Welcome to our RetireForLessInCostaRica.com Newsletter!
In This Issue:
- So, What’s Up with the Yeatmans? Our monthly update to answer the #1 question people ask us, “What do you DO all day?”
- Paul’s Monthly Tip to Live for Less in Costa Rica: Pay Cash for Almost Everything and Save 5% to 10%
- Paul’s Monthly Weather Report
- Do I HAVE to Learn Spanish?
- Featured Article: Should You Prepare Your Own Expat Tax Return?
So, What’s Up with the Yeatmans?
We had another busy month, though they all seem to turn out that way! But we’re doing what we want, when we want, and that makes it fun.
In August, we were involved in two special events sponsored by the Community Action Alliance. The first was Paul’s brainchild, a charla (talk) entitled “The Crisis in the Caja: What Can We Do?” featuring nationally recognized authority, Dr. Ramón Macaya Hayes. Paul had originally heard Dr. Macaya’s presentation in English several months ago in San Jose, and wanted to bring him to San Ramón to do the presentation for the Action Alliance. Dr. Macaya presented the current state of the Costa Rican national health care system, identified problem areas, and outlined some possible steps to shore up the system and protect it for future generations. We chose to offer it in Spanish and were pleased that about 70 Ticos came, many of them shared their concerns in the discussion following the presentation.
The following Saturday, the Action Alliance hosted a job fair for IBM. Though their complex is located in Heredia
(about an hour’s drive from here), we convinced them that San Ramón had the talent they were looking for, and they agreed to hold the job fair here at the UCR Regional Museo San Ramón. Close to 1,000 candidates from San Ramón, surrounding communities, and beyond attended the first job fair ever held by a multinational outside the Central Valley. By mid-afternoon, everyone had met with an IBM representative and many had full interviews. The IBM folks were delighted at both the turnout and the quality of the candidates.
The Crowning of the Queen
The 12-day Festejos Patronales San Ramón 2012 (Festivities of the Patron Saints of the San Ramón Parrish) kicked off on Friday, August 24th, but preparations began much earlier. Not only did it take over a month to build the temporary structures, staging, booths, and cooking facilities, each neighborhood in the cantón of San Ramón was busy raising funds for the needy of the parrish. We were given an introduction to this part of the festivities by Vilmar, the visiting nurse from our EBAIS (local clinic). He explained to us that each neighborhood or district nominates a candidata (candidate) to run for La Reina (the queen of the festival). Think of it like the Miss America pageant, but instead of the states sending their local pageant winners, 24 barrios of San Ramon county sent their candidates. The big difference, though, is that these candidates aren’t judged on their beauty, talent, or how they look in a swim suit. To be a candidata, a woman must be at least 35 year of age, be of high moral character, be married in the Catholic Church and never divorced, have children, and be a servant of the Church.
And each candidata is responsible for raising money. Though Vilmar works in the district of Santiago, he and his family live in the district of Piedades Norte, and they devoted their energies to making over 1,000 tamales to sell to raise funds for the candidata of Piedades Norte. We bought 70 tamales for ourselves and our neighbors, and purchased a raffle ticket, to help them in their efforts.
So, on the 24th of August, we were invited to join Vilmar and his family for the Grandioso Baile de Coronación (Grand Coronation Ball). We didn’t know what to expect, just that the queen of the 2012 festivities would be crowned.
The Community Center in Santiago was transformed for the celebration with a stage, fresh flowers, cloth drapes, special lighting, and a live band playing Latin music. There must have been about 400 people there – young and old — dancing, talking and having fun. People were wearing everything from blue jeans and mini-skirts to their Sunday finest. We only saw one other Gringo there, a young exchange student who was dancing with her Tica friends. After about 30 minutes, the 24 candidatas entered the hall. They were announced individually by name, barrio, age, and number of children. Most of the candidatas were in their 60s and 70s, however one was as young as 36 and another as old as 82. One was the mother of 11 children. They were dressed in their finest clothes, some in evening gowns, and all with a burgundy sash identifying them as the candidata for their barrio or district. Following the 2012 candidatas, La Reina 2011 entered the room wearing the corona (crown), and shortly after, she and her husband went to the dance floor to officially open the Ball. The music, dancing, and happy atmosphere made it a fun night. The music style was tropical, with the band playing lots of salsa and meringue, with some Rumba and Pasa Doble thrown in. There were even fireworks shot off just outside the hall in celebration.
