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Anyone considering retiring to Panama or Ecuador?

Posted by glenny56 (My Page) on
Tue, Jun 29, 10 at 11:48

Hi! My husband and I are middle income and with the market today are very worried about retirement in 5-8 years. We are considering retiring to Panama or Ecuador to make our retirement dollars go further. I understand that these countries do not charge you taxes on income earned outside of their country and the cost of living is much less than here in the US. If you have moved to another country where your $ goes further and is it safe, I would love to talk with you about it!

Thank you.


Follow-Up Postings:

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RE: Anyone considering retiring to Panama or Ecuador?

I don't normally post a personal link, but we have friends who just moved to Panama and are now applying for legal residency. Like you, they could not afford to retire in the US. The three important lessons are:

1) If you don't speak Spanish - LEARN! Prices get jacked up the moment you start speaking English. In our friends' case, she grew up in South American and speaks fluent Spanish. He's trying to learn as fast as he can.

2) Establish your banking connection well before moving. For tax reasons (the IRS goes after banks holding US funds) the process is laborious.

3) Be prepared to move around before deciding where to settle permanently. At the very least, plan to visit several times before making your move. This is a very important decision and you should absolutely not rush into it. Our friends have rented a number of houses to try different locations, and all have their pros & cons.

The mountains are cooler but a lot more remote. Our friends lost their Internet access two weeks ago to a lightning strike and haven't gotten it back yet. They tried the flatlands, but the weather was just too hot to stick it out for more than a few months.

Here is their blog. It's well done, and quite entertaining.

Here is a link that might be useful: Luisa's blog on moving to Panama


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RE: Anyone considering retiring to Panama or Ecuador?

A question I would have,are you intending on living in a "American" compound/community or among the regular inhabitants. From friends have mentioned that civil unrest is common in many of the South and Central American countries. Panama does not have as much but the expenses in some of the communities are as high as here.

Some of the countries you must purchase outright any property. Check on requirements for living in the countries and do not rely only on real estate agents. HGTV makes it look easy but you will be considered a 'have' by the 'have nots'.


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RE: Anyone considering retiring to Panama or Ecuador?

I have been to Columbia and several of the nearby islands, they are not safe in spite of what people tell you. Puerto Rico is an American colony or territory, and the guides there told me it was safe. It is not. I met the sister of a man who married a woman in San Juan. He set up his dental practice there and raised his children there. He carries a gun with him at all times. He has a gun in every room of his house. He has security doors on his dental office. His children came to the US for their education and won't move back. They beg their mom and dad to move to the states where it is safe. Some of the islands do have American compounds and it safe there, but I would feel like a prisoner.


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Puerto Rico

"Puerto Rico is an American colony or territory, and the guides there told me it was safe. It is not."


I believe them. I have an uncle who lives here in a gated community. You pass a guard house to get in. Once the guard has checked your license to make sure its ok to let you in, you drive to your house where you have to open an electronic gate to get in the driveway. After that closes behind you, you get out of the car to open yet another (sliding) gate before you even get to the front door! I noticed that many houses (outside of the gated communities) had bars on the windows.

While I was there, we took a drive along the old scenic highway. On the way back we drove through an unfamiliar area where we saw men in uniforms standing on street corners holding rifles.

I would not feel comfortable living there either.


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RE: Anyone considering retiring to Panama or Ecuador?

I've been thinking about retiring to Panama, I've been trying to make contact with someone who lives there and would be willing to email back and forth about the day to day in Panama


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RE: Anyone considering retiring to Panama or Ecuador?

bob, please read the blog I linked in my first posting. Our friends live in Boquete, and this is the fourth city in Panama they have moved to.

Unlike other countries mentioned above, they feel very safe and have never felt the need to live in a gated community, although of course they are available in Panama if that's what you want. But there are some serious disadvantages to moving overseas, so you really need to have a long-term strategy and execute it in phases. Just jumping in increases the odds it will not be anything like what you think.


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RE: Anyone considering retiring to Panama or Ecuador?

