U.S. law could be a Snowbird tax timebomb http://t.co/kb9oIrSAVj – Dont' fall for US tax and #FBAR trap!
— U.S. Citizen Abroad (@USCitizenAbroad) June 3, 2013
The above article appeared in the Toronto Star. Our friend Roy Berg is quoted. The article says that the purpose of the law is to encourage tourism. It appears that the article is open for comments. This would be a good opportunity to explain how U.S. tax laws hurt and will ultimately destroy the U.S.
It includes:
“It looks like a great deal. I can be in Palm Springs for 240 days., but they didn’t tell you that it comes with a very high tax cost,” Roy Berg, international tax lawyer at Moodys Gartner Tax Law in Calgary, said in an interview.
The changes, part of a U.S. immigration reform bill introduced in the Senate on April 15, are likely to become law, but it is not clear when they would take effect, observers say.
Would-be holders of the so-called Snowbird or Canadian retiree visa could become subject to U.S. income tax and estate tax, “and would, therefore, inadvertently light the fuse on the Snowbird Visa tax bomb,” Berg wrote in a recent article.
Under the current rules, those who spend more than 182 days out of 365 days in the calendar year, or more than 120 days per year on average over a three-year period, may be considered a U.S. resident for tax purposes.
The U.S. also imposes an estate tax on the value of certain individuals’ worldwide assets owned at death, Berg said. The estate tax could take effect even for someone who lives in the U.S. for a brief time, depending on the circumstances.
It’s astonishing that:
Avoid Snowbird trap of staying too long in US http://t.co/uHYjCuUXdM – US treats Cdns abroad in US better than it treats #ameriansabrod
— U.S. Citizen Abroad (@USCitizenAbroad) June 3, 2013
You can comment on the above article too.
I look forward to the day that I can choose to be a Canadian who pays US taxes.
Here’s the Globe and Mail May 13, 2013 version (and 268 delightful comments) U.S. bills propose longer stays for Canadian vacationers
bubblebustin,
No, No, Never, Never!
@Calgary411
I meant the day that I can be like a regular Canadian who through their own actions manage to become US taxpayers, instead of having it forced on me 🙂
I know — but, even then, I don’t want you to turn into someone like my next-door neighbours. American patriotic music played in the backyard is the last straw.
You mean a wannabe American? I can’t imagine what it would be like living next to someone like that. I cringe whenever I hear the U-S-A chant that homelands do at sporting events, political rallies and upon hearing news that a terrorist has died.
How do you cope?
I’m being punished. Five more months until Arizona.
I contacted the snowbird association and they said the IRS rules are to be adjusted so that closer connection exception will be extended to 8 months for Canadians. There is also a retiree Visa included that will permit living in the US full time, of course with tax and health insurance implications.
Kroeran. The snowbird association should know the difference between fact and assurances… “Never trust the words of a perennial thief” which is what the United States has turned into. If you are living in the United States for 2/.3s of the year, you have more of a connection to the United States than you do to Canada. It doesn’t make sense that you end up using the infrastructure of the States for 8 months out of the year and then say that you have a “greater connection” to Canada, than to the United States.
Yes, this is a tax grab by the United States, but if you choose to spend more than a vacation’s amount of time (let’s call it the usual 3 weeks) in the United States, then you make use of their infrastructure in a way that you should be liable; along with the requisite removal of one’s health benefits from Canada. Double-dipping is frowned upon.
The ones who are really hurt by this FATCA and extra-territorial taxation are the ones who have lived here in Canada, pay their taxes to Canada, have opted to make a life IN Canada and then are double-dipped by the United States in their finances to the point where they can never retire or have a nest egg. Those are the people that I’m sympathetic to and to which I have the obligation to fight the United States against.
The proposed visas are a “tax bomb” for only one group of Canadians: those who use the visas without advance planning. Canadians certainly could use the visas, maintain access to provincial health care, and avoid US tax residency. But why is US tax residency seen as a bad thing? Many Canadians with $80,000+ incomes would lower their tax burden and increase their disposable income as US tax residents (except, of course, for Albertans moving to California!). That is true for working age people, as well as retirees, even with the recent US tax increases and higher US health care costs. True, there is a health coverage gap in the ObamaCare system for nonimmigrants over 65 and some immigrants over 65; that glaring gap, in a system that is supposed to cover everyone, will likely be corrected in future legislation. Regardless, a Canadian living in the Sunbelt, enjoying more disposable income, can always resume Canadian residency and provincial health care eligibility if the need arises.
