The Cross Border Living Blog

Dual Nationality - An Effect of Globalization Not Widely Accepted

"The golden age of mutliple nationality may be dawning. But it is not here yet." This is the final sentence of the January 7, 2012 article, "Dutchmen Grounded. Multiple citizenship is on the rise. But some states continue to deter it.", in The Economist.

The article uses a new law proposed by the Dutch government to "limit dual nationality among immigrants" and "to make it easier for the authorities to strip members of the 850,000-plus Dutch diaspora of their nationality, should they secure a second citizenship abroad", to educate the reader on some historical facts as well as current trends, citing policies of several countries.

The fact, as supported by this blog, is "increased migration and rising numbers of cross-border marriages mean that ever more children are born to multinational families." I encourage readers of this blog to check out the full article.

Want To Manage Cash Flow Better in 2012? Set Your Life Goals First

Do you find yourself restricting spending over several weeks at a time, but despite this action, still have very little if anything left over at the end of a calendar year? Is getting cash flow under control something that you would like to master this year?

If so, you need to develop a strategy to keep everyday obligations, funds for those expenses that occur once or twice per year and savings commitments from clashing with one another.

After 20 years of advising people, both domestic and internationally-mobile, on this subject, I can categorically state that those who have articulated short, medium-term and longer-term goals for their life are substantially more successful in managing cash flow. In addition, when asked about how satisfied they are with their life, as a whole, those who could see themselves managing their cash flow to achieve short term goals expressed a higher level of satisfaction with their life than those who managed cash flow to achieve a certain dollar amount each month, but did not have a compelling reason or direction to guide them. To develop an effective cash flow strategy, you need to know what you want to achieve.

Most people spend what they earn on daily living expenses and don't think about cash flow in time frames of more than a pay period. I find this habit is most pervasive in households where the major wage earner is on a work visa, although it is very high outside of this specific situation, as well. No matter what your current situation is, even if you can only clearly visualize your life to the date of a work visa renewal and have some fuzzy vision of what life looks life beyond that period, you can improve your cash flow by becoming intentional about how your money will support your life this year and beyond.

Set Your Life Goals, Then Design Your Spending Plan

Goal setting is a powerful process for getting intentional about your life. When you set out what you want to achieve, you know where to focus your attention. You'll also be better at spotting those distractions. Coming back to how goal setting and cash flow work together, you'll make better decisions about short-term wants or opportunities because you will have already decided what must happen this year. Those impulse ideas or opportunities will now be viewed as a trade-off.

Success Formulas

Sometimes it is easier to see concepts expressed as formulas. Use the following formulas to help you master the concepts. And please post questions and comments. Do you like these formulas or do they cause confusion?

Fixed Expenses + Savings for Annual Expenses + Savings for Goals + Discretionary Spending = Spending Plan

Spending Plan + Commitment + Reviews = Life Goal Achievement

Life Goal Achievement = Increased Life Satisfaction

 

Taxpayer Bill of Rights Recommended by the National Taxpayer Advocate

Congress is being urged to put together a Taxpayer Bill of Rights. Yesterday, National Taxpayer Advocate, Nina E. Olson, released her annual report to Congress. The report indicates that a combination of expanding workload and decreased funding "is causing the IRS to resort to shortcuts that undermine fundamental taxpayer rights and harm taxpayers - ..."

The report summarizes recommendations made in past reports to create additional taxpayer rights and recommends that the rights be enacted into legislation. Ten (10) taxpayer rights and five (5) taxpayer responsibilities are mentioned. Of interest to many and particularly overseas Americans, are the suggested right to be informed, right to be heard, right to certainty, right to privacy and the right to a fair and just tax system.

Perhaps these suggestions are reiterated in this report due to the inclusion of a discussion relating to the IRS's policy change in the application of key terms of the 2009 Offshore Voluntary Disclosure Program more than a year after the application deadline had passed. The report states that the policy change was in contravention of the IRS's written pledge that "under no circumstances will a taxpayer be required to pay a penalty greater than what he would otherwise be liable for under existing statutes."

It is worth having a look at the Press Release which has links to the Executive Summary and the complete report.

Possible US Visa Could Assist Cross-Border Retirement in the USA

A bill introduced in October may provide individuals who want to spend part of the year living in the United States with a special visa to do so.

The Visa Improvements to Stimulate International Tourism to the United States of America Act ("VISIT-USA Act") would provide a non-immigrant visa to an individual (and his or her spouse and children) who:

1. uses as least $500,000 in cash to purchase one or more residences;

2. maintains ownership of residential property in the United States worth at least $500,000 during the entire period the alien remains in the United States as a nonimmigrant; and

3. resides for more than 180 days per year in a residence in the United States that is worth at least $250,000.

Home buyers under this program, however, will be encouraged to pay a premium for their residence(es), as one of the proposed rules are that the residence must have sold for more than 100% of the "most recent appraised value of such residence, as determined by the property assessor in the city or county in which the residence is located".

