Canadian Snowbird In America

D. Wruk Brian

Description

With thousands of Canadians heading south for the winter each year, many of these individuals, referred to as snowbirds, face unique and challenging U.S. tax and financial planning considerations. Crossing the border, spending time in the U.S., and engaging in various financial transactions have legal and tax implications both in Canada and the U.S. The Canadian Snowbird in America covers the U.S. tax filing requirements based on seasonal residency in the U.S. and the U.S. tax issues related to the renting and sale of U.S. real estate. Information related to the

Sujets

• Personal finance
• Self-help

Informations

• Publié par: Ecw Press
• Date de parution: 01 décembre 2007
• Nombre de lectures: 0
• EAN13: 9781554903092
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

The Canadian Snowbird in America addresses practical issues for anyone looking to travel or move to the United States. Read this book before taking a trip south of the border, especially if the stay is to be recurring or for an extended period of time .
- Doug Macdonald , MBA , RFP , Macdonald, Shymko Company, Fee Only Financial Advisors
Well researched, well written, and well thought out. This book is a must for all Canadians who spend any significant time in the U.S.
- David Christianson , BA , RFP , CFP , TEP , Canadian wealth management specialist and financial writer
I m not a snowbird, nor do I plan to become one (if I ever retire). Still, I know there s a fast-growing group of snowbirds who need the practical information that Terry Ritchie provides. He has everything you need to know about banking, health care, and taxes (such as how not to pay tax on your U.S. lottery winnings) and even some fun stuff on the differences between Canada and the United States .
- Ellen Roseman , personal finance columnist,
Toronto Star and CARP Magazine
The Canadian Snowbird in America
Professional Tax and Financial Insights into Temporary Lifestyles in the U.S.
TERRY F. RITCHIE and Brian D. Wruk
Copyright Transition Financial Advisors Group, Inc., 2007
Published by ECW Press 2120 Queen Street East, Suite 200, Toronto, Ontario, Canada M 4 E 1 E 2 416.694.3348 / [e-mail]
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any process - electronic, mechanical, photocopying, recording, or otherwise - without the prior written permission of the copyright owners and ECW PRESS .
LIBRARY AND ARCHIVES CANADA CATALOGUING IN PUBLICATION
Ritchie, Terry F. The Canadian snowbird in America : professional tax and financial insights into temporary lifestyles in the U.S. / Terry F. Ritchie and Brian D. Wruk.
ISBN 978-1-55022-804-5
1. Canadians-United States-Finance, Personal. 2. Canadians-Taxation-Law and legislation-United States. 3. Canadians-Legal status, laws, etc.-United States. 4. Canadians-Retirement-United States. I. Wruk, Brian D. II. Title.
HG 179. R 58 2007 332.024008911073 C 2007-903570-1
Text Design: Tania Craan Cover Image: Miguel S. Salmeron and Charles McRae Typesetting: Mary Bowness Production: Rachel Brooks Second Printing: Thomson-Shore
This book is set in Minion and Franklin Gothic
The publication of The Canadian Snowbird in America has been generously supported by the Government of Canada through the Book Publishing Industry Development Program.

