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Re: Retiring In Canada
Old 01-30-2004, 12:17 PM   #61
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Re: Retiring In Canada

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Only the USA allows itself to be a dump for *the uneducated, old, and sick excess population of practically any other country. My neighborhood is full of very old Russians. *Almost none of them speak English. I never see them with adult children, so I wonder who is supporting them? I would guess that I probably am, but I can't be sure.

The only positive I can see is that the quality of smoked herring and cultured milk products has gone way up. And the young Russian women are totally yummy. Quite different from the image I remember from my boyhood in the 50s. Olga, the 185 pound shotputter is out. Natasha the 115 pound beautifully dressed red head is in.

Overall though is seems that the American middle class are pack animals for rest of the the world.

Mikey
Mikey, where do you live? I'd like to see more red heads named Natasha or Sveltana.

I would think that with the amout of money that retiree Americans take to Canada, Mexico, or Costa Rica, these countries would welcome them with open arms because the money that these retirees bring are free money. The money was made with the peace provided by the U.S. military, the infrastructure funded by U.S. tax dollars, and the natural resources harnessed by U.S. businesses. These destination countries are basically getting free money for providing some health care. I would think that it's in their best interest for these countries to welcome U.S. retirees.

This is why I'm still confused why retiree citizenship was once available in North and Central American countries only to be revoked relatively recently.
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Re: Retiring In Canada
Old 01-30-2004, 12:39 PM   #62
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Re: Retiring In Canada

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The opposite. *You can live income tax free for 5 years if you have income from abroad. *If you are moving there and not a current Citizen. However, *I am a Citizen of Canada, USA and European Community so there will not be an issue. (Tri Citizenship, Just call me "00-Ian")
Shok, I asked earlier this question: How did you manage to become citizens of the U.S., Canada, and the E.U.?
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Re: Retiring In Canada
Old 01-30-2004, 01:42 PM   #63
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Re: Retiring In Canada

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Shok, I asked earlier this question: How did you manage to become citizens of the U.S., Canada, and the E.U.?
I'm not Shok but it's not that hard to do. I'm currently a dual Canadian/EU citizen. I was born in Canada and my parents were immigrants from an EU country. That gave me dual citizenship at birth. It would be entirely possible for me to collect US citizenship as I currently work in the US and will soon have "green card" status. For a potential FIREee though I think getting US citizenship is big negative. One of the biggest problems is the lifetime US claim on a percentage of your income. Most other countries in the world only tax on residency and NOT citizenship.

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Re: Retiring In Canada
Old 01-30-2004, 02:15 PM   #64
 
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Re: Retiring In Canada

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You are talking to a student of history here
Cut-Throat. You don't need to be a genius to see where
we are headed.

BTW, my life has not been all that "cushy".
John Galt,

If you don't think Women's Rights or Civil rights were a good thing and fought for by men of honor, I guess I can see why you don't like the way the country is going.

I guess you wanted things the way they were - that favored white men only!

Are you sure 'you are a student of history' or just blindly supporting your own predjudiced beliefs?

BTW - My life and your life were very cushy compared to the average Chinese and Indian now working today in an overseas Manufacturing plant.
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Re: Retiring In Canada
Old 01-30-2004, 02:48 PM   #65
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Re: Retiring In Canada

Sorry I did not Respond to this earlier.

I am a Born UK Citizen (Hence EU Passport) I became a Canadian Citizen (Dual OK) then I became an American Citizen, They did not ask me to renounce my UK (Birth) Citizenship. I think they used to some time ago though. I did not tell them about my Canadian Citizenship.

I do not think their policy is to remove ones birth citizenship. IT would be hard to do. They could confescate the passport but I could go back to the UK with my Birth cert and get a new one.

SWR
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Re: Retiring In Canada
Old 01-30-2004, 03:08 PM   #66
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Re: Retiring In Canada

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I do not think their policy is to remove ones birth citizenship. IT would be hard to do. *They could confescate the passport but I could go back to the UK with my Birth cert and get a new one.
IIRC the oath that you take when you become an American citizen has words of "I hereby declare, on oath, that I absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty, of whom or of which I have heretofore been a subject and citizen."

Other countries are under no obligation to take that as any indication that you wish to give up citizenship in their country and most ignore it. Some countries (China) don't allow you to ever give up citizenship. The US is trending that way too with their expatriation tax laws. Not exactly forbidding it but trying to make it very expensive.

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Re: Retiring In Canada
Old 01-30-2004, 03:12 PM   #67
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Re: Retiring In Canada

Hey - This is a lot more fun than picking on Canada during winter - thermometer jokes aside.

Back to my top down theory on 'free markets' , I'm still waiting for some of the 100+ governments of the world to fill my mailbox with enticements to retire abroad along side the investment junk I'm getting.

Job arbitrage, immigration, SS problems are faced by all the G-7 countries to varying degrees. My grand theory aside - we get to depend on that wonderful group - politicians to solve the practical aspects in each country. No engineering, simulation models, spreadsheets, benchmarking, - just politicians.
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Re: Retiring In Canada
Old 01-30-2004, 03:20 PM   #68
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Re: Retiring In Canada

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IIRC the oath that you take when you become an American citizen has words of "I hereby declare, on oath, that I absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty, of whom or of which I have heretofore been a subject and citizen."

