The Canadian Snowbird in America: Professional Tax and Financial Insights into a Temporary U.S. Lifestyle

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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...
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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 acquisition and financing of U.S. real estate is also covered. The Canadian Snowbird in America provides a comprehensive overview on financial management issues including the implications of opening U.S. bank and investment accounts, the management of Canadian investment and registered accounts, cross-border retirement planning and foreign exchanges issues. Readers will learn strategies to deal with a fluctuating loonie. Snowbirds will gain valuable insight into how and what their provincial health plans cover while they are in the U.S. Understanding what to look for in a travel insurance policy is covered as well. Incorporating recent changes in the Canada-U.S. Income Tax Treaty and U.S. income and estate tax rules, this book is an invaluable resource for Canadians who spend time or invest in the United States. If you are a Canadian looking at adopting a temporary lifestyle in the U.S., you cannot afford to head south for the winter without this book.
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Editorial Reviews

From the Publisher

"A good resource for financial planning advice on cross-border issues."  —Saskatoon StarPhoenix

"For a closer look at U.S. Tax and financial-planning nuances and seasonal-residency and red-tape issues, pick up the book."  —Boston Herald

"Current enough to refer to the Loonie nearing parity with the Greenback and includes tips on road food for your clients who don’t like to fly."  —Advisor's Edge

"Ritchie’s book should be required reading."  —Kerby News

"Will definitely appeal to that segment of the Canadian population that travels south regularly. If you are among those people, consider The Canadian Snowbird in America to be required reading."  —Scene Magazine

Scene Magazine
Will definitely appeal to that segment of the Canadian population that travels south regularly.
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Product Details

  • ISBN-13: 9781550228045
  • Publisher: ECW Press
  • Publication date: 10/28/2007
  • Pages: 240
  • Product dimensions: 6.00 (w) x 8.90 (h) x 0.60 (d)

Meet the Author

Terry F. Ritchie is a partner in the firm Transition Financial Advisors with offices in Canada and the United States. He is an IRS-enrolled agent and the only financial advisor to hold the Canadian registered financial planner (RFP) and the U.S. certified financial planner (CFP) designations. He lives in Edmonton, Alberta. Brian D. Wruk has dual citizenship in Canada and the United States. He is a registered financial advisor (RFA) and the founder of Transition Financial Advisors. He lives in Gilbert, Arizona. 
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Read an Excerpt

Every year hundreds of thousands of Canadians cross into the U.S. seeking warmer climates during those cold Canadian winters. These individuals are collectively referred to as “snowbirds.” If you’ve purchased this book, it’s likely because you, or someone you know, is a snowbird. Some of you may already be familiar with some of the unique financial, income, and estate tax issues that you face in the U.S., and this book will prove to be a valuable resource for you. For others, this book will provide you with the detailed information you need to help you navigate the slippery slope of becoming a snowbird.

According to the Royal Bank of Canada, over 1.5 million Canadians head south for the winter for a minimum of at least two months. The Canadian Snowbird Association suggests that more than 750,000 Canadian snowbirds head to the southern United States each winter for an average of 4.7 months. Regardless of which number it is or for how long, that’s a lot of “birds flying south” for the winter.

While in the U.S., you will likely participate in financial transactions involving U.S. dollars. You might, for example, purchase a house or condominium in Arizona, Florida, California, Texas, or Hawaii. You might reside in it for a few months of the year, rent it out at other times, and hopefully sell it at a profit in the future — and in U.S. dollars! Some of you might get sick or suffer an accident while in the U.S. Unfortunately, some of you might pass away owning U.S. assets and have to pay the dreaded U.S. estate tax. It alone can compromise your retirement savings and in turn the future lifestyle of a surviving spouse. In addition, the confusion among family members that can arise in such circumstances can be mind–boggling and, in our experience, lead to hasty decisions with long–term effects.

Crossing the border, spending time in the U.S., and engaging in various financial transactions carry legal and tax implications both in Canada and in the U.S. The tax laws are distinctly different between the two countries. Becoming more aware of the financial, immigration, health care, tax planning, and estate planning issues that you will face allows you to make the most of your snowbird lifestyle.

Having practiced in the areas of Canada–U.S. financial and transition planning for many years and having written about the unique financial planning requirements of Canadians and Americans in both countries (see our companion books The Canadian in America: Real Life Tax and Financial Insights into Moving and Living in the U.S. and The American in Canada: Real Life Tax and Financial Insights into Moving and Living in Canada, both published by ECW Press), we thought a book specifically written for the needs of snowbirds was required.

It is not uncommon for us to work with snowbirds who ultimately decide to pursue their dream of permanent residence in the U.S. either through meeting and marrying a U.S. citizen or through potential U.S. immigration planning strategies. We hope this book is a good starting point for whatever type of lifestyle (temporary or permanent) you desire in the U.S. We have tried to cover the most common financial, immigration, tax, and estate planning issues that you will face as a snowbird.

