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For many denizens of the great white north, the Canadian dream is to live in America. If you're a show-biz celebrity or sports hero you may already be living that dream. But for the rest of us, short of marrying an American, moving to and living in the United States can be a dauntingly complex transition.
Despite that, 25,000 to 30,000 Canadians realize this dream every year, says Brian Wruk, coauthor of a just-published book called The Canadian in America (ECW Press, Toronto, 2007.)
Before this book, the only major treatment of this topic of which I was aware was the annually updated The Border Guide, by Robert Keats (Self-Counsel Press). To be candid, after reading both books, I'm not enthralled enough with the good old US of A to even be tempted to jump through the hoops needed to pull this off. Those include immigration, visas, bank accounts, currency exchange, medical coverage, investments, pensions and departure taxes. It's enough to make your head spin -- just the prospect of filing two tax returns every year is enough to make me sing Oh Canada with renewed patriotism.
But whether drawn by business, romance, weather or other attractions, many Canadians think otherwise. Some turn to Calgary- based Transition Financial Advisors Inc., a partnership of the two co-authors (www.transitionfinancial.com/). Wruk and Terry Ritchie are certified financial planners who specialize in helping Canadian residents go south.
Edmonton native Wruk is a dual citizen of both countries. He did it the easy way by marrying a woman from Arizona but takes pains to point out that even this method is not a speedy one.
But even for those who eschew that route, there's hope for those who wish to escape the land of snow and high taxes.
Wruk makes no bones about the complexity of the undertaking. He notes in the book's introduction that casual observers may conclude from similarities in culture, language and currency that such moves will be simple. "In fact, the differences in taxation, investing, health care, wills, and estates are profound." I agree with Wruk when he describes the complexity involved as "mind-boggling."
The pair explodes dozens of myths and misconceptions. Did you know, for instance, that the much-coveted "green card" is no longer green in color? It's changed slightly each year to discourage counterfeiting and now requires a fingerprint and photo. A green card conveys lawful permanent residency status in the United States: 2.5 million of them are issued every year.
Once you've held it for five years (or three if you marry a U.S. citizen) you become eligible to apply for American citizenship. At the ceremony, the green card is exchanged for a valuable document called a Certificate of Naturalization, which is required to procure an American passport.
Another shoal on which Canadians may run aground is medical coverage. America has a fine medical system but does not provide the universal coverage Canadians
are used to. The authors say 50% of bankruptcies in the United States are caused by medical expenses. Canadian newcomers to the States may be covered for the first six months of their stay (depending on the coverage in their provincial plan) but after that, OHIP and similar Canadian plans may be "virtually no use to you."
After five years in the United States, a Canadian is eligible to pay into U.S. medicare at age 65. There are four parts to Medicare. Part A deals with hospital insurance and premiums cost US$410 a month or US$4,920 in 2007. To qualify for free Medicare part A at 65 you must have paid Social Security taxes for at least a decade.
Taxes and investments are two more trouble spots for the would-be ex-patriate. The much feared IRS (Internal Revenue Service) does not recognize the tax-deferred status RRSPs enjoy in Canada. Canadians in America must therefore declare to the IRS any investment income generated from RRSPs and pay tax on it. Fall afoul of this and you may face a US$10,000 fine or 5% of the value of the RRSP.
Nor can you simply move your RRSP into its American equivalent, the IRA.
"The current rules and regulations simply do not allow a Canadian RRSP to be rolled over to an IRA while maintaining the tax-deferred status in both countries." It's possible to collapse the RRSP and transfer the cash to the United States, then make an IRA contribution, but if you don't do it properly "you can end up being double-taxed."
The Canadian in America confirmed my own preference for the simple life of staying in Canada. But this book will be an essential reference guide on my desk any time I write on this topic.
