Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

Knowing your status is key to breaking up with the IRS through expatriation

By Elena Hanson

Special to the Financial Independence Hub

Giving up U.S. citizenship isn’t an easy decision to make, especially since there are benefits to having it. For example, if you are career-minded and interested in the larger, more diversified U.S. economy, or you want to find employment with a Canadian affiliate of an American company, holding the status of U.S. citizenship can be an advantage.

But when it comes to taxation, there are plenty of reasons to consider cutting ties with the Internal Revenue Service (IRS).

For starters, being a U.S. citizen can be, well, taxing. The tax obligations and restrictions of U.S. citizens, even those who are non-resident, can be onerous, to say the least, and include such things as:

  • Filing U.S. tax returns and paying U.S. income taxes.
  • Paying gift tax on gifts to any recipients, including a spouse if he/she is not an American, if the gift exceeds a certain threshold.
  • Restrictions on types of financial assets in order to avoid additional reporting or double taxation.
  • Restrictions on how to run a non-U.S. based business or on how to be part of non-U.S. family wealth.
  • Additional complexities with non-U.S. inheritance.
  • Full disclosure of a financial accounts and assets, even those received through employment, if the American has a signature authority.

These obligations apply to any U.S. citizen, no matter where they reside or where their assets are held. This includes those who are considered ‘Accidental Americans’ – people who discover for the first time that they are considered U.S. citizens.

Yes, that might be the case even if you’ve spent your entire life as a citizen and resident of Canada, so it is important to explore how to become tax compliant south of the border. Feigning ignorance will not likely save you from the long arm of the IRS, and the only thing costlier than paying and/or reporting U.S. taxes is not doing so. In fact, the fines and penalties associated with willfully ignoring obligations can be financially devastating.

So, knowing your status is the first step in changing your status.

The only way to relieve yourself of these obligations is to renounce U.S. citizenship. The legal process involves an appointment with the U.S. consulate, remitting a USD $2,345 administrative fee to receive a Certificate of Loss of Nationality, and the physical surrender of your U.S. passport.

From a tax perspective, renouncing may also require paying U.S. taxes and filing additional forms disclosing all financial aspects of your life, but it is probably the lesser of two evils over the long term; by retaining U.S. citizenship you must file lengthy tax returns with potentially hefty penalties, and possibly pay taxes annually).

Obviously, this process is more straightforward for those who are aware of their U.S. citizenship and already have a social security number. For those to whom U.S. citizenship has come as a surprise, you may have to acquire a social security number in order to file your first … and maybe shortly after that, your last U.S. tax return. Continue Reading…

Supporting the Finances of Seniors in the age of COVID-19

iStock

By Rick Lowes 

Special to the Financial Independence Hu

COVID-19 continues to have a tremendous impact on every aspect of our lives, from the way we work and connect with friends and family to how we shop and bank. Yet as we look at the world around us changing, the need for social distancing measures and self-isolation has accelerated the pace of digital adoption, especially among a population that is considered highly vulnerable to this pandemic.

While ensuring there continues to be support for seniors available through in-branch visits, we want to keep our seniors safe and that means more focused efforts by phone, and stepping up support to  help seniors bank online.

RBC recently initiated customized proactive outreach to seniors, reinforcing the message “be safe, stay home” – and we’ve seen a very positive response from seniors. In the span of just a month, we saw an 84% increase in digital enrollment among clients aged 60+ and a 210% rise in digital activity from seniors who were enrolled, but had not actively used online banking for at least six months. The most actively used online and mobile banking options per week: sending electronic money transfers and making payments.

We understand online or mobile banking can feel intimidating for Canadians of all ages who are first time users. This made it crucial to ensure we could make online and mobile banking as simple and convenient as possible. We set up our “bank easy” hub, with how-to videos and very clear instruction guides, to show how easily – and securely – anyone can bank digitally, using online and mobile banking to do their everyday transactions.

Front-of-the-line access for those over 70

With a significant rise in calls to our contact centre, we are also prioritizing calls from clients over the age of 70: and ensuring seniors get this same “front of the line” access for branch visits. Continue Reading…

What changes happen to the body as we age

Image courtesy of Hartmann Direct

By Ruth Hilton

Special to the Financial Independence Hub

Every moment of every day, a cell in our body dies. Don’t worry, it is programmed to do this. However, this continual shedding of cells poses questions about how our body changes with age. We expect to change as we grow older, but we might wonder what is natural and what should cause us worries. Here we explore these changes, so you can know what to expect.

Aging Cells

Our bodies are a composite of millions upon millions of cells. As our cells age, they will function less well and eventually must die. The genes within some cells are programmed to cause this death. Cells can only divide a set number of times. When a cell can no longer divide. The process of apoptosis, as it is called, is a way of old cells making way for new cells. The body you have now is entirely different from the one you had 9 years ago.

Cells can also be damaged by harmful substances. Further damage can be caused by free radicals, which is a natural by-product of the work of cells. There are many foods you can help that will counter the effects of free radicals, and this is worth some research.

Loss of function in our body is usually a result of disorder and not because of this aging process within the cells.

Aging Organs

Obviously, our organs operate as well as the cells that make them up. When older cells die and are not replaced, our organs begin to work less well. Our testes, ovaries, liver and kidneys lose a marked number of cells as we age. The more cells that are lost, the less well the organ will work.

The natural consequence of this loss of cells is that our organs do not function as well as we grow older. However, not all organs lose cells. Our brain does not lose cells through aging, for instance. Most cells are lost in the brain from dysfunctions, such as a stroke or progressive nerve damage.