Thank you to everyone who responded to my "post"! I am still researching, but I believe we have now added Belize to our list! They speak English there and it might make it easier for us. We aren't against learning Spanish, it's just not as easy as it sounds when you aren't surrounded by it all the time. We feel that moving just for economic reasons isn't enough. We want to participate in the culture and community as well. I'll definitely check out the link provided and again thank you...!!


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RE: Anyone considering retiring to Panama or Ecuador?

International Living (magazine and website) recently featured Uruguay as a retirement haven. You may wish to look into this - there's 3 or 4 articles in the series; one is linked below.

Here is a link that might be useful: Uruguay article


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RE: Anyone considering retiring to Panama or Ecuador?

I seriously considered moving to one of the Caribbean Islands or somehwere is South America and did quite a bit of research. The thing that persuaded me not to pursue that dream was the lack of really good medical/hospital care.


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RE: Anyone considering retiring to Panama or Ecuador?

Wife and I have thought about all of those, also even places like Bulgaria, we have looked everywhere.
When it comes right down to it we have decided to retire in OREGON LOL.
We can or at least could last time I checked buy a decent 2-3 bedroom 2 bath nice house near the river with 2 acres of land for right around $150,000 or less.
We are going to make it extremely efficient if it isn't already, possibly solar panels, small wind turbine.
have a good sized about 20'X30' greenhouse.
We will be paying less than we are now in mortgage in bills and actually will be making a bit more money in retirement especially once the annuities kick in.

plus Oregon is beautiful, nice people, mostly all are progressive democrats, large atheist/agnostic population so not surrounded by religious nuts.
No state tax.
Still reasonable prices on land and homes.

Every place we looked elsewhere were all being bombarded with gringos buying everything up quickly causing prices to skyrocket.
Just got tired of looking for Shangri La, it may exist somewhere but Oregon is looking real good to us.


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RE: Anyone considering retiring to Panama or Ecuador?

One more thing to consider: Medicare does not extend beyond the borders of the US and it protectorates.


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RE: Anyone considering retiring to Panama or Ecuador?

Doesn't much matter because most of the planet, at least anyplace you would really want to retire to has Universal Healthcare and has better medical care than we do here.

It would be a concern in only a few countries that your Medicare doesn't follow you.


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RE: Anyone considering retiring to Panama or Ecuador?

I love Oregon but until recently anything under $200K was very small and to be honest a dump. Each year when I go I have been looking for something to have after my husband dies with no avail. One thing about Oregon though is the have both estate and inheritance taxes. I too am exFed but will need medical care as I age many areas of Oregon have little medical coverage and most will send you to larger cities. I do love that you do not have to pump your own gas and the pump people do not expect tips.


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RE: Anyone considering retiring to Panama or Ecuador?

I have seen some rather nice houses around Bend for under $200,000, that is where we are planning to go.
They combined estate and inheritance tax, its all the same thing now and doesn't even affect you unless its over 1 Million dollars so not ever going to affect us.

Nice that they do not have State tax though.

But I do think that they tax retirement pay as income which sucks.


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RE: Anyone considering retiring to Panama or Ecuador?

we're selling our home in vermont and traveling a bit before we settle down again. much as i love vermont is's quite an expensive place to live, and i have been wondering where else in the country i might find similar minded folks. sounds like oregon might be the place,so i'm real glad you posted.
i've also been researching latin america as a winter home, but for various reasons that's taking a back seat to the living in an rv idea.
it's good to have options though!


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RE: Anyone considering retiring to Panama or Ecuador?

Yes Oregon is a nice state, totally Blue politically which means the state isn't out to screw you in every possibly way like most Red states.
Most in Oregon depending on the area are 1960s Californians so very laid back, nice.
It is the only state I have been in since the early 70s of which you still see several hitchhikers on the roadside thumbing, you will see a bunch of cars on the roadside in places which usually turns out to be a natural hotspring which if you hike a bit up the stream there will be a big group of people relaxing in a hot spring, many times skinny dipping.
The roads are well maintained, just an overall nice state.