Hyperborea
WRONG! When I did it you simple pledge allegence to the flag and Americ from a PRIMARY perspective. RENOUNCE was never mentioned. I did it 3 years ago.

Ian
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Re: Retiring In Canada
Old 01-30-2004, 04:14 PM   #69
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Re: Retiring In Canada

Dumb question? Is Canada getting more expensive as in noticible prices with the falling dollar in the news. Do currency concerns affect portfolio strategy as much as taxes and residency/citizenship.
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Re: Retiring In Canada
Old 01-30-2004, 04:38 PM   #70
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Re: Retiring In Canada

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Dumb question? Is Canada getting more expensive as in noticible prices with the falling dollar in the news.
With the falling US dollar and the climbing Canadian dollar imports into Canada have gotten cheaper. It is more expensive now than it was two years ago to take your US dollar and spend it anywhere else in the world.

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Do currency concerns affect portfolio strategy as much as taxes and residency/citizenship.
Currency concerns are definitely important if you are going to be travelling in retirement and even more so if you want to be spending significant amounts of time travelling (perpetual traveller). If you are mostly living in one country then your 5 year fixed income buffer (FIB) should at the very least be in that currency. If you split between two countries (e.g. summer in the US and the other summer in NZ) then you would probably want to split your buffer between the countries.

With plans to spend a good number of the first years (4 to n) of retirement travelling I am not sure how I want to allocate my FIB between currencies. If I was to retire right now I would probably consider a 50/50 split between US dollars and Euros for the CDs.

For most Americans there really is no taxation dilemma because there is very little in the way of choice. You are tied to American taxes for life. For citizens of other countries there are quite legal ways to change your tax residence and lower your taxes. For example, when I retire I may setup Thai tax residence and so using US/Thai tax treaty pull my IRA (and 401k rollover) out at a 0% US tax rate and a 0% Thai tax rate. The only thing I will owe is the 10% penalty the US for being under 59.5.

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Re: Retiring In Canada
Old 01-30-2004, 04:49 PM   #71
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Re: Retiring In Canada

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For example, when I retire I may setup Thai tax residence and so using US/Thai tax treaty pull my IRA (and 401k rollover) out at a 0% US tax rate and a 0% Thai tax rate. The only thing I will owe is the 10% penalty the US for being under 59.5.

Hyperborea
Are you Positive this holds true? I think that as the IRA/401k moneys were earned in the US, and Taxes were deferred in the US. Ergo, Taxes are payable in the US regardless. I think you will find IRAs etc are a different beast in the overseas tax strategy. I could be wrong.

SWR
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Re: Retiring In Canada
Old 01-30-2004, 04:57 PM   #72
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Re: Retiring In Canada

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WRONG! *When I did it you simple pledge allegence to the flag and Americ from a PRIMARY perspective. RENOUNCE was never mentioned. *I did it 3 years ago.

Ian
If you check out the USCIS (née BCIS née INS) web page you will find the oath includes exactly the text as I posted above about renouncing allegiances.

http://uscis.gov/graphics/services/natz/oath.htm

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Re: Retiring In Canada
Old 01-30-2004, 05:11 PM   #73
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Re: Retiring In Canada

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Are you Positive this holds true? I think that as the IRA/401k moneys were earned in the US, and Taxes were deferred in the US. *Ergo, Taxes are payable in the US regardless. *I think you will find IRAs etc are a different beast in the overseas tax strategy. I could be wrong.

SWR
Yes, I'm absolutely positive that this holds true. *If you check out IRS publication 901 (http://www.irs.gov/app/scripts/redir...s-pdf/p901.pdf) for an overview of the tax treaties you will find that the taxation levels are given for "pensions and annuities" under which IRAs fall. *That taxation level is the default taxation amount and is also the withholding amount. *If you are over withheld by the default amount then you can file a 1040NR to get the extra back. *This amount withheld can be applied as a foreign tax credit if applicable in the country your are residing in. *The default and withholding amount on IRAs (part of the "pensions and annuities" category) is 0% for Thai tax residents.

Similar principles hold to things like equities. *After I leave the US and cease to be a US tax resident then I can sell my stocks and will owe taxes on none of the gains to the US.

The US has an expatriation tax that they hit long term permanent residents (green card holders) and citizens with if they try to stop being long term permanent residents or citizens. *I will be retired and have left the US long before I fall under the purview of these laws.
http://www.irs.gov/businesses/small/...=97245,00.html

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Re:  Retiring In Canada
Old 01-30-2004, 06:35 PM   #74
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Re:  Retiring In Canada

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Yes, I'm absolutely positive that this holds true. If you check out IRS publication 901 (http://www.irs.gov/app/scripts/redir...s-pdf/p901.pdf) for an overview of the tax treaties you will find that the taxation levels are given for "pensions and annuities" under which IRAs fall. That taxation level is the default taxation amount and is also the withholding amount. If you are over withheld by the default amount then you can file a 1040NR to get the extra back. This amount withheld can be applied as a foreign tax credit if applicable in the country your are residing in. The default and withholding amount on IRAs (part of the "pensions and annuities" category) is 0% for Thai tax residents.