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Table of Contents

Preface     xiii
Introduction     xvii
Don't Worry, I'll Be Back: Crossing the U.S. Border     1
Entering the United States     1
The B-2 Visa     2
Documents Required to Cross the U.S. Border     4
Obtaining a Canadian Passport     4
The Border Binder     6
Automated Entry/Exit System?     8
U.S. Retirement Visa?     9
Crossing the Border with More than {dollar}10,000     9
Canadian Rules     9
American Rules     10
Taking Medication to the States     11
Taking Pets to the States     13
Taking Personal Items to the States     14
Driving Your Vehicle to the States     14
The Use of Canadian Satellite TV in the States     15
Coming Back Home     17
Additional Tips     17
Welcome to the United States - Now Pay Up! U.S. Tax Issues for Snowbirds     19
U.S. Income Tax Filing Requirements of Snowbirds     19
The Green Card Test     20
The Substantial Presence Test     21
The Closer Connection Exception     23
Canada-U.S. Tax Treaty Tie-Breaker Provisions     28
Taxation of theRental of U.S. Real Estate     29
U.S. Tax Implications     30
Canadian Tax Implications     31
Example of the Tax Implications of Renting a U.S. Property     31
Taxation of the Sale of U.S. Real Estate     33
U.S. Tax Implications     34
U.S. Withholding Tax on Real Estate Proceeds     36
Example of U.S. Withholding Tax under FIRPTA     38
Example of Sale of U.S. Real Estate     39
Obtaining a U.S. ITIN     41
Taxation of U.S. Gambling Winnings     43
U.S. Withholding Tax Recovery Firms     46
U.S. Tax Scam Directed at Unsuspecting Snowbirds     46
Additional Tips     47
A Home Away from Home: Purchasing U.S. Real Estate     49
American and Canadian Mortgage Differences     49
Amortization     50
Fixed Interest Rate     51
Prepayments     52
Down Payment     52
Closing Costs     53
Points     53
Impound (Escrow) Accounts     54
Obtaining a U.S. Mortgage     54
Common U.S. Real Estate Terms     55
Ways to Own and/or Title U.S. Real Estate     57
Sole and Separate      57
Joint Tenancy     57
Community Property     58
Tenancy in Common     58
Corporations. Trusts, Partnerships     58
Money Doesn't Grow on Trees: Money Management for Snowbirds     61
U.S. Banking for Snowbirds     62
Royal Bank of Canada     62
Bank of Montreal     62
TD Canada Trust     64
Canadian Imperial Bank of Commerce     55
National Bank of Canada     65
Scotiabank     66
HSBC Canada     67
ATB Financial     57
Desjardins     58
NYCE Payments Network     68
Opening a U.S. Bank Account     73
Taxation of U.S. Investments     75
U.S.-Source Interest-Bearing Investments     75
U.S.-Source Dividends     76
Capital Gains     77
Management of Canadian Investment and Retirement Accounts in the United States     77
Foreign Exchange Issues     78
Myth: You Lose Money When You Convert     79
Myth: Someone Knows Where the Exchange Rate Is Going     81
Myth: Wait to Convert     83
How to Calculate Exchange Rates     85
Fact: There Is an Expense to Converting     86
Strategies to Exchange Canadian Dollars for American Dollars     86
Additional Tips     88
Till Death Do Us Part: U.S. Estate Planning Issues for Snowbirds     89
The Previous U.S. Non-Resident Estate Tax Environment     92
The New Prorated Unified Credit     93
Small U.S. Estates     94
Marital Tax Credit     95
Canadian Foreign Tax Credits for U.S. Estate Tax     96
The Current and Future U.S. Non-Resident Estate Tax Environment     97
Calculating Your U.S. Non-Resident Estate Tax     99
Determine the Value of Your Worldwide Estate     99
Strategies to Reduce, Defer, or Eliminate U.S. Estate Tax     103
Sell U.S. Shares in Your Canadian Investment Accounts     105
Gift U.S. Property Prior to Death     105
Ensure Your U.S. Worldwide Estate Is below U.S. {dollar}2 Million     106
Hold U.S. Shares in Canadian Mutual Funds     106
Hold U.S. Shares through a Canadian Corporation     107
Use Life Insurance to Cover the Taxes at Death     107
Rent Rather than Purchase U.S. Vacation Property     108
Hold Property Jointly - But Be Careful!     108
Create Tenancy-in-Common Ownership for Valuation Discounts     109
Finance U.S. Real Estate Using a Non-Recourse Mortgage     110
Holding U.S. Property through a Canadian Corporation     112
Purchase U.S. Real Estate through a Canadian Resident Discretionary Trust     113
Purchase U.S. Real Estate through a Canadian Partnership     114
Beware of U.S. Living Trust Seminars     116
Filing a U.S. Non-Resident Estate Tax Return     116
Summary Comments     117
Will Planning     117
Will Planning Tips for U.S. Property     118
Probate     119
Powers of Attorney     120
Additional Tips     121
Help! I've Fallen, and I Can't Get Up: Risk Management for Snowbirds     123
Provincial Health Care Plans     123
Choosing a Travel Insurance Policy     125
Provincial Out-of-Country Coverage     127
British Columbia     127
Alberta     129
Saskatchewan     129
Manitoba     130
Ontario     130
Quebec     132
Nova Scotia     134
Prince Edward Island     135
Newfoundland and Labrador     135
New Brunswick     137
Property Insurance     137
Mayday! Mayday! Finding Help     139
Selecting a Qualified Canada-U.S. Advisor     140
Competence     140
The Planning Process     143
Client Relationship     144
Nature of the Firm     144
Regulatory Compliance     146
Compensation     147
Our Firm     151
Snowbird Resources and Relevant Websites     155
List of Canada-U.S. Border Crossings     157
Canada-U.S. Advisor Interview Checklist     162
Canada-U.S. Differences     166
Index     177
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Customer Reviews

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  • Posted September 20, 2013

    Excellent reference book.  Easy to follow and contains a lot of

    Excellent reference book.  Easy to follow and contains a lot of good information.  Should be updated, but still an excellent starting point for any questions you might have about spending a lot of time in the USA...

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