ER for Canadians

Back when I could tolerate big cities and cold weather,
Toronto was my favorite place to be.

John Galt

[Hyperborea]

Quote:

Why anyone would want to live in a metropoitan area is beyond me? For hyperborea: I understand why you would want to work in the U.S. to enjoy higher pay, lower 'working income' taxes, and better climate. *I'm not sure I fully appreciate, why you would want to go back even for 'low <no?> cost' health care. If your gov't employed health care workers do receive lower compensation and have to accept a lousy climate, hard to see how you would attract very many of the 'best and the brightest'. Why you would you want to wait in 'cue' for this care, when there are so many other alternatives, is ... ?? Oh well, choices - it's all about choices.

The pay here in Silicon Valley is higher yes but that is because there is still for people with certain skill sets a shortage. *In any shortage situation there will be higher costs to the purchaser or in this case to the employer. *There are also higher costs to live here but if you are careful you do end up ahead. *However this shortage situation doesn't exist for most of the mundane computer jobs in the US so the pay isn't really any higher.

As for the taxes, I've just run some really rough numbers and I come out with a couple of thousand dollars more in taxes in Canada as compared to my multiple tens of thousands of dollars US tax bill. *However, that didn't include all of the Canadian deductions (rough over morning coffee calculations) and my US taxes are driven lower by the large interest amount that I pay on my US home. *It also doesn't include the cost that I pay for my mostly employer subsidized health insurance. *Finally, that doesn't include the very large amount I pay in FICA taxes. *All in all as I said earlier roughly comparable to perhaps being cheaper in Canada. *If yo income split the numbers for Canada get even better. *But I guess it's easy to disparage without actually working the numbers isn't it?

Better climate is a personal decision. *Right now I experience the two seasons of Silicon Valley - rain and summer. *I never minded the winter and I used to X-country ski which I can't do here.

As to why Toronto? *Just look at your opening line. *If you want a safe, clean, diverse, big city then Toronto is your choice. *I don't understand how anyone doesn't want to live in the city.

[Hyperborea]

Quote:

LOL -- I guess you have me there, but before I take out my stubby pencil -- Do you really believe my gov't pension + eventual SS benefits *+ investment income (all taxed by U.S.)would result in lower taxes, if I paid canuk taxes on top of U.S. taxes?? Palleez some common sense.

Common sense? What kind of common sense is it when you change the scenario after the answer doesn't suit you? The original comment you posted was that I was paying less taxes by working in the US as opposed to Canada. Now you are making the scenario one where somebody is paying taxes to two countries. Those situations are always troublesome and you basically end up with the worst of both taxation systems. For the most part those kind of situations only occur in the year that you change residence unless you are a US citizen because the US government wants tax from you no matter where you live.

Quote:

Will you still be able to collect on your U.S. SS when you go back?

Yup.

Quote:

As I stated before, you couldn't pay me to use canuk's socialized medicine. So, if by some miracle paying taxes to two countries was actually cheaper, there is absolutely NO way I would trade my earned medical benefits for the dubious delights of socialism.

Do you mean your socialized government provided health system given for military service? I've heard a lot of horrific stories about the military health care for vets in the US.

Quote:

It should be real interesting to see what happens in a few years, when canuk's boomers start to hit zip's mum's age and all want the freebee ultra-bionic treatments at the same time.

My father had one of his knees replaced just a couple of years ago and everything went very smoothly. He's currently looking into having the other one done (probably bad genetics, squash - it's harsh on the knees, and a lifetime of working on concrete floors). No more hassles than health care in the US. The big trouble with health care in the US that I've had is having to change all of my medical providers (GP, dentist, wife's OB/GYN) every time I've changed jobs because the health insurance company changed and the doctors didn't take that one. Back in Canada I had been seeing the same doctor who had delivered me.

[Hyperborea]

Quote:

Sorrrry about changing trains in mid thought on you. I tried to apply your logic to see how it would work for me. You asked if I had done the math on taxes and I really have no reason to do tax math for anyone else.

Well, if you want to make the claim that you did that I was paying less taxes in the US then you did unless you were willing to make a completely uninformed comment.

Quote:

It sounds like in your old age, you'll have U.S. youngsters to support your SS and canuk youngsters paying your med bills. It should be interesting to see who gets fed up first.

I've actually got US SS and Canadian CPP that I've paid into with credits enough in both for a pension and my wife has credits in the Japanese system and may have enough for the US SS before we leave the US. The Canadian system is on quite sound footing with a large pool of investments built up so I think that it has larger odds of paying out. None of these are included in my retirement planning as it will be about 20 years after I retire until I can collect any of them.

As for the health care systems I won't be using it for quite a while as I plan to be travelling for quite a number of years before possibly returning to Canada. The survival of the Canadian health care system seems much more likely than the US Medicare system that most US citizens will be relying on in retirement though.

[AltaRed]

I've been disappointed at the bias of some of the Americans in here, and ignorance of what is comparable and not comparable between the 2 countries. There is no way to make an informed judgement until one has lived and worked in both countries. I have worked in the USA 4 different times including my 1.5 years so far in Texas. Perhaps it's time to trust those individuals a bit more who have some real knowledge.