Hyperborea
The Publication talks about pensions from other countrys not your 401k earned in the USA. Where did you read this?

SWR

About the Renunciation. All I can say is that I did not have to do it 3 years ago. In fact I remember them saying that they do not ask you to.
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Re: *Retiring In Canada
Old 01-30-2004, 10:14 PM   #75
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Re: *Retiring In Canada

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The Publication talks about pensions from other countrys not your 401k earned in the USA. *Where did you read this?
Ok, look at IRS publication 901 to which I posted the link above. Look at Table 1 (pgs. 32 & 33). The table lists the US tax rates for various types of US sourced income for payees of various tax residences. A payee is someone to whom money is paid.

If you wish more than the summaries of the tax treaties provided by this document then I recommend that you go directly to the text of the tax treaties that the US has with various countries. These can be found at http://www.irs.gov/businesses/corpor...=96739,00.html

For the Thai example that I gave earlier look at Article 20 of the treaty which states that "pensions and similar annuities" are taxed only in the country of residence (i.e. the US takes 0% tax). "Pensions and annuities" includes IRAs as explained in the even more detailed technical explanation of the treaty also at the above link (you can find this on pg. 63 of that document).

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Re: Retiring In Canada
Old 01-31-2004, 06:22 AM   #76
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Re: Retiring In Canada

Thanks. Do you know if you take the 72(t) option from another country if there is still the 10% penalty?

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Re: Retiring In Canada
Old 01-31-2004, 09:24 AM   #77
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Re: Retiring In Canada

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Thanks. *Do you know if you take the 72(t) option from another country if there is still the 10% penalty?
The 72(t) (SEPP) rules don't care about country of residence. *The 10% penalty if you're under 59.5 rule also doesn't care about country of residency. If you do have a different country of tax residence than when you set up the IRA you will need to file a W-8BEN with the IRA provider so that they will withhold the correct amount.

I'm planning on just straight withdrawing the entire amount and taking the 10% hit due to a couple of factors - young age at retirement (mid-40's), variable tax residency, escape from changing US tax policy, 0% tax rate other than the penalty. *The last one is a big concern - how long can such a good opportunity last given the focus of the G7 countries on pushing low tax countries to raise their rates? As well, even after I withdraw the money I should be able to let it grow without taxes for a number of years due to various legal means.

You have stated that you are a US citizen though. *That makes you forever subject to US taxes despite the tax treaties. *In other words becoming a Thai tax resident (or a tax resident of anywhere else) won't stop you from paying US tax on your IRA withdrawals. *If there's a tax treaty it will only prevent you from being double taxed. That means that the country of closer ties (i.e Thailand if living in Thailand) would get a first kick at taxing the income and then the US would tax it but allow a credit for the foreign taxes paid.

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Re: Retiring In Canada
Old 01-31-2004, 09:31 AM   #78
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Re: Retiring In Canada

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The 72(t) (SEPP) rules don't care about country of residence. It's just a simple 10% penalty if you're under 59.5. I'm planning on just straight withdrawing the entire amount and taking the 10% hit due to a couple of factors - young age at retirement (mid-40's), variable tax residency, escape from changing US tax policy, 0% tax rate other than the penalty. The last one is a big concern - how long can such a good opportunity last given the focus of the G7 countries on pushing low tax countries to raise their rates?

You have stated that you are a US citizen though. That makes you forever subject to US taxes despite the tax treaties. In other words becoming a Thai tax resident (or a tax resident of anywhere else) won't stop you from paying US tax on your IRA withdrawals. If there's a tax treaty it will only prevent you from being double taxed.

Hyperborea
I think I am begining to Understand. For Myself though. There is a 15% US tax on Retirement funds from the 401k's in Canada. There is a double taxation treaty in place though.

I do have an address in Florida for US purposes that I send all Bank and Interest statements to. So At least no State tax. Although I will be filing in Canada as a Canadian Resident. So I assume (Pub 54) I will be paying Canadian Incomtax Minus US withholdings/tax on all the income.

I will satisfy the 330 days out of the USA part. As far as other items I will be sure to need some tax advice next year. I have no earned income only interest at the moment. And the 401ks which I have not begun withdrawing on. I will most likely take the SEPP payments options sooner or later.

I am simply living on my investment income from CD's right now. So it is a lot less than the $80k exemption.

SWR.
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Re: Retiring In Canada
Old 01-31-2004, 09:43 AM   #79
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Re: Retiring In Canada

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I think I am begining to Understand.
I will suggest that you have a look at the web boards at http://grasmick.com/board/ This is a pair of discussion boards that run off an immigration lawyer's website. There are two boards one on immigration/visa concerns and the other on financial/tax issues. Since the lawyer is based in Buffalo and specializes in Canadian issues that is the focus of the boards. There are a lot of knowlegable folks there (i.e. helping each other do what we've already done) and occasional replies from the experts.

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