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RE: Anyone considering retiring to Panama or Ecuador?

Have you considered english speaking Belize? It used to be called British Honduras ? there are very nice homes for a good price , check around Orangewalk,and Progresso, on the internet I mean. They have photos etc.
Money sense magazine reported Belize to be one or the 6 best retirement Countries , oh yeah Equador was one of them too.
google Belize expat forums


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RE: Anyone considering retiring to Panama or Ecuador?

Oregon is a lovely state, but they are not considered tax-friendly at all. In fact, they tie CA as one of the highest overall tax burdens on residents.

That said, one of my bosses had a favorite saying: "Don't let the tax tail wag the dog!"

Here is a link that might be useful: Kiplinger state-by-state interactive tax map


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RE: Anyone considering retiring to Panama or Ecuador?

Does anyone have any updates on current rentals in Panama (Volcan, Santa Fe, Alto de Piedra areas - not Panama City)? Cost comparison websites don't provide info on regions other than the major cities. It seems Panama City is only 18% cheaper to live than VA so that's not much incentive to relocate, considering I've read that it is best to have American appliances shipped there, yet another hefty expense. Anyone have any inside info for current economic/living conditions? Thank you.


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RE: Anyone considering retiring to Panama or Ecuador?

>>Anyone have any inside info for current economic/living conditions (in Panama)?>>>

I have to say that after watching our friends (husband & wife) spend two years moving to Costa Rica - they are now on their fifth rental, which they like best of all - I don't think there is any substitute for actually GOING there yourself.

You have to "take the plunge" and check it out to see if the pros/cons will work for you, or dissuade you entirely. That means in all seasons, in several different locations.

Good luck to you going forward!


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RE: Anyone considering retiring to Panama or Ecuador?

Costa Rica has several climates. That hot and humid near the water. And, hot and humid in the jungle. And into the mountains where it is good.

Your friends in Costa Rica, where are they and why are they there?


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RE: Anyone considering retiring to Panama or Ecuador?

>>Your friends in Costa Rica, where are they and why are they there?>>

They moved to Central America because the husband didn't have enough retirement $$$ after a divorce, to live on Social Security in the U.S. He'd come back in a heartbeat if he could afford to. His second wife speaks fluent Spanish, having grown up in South America.

He loves the relaxed lifestyle, but he comes back periodically to indulge in wargaming conventions (mostly in LA, which is easier/cheaper for him to reach) because there is no one he's met down there who shares the same interests as he has.


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RE: Anyone considering retiring to Panama or Ecuador?

hi
I have a ?? along similar lines . Have been going to Costa Rica for many years . Have always rented but the place I love is being sold or absorbed into the park system.
it is the remains of an old coffee plantation surrounded by
a national park in the high altitude rainforest.
I'm thinking of buying if the price is right .
Don't intend to live there but keep it as a summer retreat has many drawbacks . Very remote .roads are dry season only, elec is unreliable but SW telephone and internet along with generator. has no heat,air in fact part has dirt floors MUST take a cab to get there day time only and often delayed due to rainfall, tremors.
Only food source is a hotel on the other side of the mountain. Another factor Wife hates "jungle" lol
many factors to consider obviously but wondered if anyone had advice on how to go about this??
have bought many houses but only in the US Thanks gary


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RE: Anyone considering retiring to Panama or Ecuador?

I have been to the Peruvian jungles twice and really, really enjoyed it.................for about 5 days. That is the longest time I could live with the humidity, also very dangerous snakes. Our guides took very good care of us so the only snakes we saw was in the rafters of our lodge. They were small non poisonous. There are also tarantulas, termites with no control at least where I went. It is no place to be roughing it and that is what you will be doing. We have 2 poisonous snakes here in the states, in the rain forest all but 2 are poisonous. No way would I live there.


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RE: Anyone considering retiring to Panama or Ecuador?