Each country has some pluses and minuses, but on balance there is little difference. Canada does not allow interest deductions on a mortgage on a principal residence, but they don't tax the gains either upon sale. And before someone comments on paying double taxes, they obviously don't understand the tax treaty between the 2 countries.

Americans also pay huge FICA taxes which must be figured into the income tax rate. Also health care costs - and if Americans don't have healthcare, well, then it's SOL with Medicaid, etc. My co-pay with my Fortune 500 company is way more stateside than what it was in Canada. When the adjustments are done, there is little difference between the 2 countries in most areas (high cost urban areas aside).

Both Canucks and Americans could learn FIRE from each other if they chose to. It's obvious the American posters in this thread don't.

[superdave]

Wow. I was off camping for a couple of weeks and my thread went crazy.

For what it is worth, I am a Canadian but lived in Houston Texas and Boston Mass for 4 years and 1 year respectively. For the purpose of accumulating capital, Texas was really good with no state income taxes and a relatively low cost of living. We Only stayed 1 year in Boston primarily because we could not accuulate capital , primarily because of the high cost of living and high tax rates. In fact, we found that financially, we were best off in Texas. However, to ER, Canada is very good after you have a nest egg .

As was already stated, you are much better off paying off the mortgage early in Canada, even with todays low interest rates. We leave in Nova SCotia, think it was a great place to ER, but do miss the 'opportunitys' presented in some of the larger US centeres. However, you can't have everything all the time.

Or, as I like to put it, we can anything we want.
We just can't do everything.

John Galt

[Calgary_Girl]

Each country has some pluses and minuses, but on balance there is little difference. Canada does not allow interest deductions on a mortgage on a principal residence, but they don't tax the gains either upon sale. And before someone comments on paying double taxes, they obviously don't understand the tax treaty between the 2 countries.



Hey AltaRed I have to agree with you. I lived in Tulsa, Oklahoma for a couple of years and OVERALL found the cost of living about the same as in Canada with some differences. Healthcare cost me a lot more in the States what with all of the co-pays than it currently does in Canada. Housing was cheaper in Tulsa (since it was a smaller city and had a less than desirable economy) but my property taxes were higher than they currently are in Calgary. I find it much easier also to save for retirement in Canada with the carry-forward RRSP rules. In the States if you can't afford to contribute to your 401K than that's too bad and your contribution room is lost forever.

My American husband and I moved back to Calgary to be closer to my family and to take advantage of the great economy in Calgary and the standard of living. Also, I didn't care too much for the level of violence in Tulsa....everyone down there would tell me what a great place it was to raise kids and I would have to laugh because it had HALF the population of Calgary but DOUBLE the murder rate.

The "level of violence" Calgary vs. Tulsa touched a nerve with me. While not disputing the "stats"
I do know Tulsa is relatively safe compared to many
other U.S. cities (I worked in Detroit for several years
so I have seen some violence up close and personal).
I have my own theories about why there is more
violence in one place (or country) vs. another.
However, I do take comfort in the fact that most of the states in the USA allowed licensed "concealed carry"
of firearms. As usual, I would rather take care of myself than rely on "the government" to protect me.

John Galt

[Zipper]

If you come over to Ontario from Illinois John, make sure you check your guns at the door. :P

[Jarhead*]

Quote:

The "level of violence" Calgary vs. Tulsa touched a nerve with me. *While not disputing the "stats" I do know Tulsa is relatively safe compared to many other U.S. cities (I worked in Detroit for several years so I have seen some violence up close and personal). I have my own theories about why there is more violence in one place (or country) vs. another. However, I do take comfort in the fact that most of the states in the USA allowed licensed "concealed carry" of firearms. *As usual, I would rather take care of myself than rely on "the government" to protect me. John Galt

John, as Cut-Throat mentioned to you once, try reading the post before you answer.
Calgary-Girl was comparing the violence in Tulsa to Calgary. (Not Tulsa verses any other state-side city).
Sorry, John, have about an hour and a half to kill before I tee off this morning.

[MikeK]

Quote:

I've been disappointed at the bias of some of the Americans in here, and ignorance of what is comparable and not comparable between the 2 countries. *

I've also been quite disappointed with the bias and, truthfully, ignorance of the Americans on these posts. First, I'm an American but married to a Canadian. I find that most Americans have no appreciation or willingness to learn about other cultures. I get the perception that most Americans think Canadians are just American-wanna-bes. This is not true. Canada is a beautiful country with wonderful people and are regularly listed above America in polls documenting the best places to live. Now that I'm off my soap-box back to the finance discussion .

You can never do a complete comparison between different countries. There are financial implications but each person has to prioritize his/her issues.

The simple answer is that people with high incomes will see more of their paycheck in America. My relatives live in Manitoba (that's a province in the middle of Canada :P) The tax rate is 47% above $60K. Most Canadian provinces have actually been lowering their tax rates because high-income individuals have traditionally moved to America (engineers, doctors, lawyers). They also have a considerable use tax, 15% in Manitoba for any sales purchase.

