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tagesschau posted:The only tax-advantaged account the IRS views as legitimate is the RRSP. Everything else requires mountains of paperwork. I've been wondering about this for a while now and can't seem to find a legit answer. Hopefully someone here can shed some light. Obviously a TFSA isn't a tax sheltered account in the eyes of the IRS. Whatever your gains there would be taxable as capital gains. Along with that is the fact that you need to do paperwork for PFIC's and all that sort of stuff. So, that sucks. But my logic is this, if you're under the approx 150,000 income limit, and under the X amount of capital gains allowed without taxation, is a TFSA still worth it? Say you're a 75K a year kind of person with approx 10 thousand in your TFSA, I can't see a scenario in which you'll owe the IRS tax, so why not use a TFSA? I'm fully aware that the paperwork is a huge mess, but my thought is that it's such a huge mess that it would be fairly legitimate for the average person to maybe not do it 100% correct, and also for the IRS to maybe not spend their time double checking that you have 2 thousand dollars in some generic Canadian ETF and maybe didn't put down the exact holdings of an ETF quite right on your form. Throughout my filing history (I'm a dual) I've always gotten the feeling that the tax thresholds and laws exist for the IRS to go after whales, not Joe for Scarborough, and likewise the amount of effort it would take to maybe extract a couple hundred dollars in tax from Joe is not a net gain for the IRS and as such isn't done unless extraordinary circumstances exist. I know there's a legit rebuttal of "don't risk it" to be made here, and certainly a theory that such a relatively small amount in a TFSA isn't worth the risk, but I'd like to hear thoughts upon keeping a moderate sized TFSA, spending half a day once a year giving your best shot at incredibly convoluted paperwork, and then almost certainly never hearing a peep from the IRS in the future.
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Jul 16, 2021 03:44
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Shappa posted:if you're under the approx 150,000 income limit, and under the X amount of capital gains allowed without taxation, is a TFSA still worth it? Say you're a 75K a year kind of person with approx 10 thousand in your TFSA, I can't see a scenario in which you'll owe the IRS tax, so why not use a TFSA? You're not going to get a tax form for the income in your TFSA. That income is still reportable to the IRS, so you'd have to calculate the numbers yourself. Have fun with that. The paperwork for PFICs (Canadian ETFs and mutual funds) held outside an RRSP is so onerous as to really make it not worth it, whether you pay someone to do it or do it yourself. The estimated time burden for form 8621 is: quote:Recordkeeping: 16 hr., 58 min.
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Jul 16, 2021 04:38
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The part about PFIC's totally makes sense, for a dual using a TFSA buying ETF's like VTI or VOO would certainly be the way to go and I think I probably missed pointing that out originally. In terms of tax, I still think that my logic makes sense. As mentioned, the IRS deems earnings in a TFSA to be taxable, and you'd have to report those numbers to them. I'm not seeing what would be so terribly difficult about that though. Say I have $10000 in my TFSA at the start of the year, I put in 2500 throughout the year, and at the end of the year I have $14555. Seems pretty easy to subtract 12500 from 14555 to find out you made 2055 in gains that year, no? Now, I'm certain this isn't EXACTLY how it's supposed to be reported and maybe there's some additional paperwork that could and should be done with this event, but my original point was that if Joe from Scarborough files his return saying "hey I made 2055 in my TFSA this year" is the IRS going to look at that and spend X amount of hours to come to the conclusion that Joe actually needs to claim 3100 in gains and still owe nothing in tax? I still can't find reasoning to suggest that someone under taxable levels can't use a TFSA so long as they give their paperwork a decent try. Even if the IRS did suddenly have extra resources to pile into cases like the above theoretical one, it still seems like there's a reasonable case to suggest that Joe did everything with the best intention and it's not 100% right because it's a really hard situation to properly report. But, as mentioned, it seems like the odds of it coming to this are incredibly low, no? I'm not asking or talking this through to argue the point or proclaim I've found a loophole in tax law, I'm just legit confused as to why there's such a hard rule against duals having TFSA's when it doesn't seem to affect low to middle income persons.
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Jul 16, 2021 18:29
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None of what you said is how income reporting works, you are woefully ill-equipped for this and should definitely avoid using a TFSA.