Hi
Costa Rica has 10 climate zones all tropical of course but ranging from near frost to near 90 year around
The house I'm interested in is on the Pacific tropical convergeance zone with very abrupt altitude changes ,the house is located at 9500 feet so temps are always below 80 often falling in to low 50's at night Often went there to escape the florida heat in summer that and I can rent for 150 bucks for a month lol the big thing is the rain around 300 inches and no dry season due to the atlantic current. always rains everyday BUT always sunny
during mid day.extreme mist in the morning makes traveling difficult . often impossible.
All that rain and mist produces a lot of greenery as well as lots of temporary waterfalls Due to the temp changes wildlife varies by the mile Snakes are limited to the valleys and insect life varies per 1000 feet as does plant life Most amazing is the birds. 780 confirmed species as well as prime habitat for the Resplenant Quetzal 95 species of Humming birds 300 of butterflies including the Morphos!! almost a thousand endemic specie of plants!!
i really wouldn't want to live in Costa Rica but if I did would chose the mid altitude mid pacific for many reasons Costa Rica has changed tremedously like every other place it's not near the bargain it used to be except for this place
The owner wants to sell but is difficult due to location
and I fear it will be absorbed into the surrounding park
Could never be a tourist trap due the accessibility it is the only private property on the entire mountain!!
Obviously if it sells will no longer be available to rent of for 10 time more lol Thanks gary


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RE: Anyone considering retiring to Panama or Ecuador?

What if you buy it and the government steps in and takes it over for part of the park?? You could loose your money and please don't tell me they can't do that because they can. That happened to my Mom in mid America and can happen anywhere. My Mom was offered a third of what her home was worth, but had to guts to go before the city council and plead her case publicly. She got full price of what the house was worth.


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RE: Anyone considering retiring to Panama or Ecuador?

Hi
When you think abouut it that's probably what should happen to the property lol It's a unique area within a unique area .It has only survived due to the difficulty getting there and the collapse of coffee in the 50;s and it will not support Banana ,tropical fruits .
Was just reading the results of a general Bio survey of
300 plants collected 12 were unknown to science !! It is also the only known habitat of all 5 big cats ,confirmed nesting of Quetzal as well as confirmed ID of Morpho rhetenor and is smack in the middle of the migratory route!!
Anyway is rather moot now as there have been 5 bids 40 percent above market value by several wildlife funds .
Guess I'll have to find another area?? Thanks for the thoughts gary


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RE: Anyone considering retiring to Panama or Ecuador?

Good Luck to you in your search. How about Arkansas? Or the rainforest in the Cascades in Washington state???? LOL


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RE: Anyone considering retiring to Panama or Ecuador?

hi
Funny story about that. When i planned a trip to Panama
The US invaded closing borders. planned a trip to Nicaraugua . civil war broke out border closed Wanted to
see Tikal in Guatamala border closed due to riots . Went to Belize and sneaked accross border .Bus was boarded by insurgents had to listen to long lecture on the glories of Communism lol In Spanish lol Wasn't harmed or really excessively delayed but that was one scary experience lol
None of that would probably happen in Arkansas or Washington but no high altitude rainforest at least tropical ones lol
Theres always Monte Verde., even higher but is MUCH smaller and far less diverse but wouldn't have to back pack ,There's always Disney?? lol gary


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RE: Anyone considering retiring to Panama or Ecuador?

Don't just focus on the positives; any place can look like paradise when you do that. Look up negatives too. A lot of sites that tout places like Ecuador have a vested interest in getting you and your dollars to go there. My father was interested in retiring there until he dug deeper... Ecuador has a crime rate higher than even New York City, not to mention a hot humid environment which allows for a great deal of flying biting insect pests. Then there's things like earthquakes, volcanoes, tropical storms, etc depending on which regions you're moving to. And as others have mentioned, there's plenty of civil unrest in South America.

And absolutely, positively look up what rights you will have. Columbia, aside from the obvious drug and turf wars, was ranked as one of the worst for human rights iirc. (Here's an article that gave me chills: http://www.hrw.org/news/2014/05/13/dispatches-victory-colombia-s-sexual-violence-victims ) I know there's several countries that have absolute bans on abortion, eg Nicaragua, even in cases of rape or life-threatening situations, or they may arbitrarily deny a live-saving procedure anyway, as in http://news.msn.com/world/baby-of-ill-salvadoran-woman-denied-abortion-dies . I know some Latin American countries are slow in legalizing same-sex marriage as well., or you may have a hard time finding birth control in some places.


