of immigrant intent, and aliens with pending I-140s may still be admitted into US with a TN visa."

Under current CBP regulations, it seems that the current policy is to allow people to enter the country under TN status even if they have a pending green card application.

Also be cognizant of http://www.hooyou.com/tn/limitations.html :

"...a pending or approved employment based immigrant petition (Form I-140) or family based immigration petition (I-130) does NOT impute immigrant intent. The TN alien is eligible for TN extensions & to be admitted as a TN alien until the adjustment of status application (Form I-485) is filed or the applicant applies for the immigrant visa. While other types of status holders (such as H-1, L-1 or O-1) may apply for Adjustment of Status (AOS) as soon as they wish once entering the country, those of TN status have at least a 30 to 60 day waiting period upon entering the United States before they may apply for AOS. Any applications before this waiting period is over will be considered an attempt to gain fraudulent entry by the USCIS. Additionally, the U.S. consulate may deny a TN visa application if the alien has previous applied for an immigration petition or AOS. Those on TN status who wish to file an I-140 immigration petition should not travel outside of the country because they will encounter issues upon their re-entry. If an alien on TN status has an approved I-140 petition and is currently waiting on their AOS petition to be approved, they must be sure to apply for Advanced Parole to travel outside of the country. For more information on AOS, please click Adjustment of Status."

These are Executive Branch regulations and can change easily unlike the fairly set-in-stone congressional statutes, so it's best to keep up to date on what the current state of affairs is.

It's best to hire a good immigration lawyer and ask them how to proceed.