PRINTED AND BOUND IN THE UNITED STATES
DISCLAIMER
This book presents information of a general nature and is not intended to be an opinion on any specific individual situation. The book also contains legal and tax information that should not be construed as providing legal or tax advice. While the authors have endeavored to ensure the book s accuracy and timeliness, no one should act upon it without appropriate professional advice after a thorough examination of the facts of a particular situation. Readers are encouraged to seek the assistance of qualified legal and tax professionals regarding their own specific situation.
Table of Contents
Preface
Introduction
I. Don t Worry, I ll Be Back: Crossing the U.S. Border
Entering the United States
The B-2 Visa
Documents Required to Cross the U.S. Border
Obtaining a Canadian Passport
The Border Binder
Automated Entry/Exit System?
U.S. Retirement Visa?
Crossing the Border with More than $10,000
Canadian Rules
American Rules
Taking Medication to the States
Taking Pets to the States
Taking Personal Items to the States
Driving Your Vehicle to the States
The Use of Canadian Satellite TV in the States
Coming Back Home
Additional Tips
II. Welcome to the United States - Now Pay Up! U.S. Tax Issues for Snowbirds
U.S. Income Tax Filing Requirements of Snowbirds
The Green Card Test
The Substantial Presence Test
The Closer Connection Exception
Canada-U.S. Tax Treaty Tie-Breaker Provisions
Taxation of the Rental of U.S. Real Estate
U.S. Tax Implications
Canadian Tax Implications
Example of the Tax Implications of Renting a U.S. Property 3 1
Taxation of the Sale of U.S. Real Estate
U.S. Tax Implications
U.S. Withholding Tax on Real Estate Proceeds
Example of U.S. Withholding Tax under FIRPTA
Example of Sale of U.S. Real Estate
Obtaining a U.S. ITIN
Taxation of U.S. Gambling Winnings
U.S. Withholding Tax Recovery Firms
U.S. Tax Scam Directed at Unsuspecting Snowbirds
Additional Tips
III. A Home Away from Home: Purchasing U.S. Real Estate
American and Canadian Mortgage Differences
Amortization
Fixed Interest Rate
Prepayments
Down Payment
Closing Costs
Points
Impound (Escrow) Accounts
Obtaining a U.S. Mortgage
Common U.S. Real Estate Terms
Ways to Own and/or Title U.S. Real Estate
Sole and Separate
Joint Tenancy
Community Property
Tenancy in Common
Corporations, Trusts, Partnerships
IV. Money Doesn t Grow on Trees: Money Management for Snowbirds
U.S. Banking for Snowbirds
Royal Bank of Canada
Bank of Montreal
TD Canada Trust
Canadian Imperial Bank of Commerce
National Bank of Canada
Scotiabank
HSBC Canada
ATB Financial
Desjardins
NYCE Payments Network
Opening a U.S. Bank Account
Taxation of U.S. Investments
U.S.-Source Interest-Bearing Investments
U.S.-Source Dividends
Capital Gains
Management of Canadian Investment and Retirement Accounts in the United States
Foreign Exchange Issues
Myth: You Lose Money When You Convert
Myth: Someone Knows Where the Exchange Rate Is Going
Myth: Wait to Convert
How to Calculate Exchange Rates
Fact: There Is an Expense to Converting
Strategies to Exchange Canadian Dollars for American Dollars
Additional Tips
V. Till Death Do Us Part: U.S. Estate Planning Issues for Snowbirds
The Previous U.S. Non-Resident Estate Tax Environment
The New Prorated Unified Credit
Small U.S. Estates
Marital Tax Credit
Canadian Foreign Tax Credits for U.S. Estate Tax
The Current and Future U.S. Non-Resident Estate Tax Environment
Calculating Your U.S. Non-Resident Estate Tax
Determine the Value of Your Worldwide Estate
Strategies to Reduce, Defer, or Eliminate U.S. Estate Tax
Sell U.S. Shares in Your Canadian Investment Accounts
Gift U.S. Property Prior to Death
Ensure Your U.S. Worldwide Estate Is below U.S.$2 Million
Hold U.S. Shares in Canadian Mutual Funds
Hold U.S. Shares through a Canadian Corporation
Use Life Insurance to Cover the Taxes at Death
Rent Rather than Purchase U.S. Vacation Property
Hold Property Jointly - But Be Careful!
Create Tenancy-in-Common Ownership for Valuation Discounts
Finance U.S. Real Estate Using a Non-Recourse Mortgage
Holding U.S. Property through a Canadian Corporation
Purchase U.S. Real Estate through a Canadian Resident Discretionary Trust
Purchase U.S. Real Estate through a Canadian Partnership
Beware of U.S. Living Trust Seminars
Filing a U.S. Non-Resident Estate Tax Return
Summary Comments
Will Planning
Will Planning Tips for U.S. Property
Probate
Powers of Attorney
Additional Tips
VI. Help! I ve Fallen, and I Can t Get Up: Risk Management for Snowbirds
Provincial Health Care Plans
Choosing a Travel Insurance Policy
Provincial Out-of-Country Coverage
British Columbia
Alberta
Saskatchewan
Manitoba
Ontario
Quebec
Nova Scotia
Prince Edward Island
Newfoundland and Labrador
New Brunswick
Property Insurance
VII. Mayday! Mayday! Finding Help
Selecting a Qualified Canada-U.S. Advisor
Competence
The Planning Process
Client Relationship
Nature of the Firm
Regulatory Compliance
Compensation
Our Firm
Appendices
Appendix A: Snowbird Resources and Relevant Websites
Appendix B: List of Canada-U.S. Border Crossings
Appendix C: Canada-U.S. Advisor Interview Checklist
Appendix D: Canada-U.S. Differences
Index
I dedicate this book to my late twin sister Sherri. Thank you for showing me the way.
Preface
Quietly Gord awoke. He wanted to make sure that Shirley had a few extra hours of sleep. Today was the day they were to make their annual trek down south. It usually took about three days, and Gord was hoping that with a few extra hours of sleep, Shirley would be able to help with the driving. He was hopeful that this year they could make it in two days.
Every year about this time for the past six years, Gord and Shirley have spread their wings and flown down to the Scottsdale, Arizona, area. Well, actually, they d just get in their new Dodge Caravan and drive down to Arizona. However, to their friends and neighbors, they were snowbirds flying south for the winter. They knew that many of their friends and neighbors were kind of envious of their annual migration.
Gord and Shirley always had their act together. It was a way of life for them, a life they enjoyed and looked forward to. In fact, Gord had become somewhat of an expert on many of the issues that Canadian snowbirds face when going to the United States.
They had developed a budget, and they knew - to the penny - what they could and could not do while down in Arizona. Each year they prayed that the loonie, named after the diving - yes, diving - bird that floats carefree on the face of the Canadian dollar coin, would rebound, and finally their prayers had been answered. The way things are going, Gord suggested, this thing could be at par by Christmas! Given the number of winters they d been in the United States, they knew too well the impact that a fluctuating loonie can have on the snowbird lifestyle.
With their past winter experiences behind them, Gord and Shirley had become more aware of the financial, health, and tax consequences of spending time in the United States. In fact, this year Gord suggested to Shirley that they take six of those large 24-roll packag