Square Peg fucked around with this message at 19:48 on Jul 16, 2021 |
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Jul 16, 2021 19:43
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Shappa posted:Say I have $10000 in my TFSA at the start of the year, I put in 2500 throughout the year, and at the end of the year I have $14555. Seems pretty easy to subtract 12500 from 14555 to find out you made 2055 in gains that year, no? Capital gains (or losses  ) aren't calculated by subtracting the paper value of your account at the start of the year from the paper value at the end.Let's say you started on January 1, 2020, with 60 shares of VTI ($9,898.80), and didn't buy or sell anything during the tax year. On December 31, you'd have had 60 shares of VTI, worth $11,625, and $166.20 in cash. The $1,726.20 in unrealized capital gains isn't something that you'd report as having made in 2020, since you didn't sell anything. Now, think about how annoying it would be to keep track of multiple securities that throw off more than one type of income (ordinary dividends, qualified dividends, short-term capital gain, long-term capital gain). I think the main caution against the use of TFSAs by U.S. persons is because correctly doing it yourself is non-trivial, and paying someone to do it correctly is expensive enough to offset any tax savings, unless you have a lot of money.
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Jul 16, 2021 19:54
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Doesn't effect me, but curious regarding above posts RE: reporting income, but do you have to actually do that even if you don't withdraw funds from the account? That sounds like an incredible pain in the rear end. e: Simulpost ^^ answered my suspicion. Question to those with CIBC/Simplii - I've noticed recently every time I log into my account, I am forced thru a 2-factor ID. Text or email a code and 5 minutes to enter it. Is that normal or is my browser acting weird with cookies or something? It only used to do that on a new device before, but now it does it all the time regardless if I've used the device before or not. slidebite fucked around with this message at 19:59 on Jul 16, 2021 |
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Jul 16, 2021 19:55
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tagesschau posted:Capital gains (or losses Yeah that makes sense, what are your thoughts on just holding VTI? (or another ETF) Dividends four times a year, since it's not a foreign fund I believe that there's no need to report details pertaining to individual holdings within the ETF, you'd probably be able to cookie cutter a good portion of your return once you figured it out (or paid someone to do it right once) and again, is there a scenario in which the IRS says "well you know you incorrectly reported a long term gain as a short term gain or put your dividend in the incorrect column so after extensively examining and auditing this we've determined you still owe nothing"? I know we're not going to get past the "ignorance as an excuse" part of this and I'm aware of non-compliance of the idea I'm presenting, I still don't necessarily think it's definitely a good idea, just sort of talking out the learning process I suppose. On that, doesn't anyone know what the capital gains limit is before they become taxable for dual citizen filers? Is it the same as a citizen within the US? For some reason I have approx $10000 in my head but I don't know why.
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Jul 16, 2021 20:49
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Bit of an odd question: Someone in Idaho wants to buy a map from my organization. It's about $20 CAD plus postage and handling. What's the easiest/least painful way to go about sending a very small amount of money across the border? There's no online store or anything like that.
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Jul 20, 2021 20:13
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Outrail posted:Bit of an odd question: Someone in Idaho wants to buy a map from my organization. It's about $20 CAD plus postage and handling. What's the easiest/least painful way to go about sending a very small amount of money across the border? There's no online store or anything like that. Paypal? Square?
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Jul 20, 2021 20:43
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Wise? (Never used them but I would take a look if I was in that situation.)
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Jul 20, 2021 20:44
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Outrail posted:Bit of an odd question: Someone in Idaho wants to buy a map from my organization. It's about $20 CAD plus postage and handling. What's the easiest/least painful way to go about sending a very small amount of money across the border? There's no online store or anything like that. Don't forget low tech solutions like a cheque, which might be easier depending on the customer's demographic.
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Jul 20, 2021 20:48
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Hahaha, probably $20 in fees to deposit a foreign bank cheque plus lovely currency exchange rates. It's also a 3+ week hold. Online like paypal is the way to go.
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Jul 20, 2021 21:46
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unknown posted:Hahaha, probably $20 in fees to deposit a foreign bank cheque plus lovely currency exchange rates. It's also a 3+ week hold. Yeah that's what I was hoping to avoid. I guess I'll see if we have a functioning Paypal account : /
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Jul 20, 2021 22:32
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unknown posted:Hahaha, probably $20 in fees to deposit a foreign bank cheque plus lovely currency exchange rates. It's also a 3+ week hold. Is this an American thing? I've never paid fees to deposit a foreign bank cheque or currency exchange (the payor pays those). Yes it's a 3 week hold but it's also just a $20 sale.
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Jul 20, 2021 22:49
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Mantle posted:Is this an American thing? I've never paid fees to deposit a foreign bank cheque or currency exchange (the payor pays those). Same here. You get a lovely exchange rate, generally, but I’ve never been charged a fee in ~50 such occasions.