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RE: Anyone considering retiring to Panama or Ecuador?

I don’t think abortions or lack of birth control are high on the priority list for retirees.....


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RE: Anyone considering retiring to Panama or Ecuador?

Very true Nanny. I gave that up at the age of 45. LOL


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RE: Anyone considering retiring to Panama or Ecuador?

Update on my advice above to actually visit the country(ies) you are thinking of moving to, and our friends' advice that establishing foreign bank accounts BEFORE moving was something they should have done to avoid six months' worth of delays:

The IRS is cracking down hard on ALL foreign investments, whether real estate, investment accounts, checking/savings. The penalties are huge, and although you can try to wrangle them down, it is a fact that taxpayers with smaller balance accounts are proportionately paying LARGER penalty fees than multi-millionaires who are deliberately hiding assets.

The WSJournal had an article on this issue June 2014, but as it's subscriber only, I'll just post some excerpts:

Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules
Record Numbers Living Abroad Renounce U.S. Citizenship over IRS Reporting Requirements
WSJournal June 2014

U.S. offices abroad reported that 1,001 U.S. citizens and green-card holders had renounced their allegiance in the first three months of the year, according to Andrew Mitchel, a lawyer in Centerbrook, Conn., who analyzes Treasury Department data. That figure puts 2014 on track to top last year's total of 2,999 renunciations, he said, which was the most since the government began disclosing the data.

Helping boost the exodus, experts say, is a five-year-old U.S. campaign to hunt for undeclared accounts held by Americans abroad….The tax dragnet has also swept up many middle-income Americans living abroad, prompting some to give up their U.S. citizenship.

While people who renounce are NOT freed of taxes due for past years, they don't want to risk sizable taxes and penalties for them and their children in the years ahead, experts say. Nearly 8,000 taxpayers have renounced U.S. citizenship in the past five years, Mr. Mitchel found, compared with fewer than 5,000 in the preceding decade.

….U.S. officials launched their campaign after Swiss banking giant UBS AG admitted in 2009 that it helped wealthy American taxpayers hide money overseas. To avoid criminal charges, the bank paid $780 million to the U.S. and turned over information on more than 4,400 accounts, ending decades of Swiss bank secrecy.

In May, Credit Suisse Group pleaded guilty to similar charges and agreed to pay $2.6 billion. Dozens of other Swiss banks are currently negotiating penalties with the U.S. Department of Justice, officials said.

Following the UBS revelations, U.S. officials announced they would begin vigorously enforcing both new and long-dormant tax rules. Unlike other developed nations, the U.S. government taxes citizens on income they earn anywhere in the world.

… The most common mistakes usually involved Americans failing to submit a form called the Foreign Bank Account Report, or Fbar. Since 1970, U.S. taxpayers have been required to file if they held one or more foreign accounts totaling more than $10,000 over the course of a year. Until the enforcement push, many Americans never filed an Fbar.

The law is more than 40 years old, but "no one ever heard of it" before the crackdown, said Edward Kleinbard, a former chief of staff on Congress' Joint Committee on Taxation, and an expert in international tax law at the University of Southern California.

Fbar penalties are as steep as 50% of the highest value of the account for each year no report was filed. The IRS fined one taxpayer for Fbar violations in four separate years, and a settlement reached this month in the case yielded $1.7 million in penalties, which was more than the account held at the time.

…The typical taxpayer with less than $45,000 in undeclared accounts paid nearly six times the back taxes owed, while the typical taxpayer with more than $7 million in such accounts paid closer to three times their back taxes, Nina Olson, the National Taxpayer Advocate, an IRS ombudsman, found.

