This is a Moodys Gartner analysis of how the new Streamlined Program may present problems for Canadian snowbirds. Timely advice given the new cross-border shared day count (which should be in effect but I understand delayed).
This blog is the first in a planned two-part series that analyzes the changes to the IRS voluntary disclosure programs, and is limited to analyzing the amended streamlined program. Part two of this blog will analyze the amended OVDP program and the procedures for delinquent FBAR or information return submissions.
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ConclusionIn summary, the recently amended IRS voluntary disclosure programs are positive for most taxpayers. Yet, significant uncertainty remains, particularly for Canadian snowbirds, which forces them to use the new 2014 OVDP if they wish to voluntarily disclose and, thus, provides a disincentive for them to disclose.
@Calgary411
This is a great article to send to one’s Financial Adviser and bank manager. I did this just now Coincidentally I saw my FA today who informed me that she is now warning her clients she knows are snow birds. I sent her t his article just now and I know she greatly appreciates this information..
Please post the part II when it comes up.
I really think that we should be emphasizing the snow bird FATCA status as this affects so many more Canadians.
I tried to get an website that would say how many Canadians go south each year but have no luck.
The US homelanders don’t like it when Canadians spend their retirement money providing service industry jobs in the United States. So I guess they should just go a few miles further south to Latin America or the Caribbean. How do you chase away tourists? Tax them. Tax what you don’t want less of. Subsidize what you want more of. It is basic principle of big government.
Well, here is another aspect of chasing away Canadians with money to spend by taxation.
There are more than most will admit in the US who are looking to GET OUT of the US. Because of the draconian and lawless government.
THEY will find out that draconian and lawless government has already planted its nefarious flag on the soil of their preferred escape: Canada.
Hoping for refuge, they will find financial shackles waiting.
And we thought slavery had been abolished!
Snowbirds are the biggest spenders in the US… Florida is booming because canuckers are buying condos as fast as they put them up near the beaches…. americans even gear their sales pitches to the canuckers… There are enclaves of canuckers such as the ones from Quebec…. with malls, restaurants, services available in french…. when I was there… if it wasn’t for the heat… I would have sworn I was at home. I was actually able to get a real poutine just like at home… surprised the heck out of me…
I think FA’s given the burdens of FATCA all around would do well to advise anyone against being a snowbird or having any connection financially to the U.S. If banks do this it means less FATCA head aches all around for everyone and I think given the fact most banks here would not have gone along with FATCA if not for the sanctions/threats then this is a good way for them to participate in steering people away from dealing with the U.S. There are a lot of places to go where it is warm. Turks and Caicos, Jamaica, Cuba, Antigua and on and on. Some of those places are cheaper than Florida too. Aruba has a ton and a half of condos and if you don’t have to be right on the beach you can get a great deal there. I’ve looked into all the islands I could, as I lived ON one before coming to Canada and loved it. It too though was in the U.S. Jeckyll Island, Ga. so…began looking elsewhere a long time ago. My dream is to go where it is warm for longer periods on the cheap. FA’s should familarize themselves with the various ups and downs of each island, pros and cons financially too. Good bye Florida. Crime is up there, you can be entrapped into U.S. tax system, you might be presumed a “tax cheat” if you don’t keep up with all the craziness tax wise there so look elsewhere in this big wide world. Any FA advising people to still be a snowbird in Florida perhaps hasn’t looked deeply enough at the problems FATCA is going to cause many, many clients.
I was reading an article about Florida snowbirds from Quebec and it mentioned that most had children and grandchild who were A) uninterested in that kind of lifestyle and B) weren’t going to be able to afford it when the time came anyway.
Snowbirding in the US, like being a USC living outside the US, has a limited shelf life. The Baby Boomers are going to be the last generation able to retire. Ppl under 55 simply haven’t enjoyed the same economic boom times and job benefits to allow things like full time retirement to happen.
I have no doubt that Florida and Arizona are using Canadians to wiggle out from under the housing market collapse of the last decade but it won’t last. Economic reality coupled with things like FATCA and the zeal of mining the middle class for extra tax dollars will put an end to it all sooner rather than later.
In the meantime, Snowbirds should be warned but many of them – who have yet to experience anything awful at the hands of US Border Patrol, the IRS or even their provinces in terms of benefits lost b/c they overstayed – are not going to listen. Experience will remain the best teacher for a while to come.
Maybe it’s a good thing for Canadians to vacate Florida, because of rising sea levels it’s going to be nothing more than a sandbar in 20 years anyway.
@Yogagirl, some baby boomers will retire but, I can tell you are large portion of us on the tail end of that group won’t be able to either. It scares me for future generations. Lots of later baby boomers are poor. The first wave of them who became adults in the early sixties had things a little better but, those who experienced several economic crashes just as they were getting on their feet haven’t done so hot. I’m 56 and there were not a lot of economic boom times when I was an adult. A child, yes but, not as an adult.