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Jul 20, 2021 23:26
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So it turns out paypal costs are pretty similar to the cost to deposit a foreign cheque, so that's the way we're going. lol
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Jul 20, 2021 23:33
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Subjunctive posted:Same here. You get a lovely exchange rate, generally, but I’ve never been charged a fee in ~50 such occasions. Ask the payor to pay in CAD. They can do it by writing CAD$20.00 on the cheque. Then the payor pays the cost of the exchange.
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Jul 21, 2021 00:28
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Why not BTC? It's hip and cool. and your $20 can be $25 or $15 depending on when you cash it
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Jul 21, 2021 03:47
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Chillyrabbit posted:Why not BTC? It's hip and cool. and your $20 can be $25 or $15 depending on when you cash it 
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Jul 21, 2021 16:11
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yippee cahier posted:The one gotcha is the the TFSA, though, right? I’ve only seen this in similar discussions online, so please consult a more authoritative source, but basically do some more research if you’re investing your earnings. you can't take full advantage of a tfsa but it still saves you money. you can use it to pay taxes on any gains in your tfsa at the us capital gains rate instead of the normal canadian income rate
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Jul 22, 2021 04:27
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the talent deficit posted:you can't take full advantage of a tfsa but it still saves you money. you can use it to pay taxes on any gains in your tfsa at the us capital gains rate instead of the normal canadian income rate As was already explained... The problem is not that you don't get tax exemption in the US, the problem is that the forms for declaring TFSA income are incredibly arcane on the account of being considered an offshore fund. Whatever small tax benefits you might get from the account are completely offset by the expense of filing it.
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Jul 22, 2021 05:09
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Insurance products are Canadian Finance, yeah? We talked about mortgage brokers ... what about auto insurance? My employer has some sort of a discount with Aha Insurance. Aha's best rate /w employee discount for condo contents insurance was comparable to my alumni rate from Economical though, Economical is slightly higher but also has more coverage (for contents not liability). So I'm not sure that just blindly going with Aha would be the best. How should I cross-shop car insurance? Is there a brokerage people like? I am a single male living in Toronto so, you know, RIP either way - although I am hoping to insure an AWD wagon with a small turbo engine so, you know, not exactly a Lambo.
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Jul 23, 2021 15:29
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Slowly working through vanguard ETFs. My lovely spreadsheet below indicates there are a few that have done well over 1, 3, 5 years and since inception. I'm never going to have time to get into it more than this, but I figure if you've done consistently well year after year you just be doing something right. It look like CAD hedged have consistently done better than unhedged, is there a good reason to get an un-CAD hedged ETF in this situation? I'm thinking: 50% VBAL or VGRO (VBAL=Vanguard Balanced ETF Portfolio (60% equity 40% fixed income), VGRO =Vanguard Growth ETF Portfolio (80% equity 40% fixed income) I'm thinking VGRO, it's a little riskier but I'm 'only' creeping up to 40 years so still have a few decades of mistakes to make. 50%: One of VFV, VSP, VUS, VUN I'm looking at a 5-30 year investment timeframe. 
Outrail fucked around with this message at 20:35 on Jul 25, 2021 |
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Jul 25, 2021 20:27
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If you're adding the latter for the sake of increased equity exposure why not just go for the 80/20 equity/FI split products instead of the 60/40? XGRO/VGRO instead of XBAL/VBAL. Don't use the 1 year historical data to make decisions imo because you're looking at a very unusual 12 months where equity will overperform relative to what you'd expect moving forward. Hedged has performed well because of the trending of the USD/CAD over that time. Lately my unhedged has been performing very well. E: it doesn't really make sense to run 50% VGRO and 50% general equity index ETF, you're just increasing your equity exposure to something like 90% of your portfolio instead of the 80%, unless you really want that extra 10% exposure and will rebalance to maintain that. e2: I personally don't bother with any fixed income allocation and use XSP and XQQ basically. VelociBacon fucked around with this message at 21:12 on Jul 25, 2021 |
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Jul 25, 2021 21:03
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Yep, last was a gong show, I'm focusing more on 3 and 5 year performance. VUN seems to be a better shot but the long-term differences between the four only seem to be about 0.5% so 
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Jul 25, 2021 21:08
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Also yeah, I want a higher exposure to the US market. The VGRO fund has 33% in U.S. Total Market Index ETF so I want to bump that up based on historical performance, this will mean I have about 66% in US stocks and the rest in Canadian/developed/global/emerging markets.