… Scrutiny of Americans abroad will intensify, however, under the Foreign Account Tax Compliance Act, or Fatca, which Congress passed in 2010. The law's main provisions, which take effect in July, will require foreign financial institutions to report income of their U.S. customers to the IRS, much as U.S. banks and brokers file 1099 forms.

Middle-class Americans "face overwhelming problems when they try to engage in standard financial practices, such as having a small business, saving for retirement, investing, buying life insurance, and making wills and trusts," because of the laws governing assets abroad, said David Kuenzi, a financial planner with Thun Financial Advisors in Madison, Wis., who works with expatriates.

The U.S. tax code, for example, doesn't recognize Australia's version of an individual retirement account, Mr. Kuenzi said. American taxpayers with these accounts must file at least two forms a year declaring the account a "foreign trust," and paying taxes on annual appreciation.

The penalty for failing to file can be as much as 35% of both contributions and withdrawals each year, plus 5% of the assets, said Mr. Hodgen, the Pasadena tax lawyer.

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Hope this info is of use to others.


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RE: Anyone considering retiring to Panama or Ecuador?

Allow me to temper the information a bit - both you and the article have a bit of a colored view.

US citizens and residents (green card holders) are subject to US tax on all income. Whether they live in Panama or Panama City, Florida is irrelevant, all earnings, all investment income, all everything, no matter where it comes from, is subject to tax. There are some exclusions for wages earned by Americans residing abroad. This is not a new situation, it's been so for more than 50 years. People who try to hide income by not declaring earnings in foreign accounts are cheating you and me the same as the person who works for under-the-table cash and pays no tax on it. Those who pay, pay more because of those who don't pay.

Getting information about offshore income of US persons (who are cheating on their taxes) has always been a challenge to the IRS. There are new rules for foreign banks in an effort to get such information. Those who report their income honestly will face no change in their taxes or dealings with the government.

The other topic mentioned is the so-called expatriation tax, which affects very few people. It basically says that higher net worth or income people can't avoid impending US taxes by renouncing their citizenship, and thus a so-called exit tax is imposed. Other countries have similar rules, Canada does as an example.

If you want to live overseas, live overseas. Except for state income taxes, there are otherwise no US tax advantages in doing so. There may also be foreign tax consequences of setting up your household in a foreign land, don't forget to check on that.


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RE: Anyone considering retiring to Panama or Ecuador?

There are plenty of thirld world semi tropical locations available within US borders that have a low cost of living. Just look at anywhere on the Gulf Coast like Louisiana. Lots of real estate never recovered from Katrina and can be bought fo a song.


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RE: Anyone considering retiring to Panama or Ecuador?

Been in Ecuador for 3 months. the bad areas are noworse than watts, San Francisco, or New York slums. Most of what you read on the internet is a lie about most of SA as I found out sadly to my very knowledge foundations being shaken by the false information I learned growing up in the US. (I am US born and bred, so please dont judge me).

if you look at my other post, I am looking for a few families to join us to make an organic, heirloom, non GMO farm, buying land together and working together as a big family. Please dont believe what people tell you and write generally because it is not true.


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RE: Anyone considering retiring to Panama or Ecuador?

bloodmoon do you have an ad somewhere looking for people?


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RE: Anyone considering retiring to Panama or Ecuador?

Perhaps my post was not clear. I posted the FATCA info for those who are establishing accounts abroad, for whatever reason they choose to. People should know that it is no longer "business as usual" and that there are reporting requirements which were not enforced at all previously, but beginning July 2014 are being very strictly enforced indeed.

This complicates life for those who plan to eventually retire somewhere else, for example. Establish accounts in Australia, and there can be more than just standard FATCA reporting. Australia has the equivalent of an IRA, but it isn't recognized by the IRS. It's treated as a trust, and has entirely different financial rules. A woman quoted in the article said it was a nightmare, and the uncertainty had cost her several thousand dollars in legal fees, without clear resolution.

*** The advice from my friends who moved abroad was to establish bank accounts abroad before leaving the US. Not doing this slowed their move down by about 8 months (it took two years before they finally relinquished US citizenship).