You’re right though, I don’t see that sort of life style being available to nearly as many people in the future. Unless you think you can sell your house and open a t shirt shop on the beach into your old age most of us aren’t going anywhere. Florida should prepare. Snowbirds who are currently there should rethink things carefully. Why put yourself at such risk? Go elsewhere which you can do for much cheaper and for far less hassles.
The renunciation business at the London US Embassy may be brisk.
They’ve set up a separate email address just for the issue:
londonrenunciations@state.gov
I wonder if they’ve done the same for other embassies?
The US Consulate in Calgary has this statement on their American Citizen Services (ACS) Appointments page:
Sending an email to set up a renunciation / relinquishment has been the procedure at Calgary for the past few years, although they did not so specify on their Appointments page. It is good this is now highlighted as I believe there was someone that travelled all the way to the Calgary US Consulate instead of using the Vancouver US Consulate (when Vancouver was having so many problems) — to be told that another appointment would have to be made for renunciation. Their appointment had been made using Calgary’s online system which works for appointments of any other nature but doesn’t transmit to you the questionnaires needed for Calgary to have all ready to complete your expatriation appointment.
Atticus, 55 was just an arbitrary cut-off. The Baby Boom peaked in 1957, I think but really, only those who came of age in the sixties or early 70’s benefited from the anomalous post WWII boom. Those of us who were small kids in the 60’s mostly got stuck making sense out of the new world order and making do during the many bubble bursts of the 80’s and 90’s.
I long ago accepted that there would be no retirement and though I am entitled to collect US Social Security and have a defined pension down in the states where I taught for many years, I doubt that either will be around by the time I am “old enough” to collect on them.
The only thing I really want is to be able to work and save like any other Canadian. It’s a pretty small request, imo.
@Atticus
I am realizing I am one of the few of my baby boomer generation who has retired and has a pension to keep me alive until I die.. My husband and I worked for companies that their employees were given good pensions. We did a lot of borrowing too to save for RRSPs as well. Many people could not do this. My husband was not lucky enough to enjoy any retirement, dying at 54.
My friends of my own age did not work for any company that had pensions. Some had their own businesses and did not start any pension for themselves. It seems to be a fallacy that all business people make lots of money. So All my friends are still working into their late 60s. They can not live on their CPP. The jobs they work at are not high paying.
I go to Walmart and Tim Hortons and see many seniors working, because they really have to work. They have no choice.
Those who are well off are the ones who can save and then pass this on to their children.
Add to that just because a person ‘makes a lot of money’ (however that might be defined for whatever person) does not mean that they had the financial literacy to know the importance of saving for retirement. Good financial literacy should somehow be a requirement for graduation from high school.
I am not a baby boomer but just on the north side of that defined generation. I learned by example and when I grew up there were not such things as credit cards, easy credit to live on. There were lay-away plans that I used to buy a new sweater in high school from my after-school job and babysitting savings. I watched my mom put my dad’s cash pay into envelopes each month — one envelope for each of the monthly expenses my mom made sure were paid. She did that (plus tended a garden and canned and froze produce and sewed her children’s clothing — actually an artist at what she so humbly did). She knew how to keep a family together. My dad was a hard worker, a machinist by day and a pin-setter at a bowling alley by night, but he was a gambler and didn’t know intuitively what my mom did about not living beyond one’s means.
I just didn’t know that we were perhaps poor as we didn’t have the constant barrage of TV advertisements telling us what we had to have to be a worthwhile person and we lived in a very working class neighbourhood in upper-state New York. I am so thankful for those times I grew up in and all the good and valuable memories. I am so glad my mom taught me about not living beyond my means and saving for the future and I’ve tried to pass good practices on to my children.
I am one lucky enough to have a defined benefit pension to add $1274/month to my savings, CPP and OAS — and Canadian health care and supports for my son. My husband has no pension and little CPP as he was a working musician who didn’t put into CPP. There are very few that will ever see that DBP that I know I am fortunate to have. How many blessings I count each day, even being able to put away for an RDSP for my son. My plan didn’t quite work out the way I thought, but I am one of the lucky ones even though being “criminalized” by US CBT and FATCA. I am also so glad I found out about all of this before the “rush” and my husband and I have gone through our hell to get our CLNs. I’ll stay in the fight for my son and other families who have family members like my son. I know that most of them are not as fortunate as I have been and will not have one extra penny to pay a US tax professional or have the luxury of any retirement savings to dip into.
It is harder for each generation, their work situations, raising young families and juggling finances and able to put some into savings for retirement. That the US would get one penny of the savings that my mom instilled in me to put away for my retirement and have a little left over to pass on to my children for “their inheritance” is foreign and legalized theft to me.