The function of our internal organs peak at the age of thirty and slowly decline from this point. However, when we peak, we have significantly more capacity than our body needs.

Therefore, declines in health from our organs are unlikely to a result of our age.

Bones and Joints

The first signs of aging usually begin with the musculoskeletal system. Our bones become less dense. Women are more likely to struggle with reduced bone density, known as osteoporosis. This can make the chance of a fracture more likely. The speedup of this process for women is directly linked to the menopause and reduced estrogen in the body.

Bones also decline with age because our body becomes less adept at absorbing calcium. Calcium is an essential mineral for strengthening our bones. Some bones are more likely to weaken that others, for instance, the hip is more likely to break, as are our wrists.

The cartilage at our joints is also susceptible to wear and tear due to age. The weakening of cartilage means that the bones do not rub well over each other, and this can make them open to injury. The consequence of reduced cartilage is arthritis, which is one of the most common disorders of our older age.

Muscles and Body Fat

Our muscles mass will start to decrease from about the age of thirty and will continue to decline into our old age. The decline is partly due to a decrease in physical activity, as our lives slow down, and partly due to a reduction in growth hormones in the body. We slow down as a result of muscle decline too. We lose the fast-twitch muscle fibres first, which then, as a consequence, results in the decrease in the slow-twitch muscles.

However, our bodies only lose about 10 – 15% of our muscle mass naturally over a lifetime. Further loss of muscle is preventable with regular exercise.

The only other explanations for a sudden loss of muscle are diseases and disorders, which either causes muscle death or results in an individual more static than is healthy. If you are restricted to bed rest for a day, you would need to exercise for up to two weeks to regain this lost muscle.

By the age of 75, your body fat will have doubled to what it was in young adulthood. Too much fat and you severely increase your chances of many life-limiting disorders. Consequently, as you grow older, it becomes essential to maintain a healthy diet and exercise regime.

Ruth Hilton is a Nurse Advisor in the continence management division for HARTMANN Direct, a UK-based supplier of  incontinence products.  

How to put your vehicle on a Budget

By Gary Bordeaux

Special to the Financial Independence Hub

Everyone who owns a car or truck knows that there are regular maintenance and not so regular repair costs. For some vehicle owners, it seems their car is always breaking down. But what if you could cut the overhead on your vehicle significantly? The good news is you can! In the following paragraphs, we’ll discuss ways in which you can dramatically reduce the money it costs you to operate your vehicle.

Maintain, Maintain, Maintain

The first thing you want to do is to read your owner’s manual. If you don’t have one, then look online for one, or check with your dealer. The reason this is so important is that the manufacturer will tell you exactly how and at what intervals to perform or have services performed on your vehicle. Changing the oil at regular intervals is just part of it. Are you using the right kind of oil for your vehicle? It is wrong to assume that the more expensive oils are right for your vehicle. Read what the manufacturer recommends and adhere to their standards.

This doesn’t just go for oil, but for all the fluids and tires too. Not all tires require the same amount of air pressure. Use the kind recommended for your vehicle, and keep them inflated to the recommended psi.

Use only OEM parts

When you need to replace a part on your vehicle, insist on only OEM parts. Original Equipment Manufacturer parts are guaranteed to fit, and they will likely last longer, saving you from replacing the same part over and over. Make sure only certified technicians work on your vehicle, so you can rely on stellar work and new parts. While it is actually fun for some to go to a parts cemetery and find your own parts at a substantial savings, you won’t have the peace of mind you will have when you stick to the manufacturer’s recommendations.

Be mindful of the way you drive

Do you really need to beat the next guy to the red light? Often, that’s what happens when a car weaves in and out of traffic. Nothing is gained, and when you drive that way, you risk getting pulled over or injuring or killing innocent people or yourself. Expressing road rage is another way that some people carelessly treat their cars and their fellow citizens on the road. Just driving the speed limit and driving defensively will help protect you and your car. Many insurance companies offer cheap car insurance for safe drivers and those discounts and savings alone could be worth a lot.

Don’t ignore squeals and other sounds

You wouldn’t believe the difference in cost between a simple brake pad replacement and an entire brake job, with new calipers and rotors. Continue Reading…

Reopening after lockdown: Switching from Defense to Offense

By Del Chatterson

Special to the Financial Independence Hub 

Do you know your Basic Defensive Interval? I was asked that question as I left a failed business venture and wandered off into the wilderness of between engagements. For entrepreneurs it’s an important question to answer, “How long can we survive without income?” For a business start-up, it’s the number of weeks or months before you get to break-even cash flow. For an operating business, it’s how long can you survive a disaster without any revenue.

For an individual, it means how long can you continue to cover your living expenses if your monthly income suddenly stops. How much cash do you have set aside to carry you through such an event? We always knew there were unpredictable economic and financial risks that we could not prevent or avoid. Maybe we maintained insurance coverage and had a contingency fund, just in case. But none of us were prepared for a global pandemic that would shut down normal business activity for two or three months. It may be six months to two years before we get back to anything approaching normal business activity.

Tactics for the next phase

We have all found a way to get through this temporary shutdown and contributed to slowing the spread of infection to allow health care workers and facilities to handle the case load. We are now entering the end of phase one of the 2020 coronavirus pandemic, we hope. Is it time to start switching from defense to offense? Caution and constant monitoring will be appropriate as businesses reopen and people go back to work, but it’s time. Continue Reading…