In all fairness too, that ugly “departure tax” that might be imposed on exiting Canadians is not an additional tax. It is simply early payment of capital gains tax due as the tax payer liquidates assets during life or at the tax payer’s death. Sooner or later, every Canadian pays that tax. By changing tax residency, a Canadian would not pay a penny more in tax and, with careful advance planning, may pay less.
In short, there is no “tax bomb” for anyone who makes the effort to plan ahead. For many, that “tax bomb” could be a “tax boon”!
To each his own. Have at it if you will — I don’t want in any way to again live in or contribute to the US economy. The US mentality and FATCA aim to steal from the Canadian and every other country’s economy. This is not a site for tax planning for Canadian snowbirds.
My guess is that Bradford Flecke has some material motivation for trying to lure unsuspecting snowbirds into yet another US tax trap. Won’t work with me since I won’t ever step foot across the border. One bitter taste of US tax entrapment was enough for me. I really don’t care whether the extended visa is a tax bomb or boon for snowbirds because no doubt it will become a tax gain for the IRS and a tax drain for the CRA. Anyone who willingly feeds the IRS beast is free to do so but it won’t be me.
“My guess is that Bradford Flecke has some material motivation,,,”
Click on Mr. Flecke’s name.
@ IRSCompliantForever
I didn’t want to give his site any traffic. I said “guess” but it was pretty obvious from the wording of his comment what was up with that.
… and doing business in the city in which I live: http://www.keatsconnelly.com/2012/05/keatsconnelly-expands-into-canada-announces-firms-first-office-in-calgary-opening-for-summer-2012/ Reading his comment creeps me out.
Hey Bradford, you may not realize this but some of us prefer to pay taxes in the country that is protecting us from the long overreach of the criminal organization called the IRS. If I want to save money on taxes, I won’t be moving to the United States, that is really stupid idea on your part. I would move rather to country that doesn’t have a reputation of droning its own citizens but also has zero income tax. Perhaps Grand Cayman. Or perhaps just a lower rate of tax, like Switzerland. The United States is great, if you want to live with Americans and their confiscatory tax escalation. That is a very stupid idea for Canadians. By the way, sure you can come back to Canada and get your health coverage back. But that can take weeks or months, and I’ve literally seen people suffer from their health problems while waiting for it to kick in again.
@Bradford Flecke
You could not have found a more hostile place to try and promote your services. You can expect reactions to be close to how an ex-smoker reacts to cigarette smoke, complete revulsion. US tax servitude? No thanks, trying to quit.
Sorry Bradford, I guess what you were hoping might be a ‘tax boon’, turned into a “tax bomb”.
Perhaps you will have better luck at the next website.
Here’s the word I now have:
Go back to selling your wares in Arizona or Florida, KeatsConnelly.
Another piece on Canadian snowbirds and US taxes.
Best they all learn the US law and the requirement that they cross all their t’s and dot all their i’s. How many know and heed?
http://montreal.ctvnews.ca/snowbirds-may-have-to-pay-income-tax-in-the-usa-1.1417047
Interesting article, Calgary411, in that it not only focuses on the additional paperwork, but how that paperwork is invasive to many people’s privacy. Sure you can spend a lot of time there, but do you really want the IRS to know all of your business? Too bad you can’t respond to individual comments, there’s a lot misunderstanding out there, like how it only effects you if you own property!
In the end though, a snowbird has a choice whether to become a US taxpayer, unlike US citizens and green card holders living in Canada.
bubblebustin,
What you highlight is important — the Canadian snowbird has a choice!
If some of these people rent out their Canadian residency for the months they are out of Canada they face big problems with the USA rules.
You’re absolutely right, money. The closer connection form states:
“It does not matter whether your permanent home is a house, an apartment, or afurnished room. It also does not matter whether you rent or own it. It isimportant, however, that your home is available at all times, continuously, andnot solely for short stays.”
http://www.snowbirds.org/8840-closer-connection-form.php
The problem is when you try and sell these stupid property the USA has a back door, way to do all this closer connection paperwork.