I personally find the quality of life in Canada much better for middle-income individuals. The national health care system, unemployment insurance, maternity leave and other social support system. What's hard to put a price on is (a) the lower crime rate in Canada and (b) the atrocious winters in Canada. It comes down to a personal choice.

My choice is to live in America since I have a high-income job and can choose to live in a beautiful weater area (Bay Area). I am seriously considering a move to Canada once I hit ER. There are many benefits to having considerable American savings and living in Canada, especially if you can access their health care system (I can because my wife's Canadian and will probably still want to work half-time).

Mike

[cute fuzzy bunny]

I for one have made all my comments with tongue firmly in cheek, and it appears to me to be the same for most of the others.

Not to mention I'm half canadian and have spent quite a few pleasant vacations there from vancouver to prince edward island.

Do we have to add "no sense of humor" to canadian traits?

Perhaps all that invasion planning, waiting in line three weeks for a flu shot and walking 3 miles in 20 foot deep snow 365 days a year from their igloos to the ice fishing shack makes them grumpy.

This has come up a couple of times (that my posts
don't necessarily pertain to the question at hand).
I plead guilty as charged! See, I read 'em fast and
respond fast so I'm bound to miss stuff or just go off
on a tangent. I humbly apologize to all. However,
it ain't gonna change. My brain is bubbling 24/7
(pretty scary) and it's gotta come out. Pity the poor wife. An example: this morning I was watching the
preparations for the Democratic Convention and asked
my wife "Where is Osama Bin Laden now that we
really need him?" She was not amused. I don't care.
Egomania is wonderfully liberating in that way

John Galt

[Hyperborea]

Quote:

Obviously, the difference in 'violence' between Tulsa & Calvary [sic] has nothing to do with quantity of people. I suspect, if you look at the demographic differences and the demographics of the 'violence' you might get a clue. But, bashing Uncle Sam is more fun for the Kanuk Kook Kontigent than having a klue.

Oh yeah, "demographics". (nudge, nudge, wink, wink) I think we got your seKret Koded Klue.

[Zipper]

GDER? re your 8:05 AM response? Do you guys always hit the bottle that early? Most Canadians I know usually wait 'til mid-afternoon. :P

My wife frequently reminds me that it is always
cocktail hour somewhere in the world.

John Galt

xxxx

[nfs]

Quote:

If I become a resident of Canada do I have to move my investment accounts to Canada so that I don't have to pay taxes in the US?

You do but not for tax reasons.

If you live in Canada, the securities regulators in every province want to protect you from rapacious thieves overseas. Brokers and mutual funds are considered part of the class. To protect innocents from them, Canadian regulators require the brokers and funds to register with the commissions. Canada is such a small market that most cannot be bothered.

A few years ago, there were nasty spats between regulators and brokers. First the SEC (the US SEC) started fining Canadian brokers for continuing to do business with Canadians resident in the US. To keep things level, the Canadian regulators started fining US brokers for doing business with Canadian residents.

The end result: Brokers stopped doing business with residents of the other country.

The moral: If you want to keep dealing with your current broker after you move, make sure that you keep a US address. Realize that, if you ever become dissatisfied with either a broker or a fund, you won't be able to switch.

Because of the hideous tax consequences, there are exemptions for retirement accounts. Regular IRAs and 401(k)s can be left in the U.S. You can even change the address to a Canadian one and nothing will happen, except that you create a problem for yourself if your taxable account is at the same institution as the retirement account.

Roth IRAs are a pain because the tax treaty doesn't mention them. Income and realized gains are taxable in Canada. If you are planning to move, stick with vanilla accounts.

If you have kids, don't open any education plans for them. Again the tax treaty will cause you grief.

Living trusts are another snare. Canadian tax authorities hate overseas trusts as much as the IRS hates overseas trusts. Don't complicate your life if you plan to move.

Enough bad news. Here's some good news. Canada steps up the basis for investments when you enter the country. The treaty specifies that capital gains are only taxable in the country of residence. So, if you have a million dollars in unrealized capital gains on securities, you can move from the U.S. to Canada, sell the lot, and pay not a nickel to either country.

[Hyperborea]

The catch on the capital gains though is if BabyApe is in fact an American. If he is then the US government has its claws into him essentially for life. Yeah, he can renounce his US citizenship but the IRS will likely continue to demand taxes for the next 10 years and he will also need a visa (which may very well be denied) for any visits to the US. If he was a green card holder and was such for 8 of the last 15 years then they've got him too. The US is one of the only countries in the world to tax their citizens no matter where they live.

Expatriation tax info:
http://www.irs.gov/businesses/small/...=97245,00.html

Note that there are "exceptions" but these only allow you to ask for a ruling that you get out of paying the expatriation tax. There is no guarantee of success and it will likely cost around US$10K for the ruling.

This means that even if Canada doesn't tax those gains the US government will. The tax treaties prevent double taxation but you generally get hit with the highest tax and the lowest deductibles of either country.