If you are thinking that this proposal might assist you in an unofficially "permanent" relocation to the United States, it is important to note that for financial planning purposes, a visa-holder would not be able to receive government benefits such as Medicare, Medicaid, and Social Security. In addition,  the visa would not authorize the holder to engage in employment in the United States, except for employment related to management of the property, and the program would not lead to citizenship.

There is the question of how the visa holder would be taxed. Since this is technically an immigration bill, the income and estate tax implications of this proposed bill are not addressed. For planning purposes, as it stands right now, one could argue that once the Substantial Presence Test is triggered, the non-immigrant visa holder would be considered resident for income tax purposes, unless they can claim the Closer Connection Exception. Of course, one would need to seek advice from a qualified professional.

Today, on CNBC, however, Senator Charles Schumer implied that taxes would be paid on US source income: http://video.cnbc.com/gallery/?video=3000060614 

We will post updates to The Cross Border Living Blog as more information becomes available.

 

Petition Created to Repeal FATCA

In its November 25, 2011 newsletter, the Association of Americans Resident Overseas provided a link to a petitition that Americans are being asked to sign. The petition reads:

"IRS efforts to chase tax cheats are netting another group entirely. Americans, 

green card holders, and dual citizens living abroad, face the threat of prohibitive 

fines for simply failing to file with the IRS, when many are unaware they were 

required to do so. This aggressive cash grab can devastate the lives of law-abiding 

citizens who already pay high taxes in their country of residence.

 

The fines for not reporting are as high as 50% of any unannounced holdings, 

year over year. This can add up to more than 100% of assets, even if no tax

is owed! Retirement funds and education funds for families who may never have 

even lived in the US would be wiped out. This is disproportionate and harsh punishment, 

and anti‐constitutional under the 8th Amendment of the Constitution. 

FATCA asks foreign financial institutions to act as collectors for the IRS, sometimes

breaking local privacy laws, and setting up prohibitive barriers to international investment 

and legitimate trade.

This is a terrible plan on so many levels. Repeal it now!"

To add your name to the petition visit the following link:

http://www.signon.org/sign/repeal-fatca?source=c.em.cp&r_by=188650

At the date of this post, there are 620 signatures and the goal is 750.

Budgeting Your Costa Rican Lifestyle

Cost of living expectations are one of the first things to check off your list when considering a cross-border lifestyle or a permanent relocation.

During the last several days I have had the pleasure of socializing with several couples, in their 30s, 40s, 50s and 60s, who are either temporary or permanent residents of the Central Valley or the Central Pacific Coast. They all agreed that getting a clear idea of their own expectations for their ideal lifestyle and applying numbers to the various expense categories from an ideal, and (and at the other end of the spectrum) minimally acceptable standpoint, greatly contributed to their successful relocation.

Start your own research with the information at this link: 

What is your own experience?

I'm off to Costa Rica with friends (Canadian expats) who own a guest house in Atenas . Looking forward to reporting on the cross border lifestyle that I have heard so much about. Post comments or questions that I can put to some of the local experts.

Cross Border Living and "Geo-Arbitrage"

I found an interesting article on "the location independent lifestyle" which apparently is being popularized by Tim Ferris' book, The 4-Hour Work Week. It also references three places to consider for your "geo-arbitrage". Happy Reading! http://financialhighway.com/the-location-independent-lifestyle-3-low-cost-but-amazing-places-in-the-world-to-live/

Families in Transition Are Never Alone

A new article has been posted in the online edition of The Weekly Telegraph covering highlights of the 8th annual Families in Global Transition. The following is an excerpt from the article:

"...for most the conference was a cause for celebration. Those who have helped to "educate, empower and equip" others have not kept the knowledge to themselves. Many have written about it, too, and the FIGT bookshop did a roaring trade. Marian Weston was not the only one with a new book. US-based Briton Toni Summers Hargis has seen her book, Rules, Britannia: An Insider's Guide to Life in the United Kingdom, launched in the UK, while Jennifer Patterson launched her book on financial planning for multi-movers, When Families Cross Borders, at the conference. Another Expat world contributor, Robin Pascoe, generously gave a copy of her latest book, Raising Global Nomads, to every delegate."

Read more>

Get a Complimentary Copy of My Book!

That's right! You could be one of five lucky winners of a complimentary copy of my book, When Families Cross Borders: A Guide for Internationally Mobile People during the month of May.

I'm excited to support ExpatWomen.com, a fantastic new website designed to help all expatriate women living outside of their home country. By signing up for their online newsletter, you will be entered in the book draw. The newsletter is your monthly reminder of all the great new content being listed on the site. Whether this is your first experience living overseas, you're a seasoned expat or permanently residing overseas (like me), you will be sure to find something of interest - from books and blogs to country mentors and useful articles to success stories and expat confessions.

Good luck!