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Discussion Starter · #1 ·
Not sure to whom I am replying- new to this whole thing. Trying to contact Bevdeforges as I have learned much from past posts. My wife and I are dual US/Canadian citizens, originally US. We have been living and working (making Canadian salary) in Ontario for 17 years. We have rrsps, tfsas and other bank accounts here. We have Iras, Roths and California state pension in US. We wonder where the the best retirement location would be from a tax standpoint. Also thinking of buying house in Ontario. Good idea? Bad Idea?
 

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We wonder where the the best retirement location would be from a tax standpoint.
A few oil rich countries in the Middle East have almost no general taxation. Examples include Saudi Arabia, Qatar, Oman, and the UAE. At present they have no VAT, no sales taxes, no personal income taxes, no property taxes, no payroll taxes (except on Saudi citizens), and (with a few exceptions such as alcohol) low or zero duties and excise taxes on consumer products. (Though the alcohol tax is effectively infinite in Saudi Arabia. Alcohol is not permitted there, and I wouldn't recommend violating the Saudi criminal code.)

Was that the answer you were looking for? ;)
 

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Thank you for all of the great advice. There are certainly many dimensions to this question, and all of you have provided me with some serious food for thought. My reason for considering naturalization is not primarily financial, but rather personal. I have been in the United States for pretty much my entire working life, and I have come to self-identify more with this country than my home country. (Which is saying something, given that I was a Canadian Olympian.) As far as I am concerned, I am here to stay. My wife, on the other hand, doesn't feel quite so strongly and she has been informed by others about the tax disadvantages should we ever return home.
You should follow your heart.

As far as taxes go, giving up a green card after long-term residence (8 of the last 15 years, I think) has almost the same tax consequences as giving up citizenship. So you may already be in a situation where tax-wise, it won't matter whether you take US citizenship or not, even if there were a possibility of relinquishing it later. (I.e., you may have already stepped in it, so there may be no reason not to get the perks that come with it.)
 

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OK, all kidding aside - I assume you're asking about retiring in Canada vs. the US. And a long-lost principle from my B-school days comes to mind here: Don't make any important decision based solely on the tax implications. You make these kinds of decisions based on all the facts and circumstances, and you deal with the tax aspects as they arise. (Of all considerations, it's the tax aspects that are most likely to change anyhow.)

As dual citizens, you're going to have to file US tax returns forever anyhow (well, unless you renounce - but even that's not free). So whether you live in the US or Canada, things aren't going to be much different on the tax side of things. (Since you have Canadian savings/retirement instruments, I assume there will continue to be some level of tax reporting, even if you are in the US. But I know very little about Canadian taxation.)

The Canadian accounts will need to be reported on as you have been doing for the last 17 years. So no big change there. The IRA, Roth and California pensions are taxed pretty much the same whether you're living in the US or in Canada. (Do check the US-Canadian tax treaty to see if there is any specific indication about the Roth.)

And, if you've been reporting the gains on the Canadian accounts on a regular basis, then when you take money out of them, it's not a taxable event for the US returns because it has already been "taxed" (or at least reported as income) for US purposes.

So, between the US and Canada there isn't really any overwhelming tax reason to do anything other than what you want to do. If you fancy shipping out to some other overseas location, then you add one more layer of complication, as you'll retain at least the US filing obligation plus whatever the Canadian government may require regarding the various savings and retirement accounts you have, and have to deal with a third government's taxation system. So, the house in Ontario is looking good.
Cheers,
Bev
 

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What happened to this thread? Did the original poster request deletion? If so, you should probably also delete my reply to him above, since it contains potentially identifying information in the portion quoted from his post.
 

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The deleted post was from someone other than the original poster and was not of direct relevance to the subject of the thread.
Cheers,
Bev
 

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Discussion Starter · #7 ·
Bev, Thank you very much for your thoughts. It is always good to hear opinions from those with evident experience and knowledge. Doesn't make the decision any easier but then what life changing decision is? Or should be?
Cheers,
Ric
 

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there is one thing in your circumstance that will not effect where you live but it will effect your pension income and that is the Windfall elimination provision(WEP) of Social Security . It will cause your social security benefit to be reduced because of your CPP pension. Your social security benefit could also be reduced because of your California state pension if social security tax was not paid on it. I am also a dual US-Canadian citizen and am effected by the WEP and am in the appeal process . As to location to live my decision is going to be based on Family location, climate and cost of health care. For me US wins on the first two and Canada on the third.
 

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Many factors influence one's monthly retirement benefit from U.S. Social Security. But why would the Windfall Elimination Provision deserve special mention here? It's one of the few benefit factors most retirees cannot control and most retirees shouldn't even try to control. It just is -- it's part of the benefit calculation. The original poster is still going to collect all his entitled retirement benefits. (I hope!)

The only way I can imagine that the WEP would influence a retirement country decision -- the original poster's question -- is if both these things are true: (a) the original poster had not estimated his future U.S. Social Security benefits correctly and did not take into account the WEP; (b) the correction of that omission then "skews" the anticipated U.S. dollar v. Canadian dollar benefit mix in a direction such that different exchange rate and inflation divergence risks tip the decision in another direction (tipping a bit toward Canada, presumably).

With respect to (a), in my observations the U.S. Social Security Administration generally provides good advice -- including all benefit factors, not only the WEP. Yes, it's important to get reliable estimates of all retirement benefits, inclusive of all factors (such as age to start collecting, which the original poster can probably control). But isn't that obvious already, or am I missing something more profound?
 
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