*** The advice from WSJournal is that the search for a bank that will deal with US-based consumers is going to be more difficult than you may have thought.

I hope this clears up what is the beginning of a complex subject.

+++++++++

>>US citizens and residents (green card holders) are subject to US tax on all income. >>

My post in no way, anywhere, was talking about avoiding all income taxes. The article's examples actually referenced NOT the wealthy, but middle-class ex-pats who were facing the possibilities of substantial penalties for not reporting accounts they had established long ago, in some cases over three decades past. In a number of cases the penalties vastly exceeded even the highest balance the accounts had ever held.

>>Those who report their income honestly will face no change in their taxes or dealings with the government.>>

That would be interesting for you to debate with the WSJournal, who ran another article on the subject. Me, I personally don't care one way or another: we have sufficient retirement income to live anywhere we want, and we choose to stay where we are. But we're lucky and we have friends who are not so fortunate - who have either had to make the move to give up citizenship, or are seriously considering it.

The article yesterday is also excerpted:
Expats Left Frustrated as Banks Cut Services Abroad
WSJournal, Sept 11, 2014
Americans Overseas Struggle With Implications of Crackdown on Money Laundering and Tax Evasion

(Excerpts only: WSJ is subscriber-only)
...Americans living abroad are being cut off by banks and brokerages as financial institutions seek to steer clear of a U.S. crackdown on money laundering and tax evasion.

The traditional challenges of expatriate life - "adapting to a new culture, separation from family and friends" - are being complicated by the tougher U.S. laws and more aggressive scrutiny of customer accounts.

...(one person quoted asks) "Can it really be that expats are facing such massive obstacles in basic financial matters?" Today, the answer is often "yes," say advocates for the estimated 7.6 million U.S. citizens living outside the country. "The reality on the ground is that overseas Americans are facing restrictions and lockouts from both U.S. and foreign financial firms," said Marylouise Serrato, the director of American Citizens Abroad, the leading group representing U.S. expatriates.

…Among those affected by the tightened policies are retirees of modest means in communities around Lake Chapala in Mexico, where an estimated 10,000 Americans live. "It hit people out of the blue," said Ann Lewis, 75, a former small-business owner from New Jersey, who was notified in late May that her account with Banamex USA, a unit of Citigroup Inc., would be closed this past June 30. A Citigroup representative declined to comment. Ms. Lewis said she found Mexican banks expensive and harder to work with: Checks can take weeks to clear while exchange rates fluctuate, she said, and wire transfers can each cost $45 or more.

Judith Furukawa, an American living in Dubai who has been an expat for nearly 15 years, is willing to pay fees to wire money from her U.S. account in Pennsylvania - but her U.S. bank no longer accepts wire requests from overseas.


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RE: Anyone considering retiring to Panama or Ecuador?

It most certainly is business as usual for millions of US expats - no significant laws have changed affecting their US tax status. There are a thousand or so people who relinquish citizenship each year, less than a drop in the bucket.

The reality is that FATCA affects banks. The withholding penalties will rarely apply, because those choosing to not comply will lose their American customers. Essentially they have register and then send 1099s to the IRS for their American customers. Tens of thousands of foreign banks have registered to do so, including most of the important banks in most countries. The IRS puts out a monthly list, it's called FFI. There's no confusion, find a compliant bank and do what you want, as before. It's a heavy handed, extra-territorial law that probably overreaches US sovereignty, but foreign banks have chosen to grin and bear it.

As far as the law and account reporting that Prof Kleinbard is quoted as saying no one has heard of, there's info and a question regarding foreign accounts ON THE FACE OF SCHEDULE B, Form 1040. It's been there forever, no need to even read instructions. Read the bottom of the form to be informed of the required annual reporting of foreign accounts on Form 114, previously Form 90.22-1. The professor hasn't read his own tax return forms.

Newspaper and magazine articles often have misinformation. I've been interviewed before, including by the WSJ, and I learned to ask the reporters (as a condition to the interview) to allow me to read the article before it was published. Many refused, in which case I'd refuse the interview. My concern was the frequency that reporters would misunderstand a technical topic and thus result in my being misquoted.