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Jul 25, 2021 21:14
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I used to obsess about all these details but I’ve decided life is too short. Now I just buy VGRO or VBAL depending on the account’s time horizon and call it a day.
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Jul 25, 2021 23:36
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I think of hedging currency in an equity fund as making a bet on how I think the currencies will move relative to one another, and my answer is "I don't have a clue" so I don't bother. As long as you aren't paying extra for the privilege, you're probably fine either way. Foreign bonds are a different story, you want to hedge those. I found this blog post and its followup fairly informative (also available in podcast form!).
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Jul 26, 2021 00:07
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Lexicon posted:I used to obsess about all these details but I’ve decided life is too short. Now I just buy VGRO or VBAL depending on the account’s time horizon and call it a day. Rapidly approaching this mindset. So you have VGRO and VBAL and that's it?
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Jul 26, 2021 17:07
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I'm 100% XGRO now too. When I get closer to retirement I'll worry about the mix.
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Jul 26, 2021 17:13
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Lexicon posted:I used to obsess about all these details but I’ve decided life is too short. Now I just buy VGRO or VBAL depending on the account’s time horizon and call it a day. Cold on a Cob posted:I'm 100% XGRO now too. When I get closer to retirement I'll worry about the mix.  I have some VXC in an open account because it's not worth the taxable event to switch over, and an HBP's worth of bonds in RRSP should buying a house ever make financial sense, but everything else is XGRO all day urry day.
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Jul 26, 2021 18:14
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Canadian Finance and Investing Thread - Just dump it in XGRO
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Jul 26, 2021 18:18
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Outrail posted:Rapidly approaching this mindset. I'm in my mid 30s and I have everything in XEQT, which is around 50% US holdings. My risk tolerance is probably higher than average though.
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Jul 26, 2021 20:15
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Outrail posted:Rapidly approaching this mindset. Yep, except for some other stuff in a taxable account that I don’t see the point taking the gain on.
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Jul 26, 2021 22:33
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I dumped everything in VGRO and stopped caring about stocks for the next 6-12 months  I feel between that, a small amount in an RRSP, and a bunch in Australian shares that I've forgotten how to access I think I've done the right thing. In terms of retirement, I am absolutely hosed unless I get a stupid paying job or inheritance from hereto unknown uncle Lester, but at least I'm investing what little I have in a somewhat sensible fashion. Thanks for the advice, thread. Outrail fucked around with this message at 00:36 on Jul 27, 2021 |
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Jul 27, 2021 00:32
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pokeyman posted:Wise? (Never used them but I would take a look if I was in that situation.) Discussion already ended but fwiw wise is only useful if you’re transferring money to yourself across a border, and it is an extremely useful solution for that purpose. But not for sending arbitrary amounts across a border to other individuals.
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Jul 27, 2021 05:59
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qhat posted:Discussion already ended but fwiw wise is only useful if you’re transferring money to yourself across a border, and it is an extremely useful solution for that purpose. But not for sending arbitrary amounts across a border to other individuals. Ah. Good to know!
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Jul 27, 2021 06:15
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We managed to save up $25k over the pandemic. Wife’s family is pushing us to buy a house. I currently have it all in the stock market. Wife wants a house, I don’t. This wasn’t a conversation until we had money for a down payment. We live in the North (Cochrane area). Would you guys suggest holding onto our money and not getting a mortgage or buying a cheap fixer upper? I don’t have friends or family to ask. Foster kid who works too much to have a social life, lol. We looked at a house for $149k, 3bdrm 2 bathroom, with about $50k of working needing to be done and that was the only decent option.
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Aug 1, 2021 16:17
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What's your current housing situation? Why is your wife's family pushing y'all? How long do you foresee yourself living where you'd buy? Buying a house seems like a pain in the rear end, and managing the project of fixing one up sounds even worse (I'm not at all handy and would just be hiring most of it out). Unless renting is truly terrible or costs like double+ what owning costs in your area, I vote "rent and invest".
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Aug 1, 2021 16:58
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pokeyman posted:What's your current housing situation? Why is your wife's family pushing y'all? How long do you foresee yourself living where you'd buy? We’re currently leaving the Arctic (Nunavik region) so we have no housing, no furniture, no anything. We’ll be sleeping at her family’s house until we figure out what we’re doing. A mortgage on a 3bdrm house is roughly $550 for us vs renting a 3bdrm apartment is $1200-1400 plus about $200-300 in utilities during the winter. Small town housing prices are still a wonderful thing… it’s just that no one up here seems to take pride in maintaining their properties.
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Aug 2, 2021 17:48
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