We saved, we hit busts in both the 80’s and 90’s. One company my husband worked for went under and took all our savings with them when we were hitting our forties and still had a kid with multiple expensive medical issues which incurred lots of dept due to not everything being covered. An experiemental treatment that saved his life was over 1500 a month just as said above company took all our savings. Some people plan their best and things just don’t work out. Had said above company not taken our savings we’d be not wealthy but, set not bad for these times. Put this together with a job problem with the current company doing cut backs and not giving raises where needed it’s been a real issue for a lot of people. Corps just aren’t treating their employees the way say my father was treated by the company he worked for in the early sixties at all.
Income disparity has been growing since the eighties busts. Scary stuff and all the more reason most families cannot afford to comply with CBT at ALL. Ironically I think some people who can afford expensive international tax lawyers won’t make out too bad over all. At least their meager savings won’t be wiped out.
FATCA despite the name isn’t really going to challenge the FATCATS and anyone who thought the U.S. government was going after “those” people really “off shoring” their billions of dollars hasn’t been paying attention. I think the reason home landers seem to love FATCA is that they are under the delusion that the government IS going after the so called one percent while they struggle to make ends meet. No sorry, home landers you have been sold a bill of goods, you know with a name that sounds like something is being done for your benefit. All that is happening is that average families in other nations are being targetted in lieu of actually doing anything that will harm the donors to the campaign coffers. Get it? FATCA is not about getting FATCAT tax evaders. Wake up.
@we never owned a house.. We rented all our married lives we saved and invested, Lost on silver investments, lost on the dot.com dive. but those pensions saved my bacon and the borrowing for our RRSPs. I bought a house after my husband died. He had life insurance . not the FATCA kind that you get penalized with.
Everyone I know, friend and family in the USA is working till their 70s or more. My dad retired but he had a union pension. He retired in the early 90s. My husband’s best friend in the USA worked in a union railroad job. He told us he would never be able to retire. He could not afford to. He owned a home though, an average one. My brother, also in a union job, lives in the USA and retired last year and is working side jobs to keep afloat.. How come the greatest country in the world has people working blue class jobs way to their 70s?. When friends or family get sick down there they have spaghetti dinners and raffles to help those who are sick with the medical bills.
In 2012 I was in Florida a couple months… I could see the difference that year in how people were living. It was not like on other visits, in the late 60s, 80s and 90s…There were more gated communities when I was there last. The inequality was really being seen.. Things were really getting run down.
No wonder those homelanders think we are rich FAT CATS…yet they want those who have the most most income to rule them. They want the rich fat cats who don’t want to give them health care like we have in Canada. They want those to rule them who don’t believe in having a minimum wage. Joe Bageant explained why people who have nothing think this way in his books. The poor folk think that someday they too will be rich. My beloved grandmother was on welfare in her last days, yet she played the lotteries and said she was going to be rich someday. America, the land of hope for the hopeless.
Rather than be responsible and fix CBT and FATCA the USG is now providing more assistance and cooperation in getting appointments to renounce… Basically once again saying don’t let the door hit you in the ass on your way out.
…and (then perhaps) we’ll see what legislation we can get passed to further punish you traitors. Just watch us.
I find it amazing that the US is going spending a few millions dollars in other countries…. to warn illegal immigrants that even if they get into the US… they will be sent home… but they couldn’t spend one fricking dollar to warn US persons about their crappy tax situation… wtf…
US_Person_Foreigner – the USG doesn’t want Central Americans coming across the southern border – especially the kids – b/c many of them would have legitimate refugee claims. A few million peddling misinformation is money well spent if you are Uncle Sam.
@YogaGirl
Hey… if the US is willing to cross foreign borders to claim what they think they are owed… what the heck… open up them borders to the rest… Since the US thinks they are the ruler of the world… let them take care of all the poor… fair is fair…
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Q&A “Bird Talk” from Canadian Snowbird Association — http://www.snowbirds.org/bird-talk — may show some of the knowledge deficit of Canadian snowbirders??
@ Calgary411 I don’t think the Canadian Snowbird Association is doing a very good job of “educating” their members either. One question asks about staying in the US 7-8 months and the response mentions being still eligible for provincial health care and that there is no problem with your Canadian pension. No mention of possible tax consequences which would have been part of the responsible answer. Most people think they can spend 6+ months over winter in the US every year and if they live near the border they fail to count their numerous trips across for lunch or shopping as part of their limit. Some will be getting nasty letters from the IRS next year now that the US has access to Canadian border crossing information.
The message is loud and clear, Calgary411: ignore past compliance issues!
@heartsick
I just emailed the Canadian Snowbirds.org site.
http://www.canadianlawsite.ca/vacationing-us.htm
How Long can Canadian Snowbirds Stay in the States?
My experience in telling snowbirds I know about this is that they do not believe me. even when sending them this.