Us Citizen - Immigrating To Canada From The Us

[Tiger7Moth]

Here is the reason for the post and desire for info:

I have been living in Thailand for 5 years and for numerous reasons, I would like to be able to spend a few months a year in North America and a few months in Thailand.

A significant portion of my income will come from government pension that US citizens must pay into throughout their working careers (called Social Security) in the US. Beyond strange, while reading various US Social Security documents I found something bizarre. Although, if I lived in the US, 85% of my Social Security income would be considered regular income and put me into a higher percentage tax bracket - meaning, I would pay I higher percentage of tax on all my income including 85% of my Social Security income - their are 6 countries that I could live in and Social Security would not be taxable and Canada is one of the 6.

So, if I made Canada my residence, I would have very substantial tax savings and would be able to easily visit my family in the US (not to mention that the savings could subsidize my staying in Thailand during the really cold months).

Why, out of all the countries in the world (including) the US, there are 6 in which I could live and pay substantially less US tax is far beyond me (Germany is the only other one of the 6 that I remember).

Thanks for any help

[Svenn]

I don't know the answer, but just curious- so the law is you don't have to pay income taxes if you become a resident of a different country? yet if you become a resident of a different country, the US will still send you Social Security payments?

If you don't have a US bank account, don't plan on doing any non-cash transactions in the US, and if you don't own property there , there's nothing the US gov't can seize to make you pay your taxes I don't think. I'm pretty sure Immigration doesn't have access to your tax information when you go through at the airport...it seems odd that a citizen would be denied entry just because of tax issues. So in other words, you might be able to get away by just not paying taxes at all right? What are they going to do? Fly an IRS agent over to your home in Thailand?

Ethically it makes sense- if you're not living in the US and therefore extracting any benefit from its public infrastructure, you shouldn't have to pay taxes anymore.

[Jingthing]

Legal problems with the IRS can crop up when you have any business to do with the US embassy, including passport renewals.

I don't know why Canada would want you. They have no retirement visa option. They are open to productive working age immigrants and relatives of Canadians. I reckon you are barking up the wrong Maple Leaf if you expect to become a legal resident of Canada.

Edited November 5, 2009 by Jingthing

[Tiger7Moth]

I don't know the answer, but just curious- so the law is you don't have to pay income taxes if you become a resident of a different country? yet if you become a resident of a different country, the US will still send you Social Security payments?

If you don't have a US bank account, don't plan on doing any non-cash transactions in the US, and if you don't own property there , there's nothing the US gov't can seize to make you pay your taxes I don't think. I'm pretty sure Immigration doesn't have access to your tax information when you go through at the airport...it seems odd that a citizen would be denied entry just because of tax issues. So in other words, you might be able to get away by just not paying taxes at all right? What are they going to do? Fly an IRS agent over to your home in Thailand?

Ethically it makes sense- if you're not living in the US and therefore extracting any benefit from its public infrastructure, you shouldn't have to pay taxes anymore.

I receive a pension from a former US employer - taxes are subtracted before deposit is made into my account. I am not happy to pay taxes to the US since I don't live there and don't receive any benefits from the US. But, there is no way to avoid this.

With regards to the US Government pension, Social Security, I can have this automatically deposited into Bangkok Bank - but, the US considers this income (85% of Social Security) and so, taxes again are automatically deducted.

As I mentioned, the special exception, for unknown reasons, is that there are 6 countries that I can reside in and I am exempt from Social Security income tax (and, Social Security payments are not counted at all, so the % I pay on my retirement income is less) - all in all, a big benefit - hundreds of thousands of baht each year!! Included in the 6 countries are Canada and Germany - I forget the others. Makes no sense at all. But, if I reside in Canada or Germany (or one of the other 4), I save hundreds of thousands in baht each year.

[Tiger7Moth]

Legal problems with the IRS can crop up when you have any business to do with the US embassy, including passport renewals.

I don't know why Canada would want you. They have no retirement visa option. They are open to productive working age immigrants and relatives of Canadians. I reckon you are barking up the wrong Maple Leaf if you expect to become a legal resident of Canada.

Hey, thanks for the reply.

"I don't know why Canada would want you. They have no retirement visa option. They are open to productive working age immigrants and relatives of Canadians. I reckon you are barking up the wrong Maple Leaf if you expect to become a legal resident of Canada.".

This is the type of information I was interested in. In order to say "they have no retirement visa options", you must have some knowledge that I don't have. All I know is that some Americans have immigrated to Canada in the past. I would be in a position to buy a house in Canada - are there other Visa options?

Regarding legal problems with the IRS, I would not have any legal problems. My reference that stated the 6 countries (Canada being one of the 6) that said there is an exemption from Social Security tax was a US Gov. Social Security publication. I would be doing nothing illegal.

So, if you have some knowledge, as indicated by ""they have no retirement visa options", I would appreciate any further info you can provide. Thanks.