I've been an expat myself. ** My job was as a tax and financial adviser to expats and their employers. How about you? I'd like to suggest that you give it a rest - you're in over your head.

Edited to add the double asterisks, where these words should be added:

During those years of my career,

This post was edited by snidely on Fri, Sep 12, 14 at 20:32


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RE: Anyone considering retiring to Panama or Ecuador?

A bit more on tax issues for those living abroad. Make sure to read some of the Comments section (there's a link further down in the article). Commenting is closed due to 1,247 responses, many by people who have also encountered difficulties with ex-pat tax issues. The author says he has a small business; many of the Commentors do not: they are either married to a foreign national, or live and work abroad.

The Opinion Pages : OP-ED CONTRIBUTOR
Why I’m Giving Up My Passport
NY Times By JONATHAN TEPPER DEC. 7, 2014

(Excerpt)..."But most, like me, are not tycoons. We’re responding to the burden and cost of onerous financial reporting and tax filing requirements that are neither fair nor just. (Living and working in London, I pay higher taxes, to Britain, than I would in New York.)

Some 7.6 million Americans live abroad -- expats would be the 13th most populous state, if we were a state. Many are overseas temporarily, for work or study. But many others marry foreigners, start companies or have long-term overseas assignments. We are just like ordinary citizens -- except that we lack representation.

The United States is an outlier: Its extraterritorial tax laws apply to American citizens and companies no matter where they are. We are the only country (except, arguably, Eritrea) that taxes all of its citizens on worldwide income rather than where the income is earned. Expatriate Americans have to pay taxes once, wherever they live, and then file again in the United States.

The I.R.S. doesn’t tax the first $97,600 of foreign earnings, and usually doesn’t double-tax the same income. So most expatriates owe no money to the I.R.S. each year -- and yet many of us have to pay thousands of dollars to accountants because the rules are so hard to follow.

The extraterritorial reach of the income tax dates from the Civil War, when the government wanted to prevent Americans from fleeing to Britain to avoid taxes. This outdated and harmful relic has only gotten worse. "

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Full article linked below. NYTimes offers a limited # of access to free articles each month.

Here is a link that might be useful: Op-Ed contributor: Giving up citizenship


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RE: Anyone considering retiring to Panama or Ecuador?

Expatriate Tax discussion, Round 2 (or 3) - Ding

The number of people who surrender their US citizenship every year is a smaller number than the number of people who land at any major airport (JFK, O'Hare, LAX, etc) on international flights in many 60 minute time intervals throughout the day. That's how few there are.

Most retirees (that was the original topic) can go live overseas and continue to file their tax returns every year in the same manner they always have, mostly unaffected by their living abroad.

This guy is complaining that his circumstances put him in a situation where time and money must be spent for his personal tax obligations. It's a shame but the same is true for the rest of us too. There are always small numbers of people who grouse about any tax - whether it's property tax that annoys them (why do I pay so much when someone else pays so little or why does it keep going up) , or complaining that sales tax is higher here than there, or whatever it may be. If he owns a business, I wonder why he doesn't complain about UK VAT, which requires him to keep and classify every signal scrap of paper received as a receipt from his business's spending. No matter how small the amount involved.

Using his information, the ratio of people who seem to be ok dealing with US tax rules for expatriates (7.6 million) to those who aren't (a few thousand) tells enough of a story.

His complaint is an old and tired one. I'm not sure what moved him to write the NY Times piece, unless he thinks he may be recognized as a martyr. Fat chance, no one really cares (which is why the rules haven't changed much after decades and decades).

(edit for typo)

This post was edited by snidely on Tue, Dec 9, 14 at 17:26


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RE: Anyone considering retiring to Panama or Ecuador?

"(Living and working in London, I pay higher taxes, to Britain, than I would in New York.) "
Well ... he's paying for the NHS, the underground, and the Royal Family.

My nephew by marriage paid more tax in Britain than he does in the USA, but he pays way more for health insurance, car insurance and housing.


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