WTFinance is an RRSP? + MORE Sep 9th

Q: I am both a Canadian and American. At this juncture, I will not give up my American citizenship since my family is down there and I am only 33. I have maxed my RRSP and I want to invest in ETFs in a non-registered account but I understand there are issues with U.S. tax liabilities.
There are over a million Americans in Canada. My question is simple: what platform can an American in Canada use to acquire indexes or ETFs with minimal tax liability and simplicity for IRS reporting?
–Megan
A: As you likely know, Megan, American citizens need to file U.S. tax returns every year on their worldwide income, regardless of where they live. That means one million U.S. citizens in Canada should be filing with the IRS. Not all of them do.
There is a bilateral agreement between Canada and the U.S. to avoid double taxation and because Canadian tax rates are generally higher than U.S. rates, many Canadian tax filers have no U.S. tax liability on their U.S. returns. That doesn’t mean you don’t need to file or worry about what you invest in here in Canada…

Q: I am a divorced, single woman, and, I have one living daughter who is 31-years old. My ex-husband died of cancer a few years ago after we were divorced, and my daughter inherited his entire estate, which was in the hundreds of thousands of dollars when she was only in her mid-20s. Having money now at such a young age has made her cocky and arrogant and she treats people badly, including me. I do not like the person she has become. I am financially stable, 61 years old, own my own home, have pension income and other income at present. However, I wish to disinherit her from my estate. Can I leave my entire estate to others without worrying that she will challenge it?
– Dianne
A: Dear Dianne, I have struggled with your question about disinheriting your daughter. Your divorced husband left his estate to your daughter. I don’t know if this changed your relationship with your daughter. Parent-child bonds are strong. You did not mention any grandchildren.
Your daughter is an adult and financially independent…

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I’ve always believed that anyone substantially mired in debt has no business fantasizing about retirement. For me, this extends even to a home mortgage, which is why I often say “the foundation of financial independence is a paid-for home.”
Sadly, however, it’s a fact that many Canadian seniors ARE attempting to retire, despite onerous credit-card debt and sometimes even those notorious wealth killers called payday loans. Compared to paying out annual interest approaching 20% (in the case of ordinary credit cards) and much more than that for payday loans, would it not make sense to liquidate some of your RRSP to discharge those high-interest obligations, or at least cut them down to a manageable size?
This question comes up periodically here at MoneySense.ca. For example, financial planner Janet Gray tackled it in March in a Q&A. A recently retired reader wanted to pay off a $96,000 debt in four years by tapping into her $423,000 in RRSPs. Gray replied that this was ambitious and raised multiple questions…