[Groongthep]

Just to clear up a point that could cause some confusion. The US considers 85% of your Social Security payment taxable income. That 85% is added to any other taxable income you might have, such as a company pension or investment income and taxes the entire combined amount at the bracket rate in which that amount falls. The final taxable amount is arrived at after any legal deductions such as mortgage interest payments (and often many others) are subtracted.

The US government does not tax Social Security payments at a rate of 85% but taxes 85% of the payment as regular income.

[Jingthing]

From the moose's mouth:

http://www.cic.gc.ca/english/index.asp

I think this sums it up. The OP is none of these:

In Canada there are three categories of immigrants: Family Class (closely related persons of Canadian residents), Independent Immigrants (admitted on the basis of a point system that account for age, health and labour-market skills required for cost effectively inducting the immigrants into Canada's blue-collar labour market) and Refugees.

http://en.wikipedia.org/wiki/Immigration_to_Canada

Like I already said, no retirement visa option. I think there is an investment option but I don't think buying a house cuts it, probably more like starting a business employing Canadians. You could always contact a Canadian immigration attorney.

Have you considered if you became a Canadian resident, that you might be subject to Canadian tax?

Edited November 6, 2009 by Jingthing

[Tiger7Moth]

Just to clear up a point that could cause some confusion. The US considers 85% of your Social Security payment taxable income. That 85% is added to any other taxable income you might have, such as a company pension or investment income and taxes the entire combined amount at the bracket rate in which that amount falls. The final taxable amount is arrived at after any legal deductions such as mortgage interest payments (and often many others) are subtracted.

The US government does not tax Social Security payments at a rate of 85% but taxes 85% of the payment as regular income.

I did say, "but, the US considers this income (85% of Social Security)". But, certainly your explanation was more complete and explicit.

[Tiger7Moth]

From the moose's mouth:

http://www.cic.gc.ca/english/index.asp

I think this sums it up. The OP is none of these:

In Canada there are three categories of immigrants: Family Class (closely related persons of Canadian residents), Independent Immigrants (admitted on the basis of a point system that account for age, health and labour-market skills required for cost effectively inducting the immigrants into Canada's blue-collar labour market) and Refugees.

http://en.wikipedia.org/wiki/Immigration_to_Canada

Like I already said, no retirement visa option. I think there is an investment option but I don't think buying a house cuts it, probably more like starting a business employing Canadians. You could always contact a Canadian immigration attorney.

Have you considered if you became a Canadian resident, that you might be subject to Canadian tax?

Thanks for the link. Perhaps I will go to Wat Pho, learn to do Thai massage and open a business. Although, I am joking a bit when I say this, I used to live in Boulder, CO in the US and some guy did Thai massage and charged 3,500 baht an hour - many wealthy people in Boulder and not a super high rate for a massage (in Boulder)!

[CosmicSurfer]

As a Dual Can/Am citizen, let me put in my 2 cents...

An American or Canadian can visit and stay in each others countries for up to 6 months MAXIMUM on a straight Visa-on-arrival basis.. these are Tourist visas with no working privilages. (6 months and one day is over-stay!)

If the OP wants to spend 6 months in N.Am and 6 Months in Thailand, then there is no Issues in Canada preventing him from doing this... Time spent in the USA visiting friends & family, etc, would be deducted from the Time in Canada during the 6 month period.. As It is counted as 6 months in one Year.. not 6 Calendar months in a block.

Clear?

CS

[Jingthing]

The OP wants to claim Canadian RESIDENCE for tax purposes. Yes, he could stay there half the year, but claiming residence there based on tourist visas on arrival sounds very dicey.

Edited November 8, 2009 by Jingthing

[hhgz]

tiger7moth,

Quoting the SSA website: "If you are a U.S. citizen or U.S. resident, up to 85 percent of the Social Security benefits you receive may be subject to the federal income tax."

Accordingly, if you are a US citizen, and claim residence in Canada, your SS benefits are still taxable. If you are NOT a US citizen, there are several countries that have special agreements with the US government, and your SS benefits will be untaxed, or taxed at a low rate.

Quoting the SSA website: "The United States has such treaties with Canada, Egypt, Germany, Ireland, Israel, Italy, Japan, Romania, Switzerland and the United Kingdom (defined as England, Scotland, Wales and Northern Ireland). Under the tax treaty with Switzerland, benefits paid to residents of Switzerland who are not U.S. citizens are taxed at a rate of 15 percent. In addition, the Social Security benefits paid to individuals who are both nationals and residents of India are exempt from this tax to the extent that their ­benefits are based on U.S. federal, state or local government employment. (This list of countries may change from time to time.)"

Edited November 8, 2009 by hhgz

[PeaceBlondie]

Don't care to go into the computations, but as a retired IRS tax auditor receiving SS old-age payments and a taxable IRS pension, none of my SS is taxable - 0%. It depends on "Modified AGI."