But of course, the highlight was the crowning of this year’s queen — la Señora San Ramón 2012. As in true pageant style, there were awards given to the first and second runners-up, as well as to the candidata deemed most photogenic and most sympatica (think “Miss Congeniality”). The deciding factor for who would be queen, however, was the amount of money raised by each candidata and her church. Finally the big moment arrived and the winner was announced – La Reina 2012 was the candidata from Piedades Norte! Everyone at our table cheered and Vilmar was ecstatic, you would have though he won himself. We told him we would get him a crown from Burger King and vote him the King of the Festivities.
Paul and I were honored to have been a part of this very Tico event in our very Tico town of San Ramón. Living in the culture, and being part of the community, is important to us and one of the big reasons we’re in Costa Rica.
Yesterday was the highlight of the festivities, with the procession of the patron saints around the central park and their entry into the Church. It’s one of the biggest days of the year in San Ramón and people come from all over the county and beyond – young and old, entire families.
On this day, every church and every organization with a patron saint takes part in this parade, led by Catholic priests and the statue of San Ramón Nonato, the patron saint of the town of San Ramon. Each barrio (neighborhood) was represented by their patron saint, either carried on a platform on people’s shoulders, on the back of a truck, on a trailer, or even transported in the bucket of a backhoe. The bomberos (firemen) brought their patron saint on top of a shiny red fire engine. There were the patron saints of the feria de agricultura (farmers’ market), education, music, the disabled, coffee growers, the municipal government, and many, many more. The procession was religious but not solemn; festive in spirit, with mariachis, marching bands, dancing, and lots of kids. Many in the crowd wore red and white, the colors of the festival. It was an occasion to celebrate family, community, and friendships in this special place called San Ramón. Here are two minutes of some of the highlights. Pura vida!
One of the few things we miss from our lives in Baltimore is the Szchuan House, probably the best Chinese Restaurant either of us has ever been to. While there are a growing number of Chinese immigrants in Costa Rica, there is a shortage of good Chinese restaurants, especially once you get out of San Jose, the capitol, and nothing that comes close to our beloved Szchuan House. So we were delighted when a new Chinese restaurant opened in San Ramón, Restaurante La Casa Sabrosa. Granted, the menu is basically slanted towards Tico tastes, but they DO have good egg rolls, or as they call them here, tacos chinos. We enjoyed every bite!
In trying to add some Asian cuisine to our dinners at home, I made Chicken Curry one night, then I tried my hand at making Chinese steamed dumplings. I stuffed them with ground pork, shredded Napa cabbage and carrot. They weren’t quite up to the dumplings at the Szchuan House but with a couple of dipping sauces, they were pretty good! Next up on the Asian front…wonton soup with the rest of the dumplings I made.
Tori and Laura remain a big part of our lives. They both bring us a lot of joy, in their own unique ways.
Tori, ever the adventurous one, has found yet another way to show her irrepressible personality. She has started climbing doors and sitting on the narrow top edge of the doors. It started in the bathroom; she would jump to the sink, then to the top of the door, pulling herself up by her front paws.
Here’s a picture of her on the bathroom door, looking out the window while Paul’s in the shower. She has since figured out a way to get to the top of all four of our doors and can even walk the ledge, turn herself around, and stand on her hind legs to investigate the beams. That’s one strong kitty!
Paul’s Monthly Tip to Live for Less in Costa Rica: Pay Cash for Almost Everything and Save 5% to 10%
In reality, all businesses are supposed to charge the same to credit card and cash customers, but rarely do. A few places will actually add a few percentage points to your bill if you pay by credit card. So the incentive to use cash is even stronger.
As you can imagine, they encourage cash sales for several reasons, principally to avoid a paper trail and, hence, “avoid paying taxes” which is a national pastime in Costa Rica. This is especially true in the service industries but can also hold true when buying retail items. Here’s a list of some of the places that will give a cash discount if you ask for it:
- auto mechanics
- beauty and barber shops
- small food stores
- furniture outlets
- auto parts stores
- health food stores
- and many other small, and not so small, businesses.
But if you don’t ask, the retailer won’t give you the cash discount. They will still do the cash transaction without you even knowing that you could have had a cash discount. Naturally, they love this, since it’s an extra 5%-10% profit that goes right to the bottom line and perhaps off the books. So always, always, ask for a cash discount. ¿Hay un descuento por dinero en efectivo?
Remember, also, should you use your U.S. bank credit card, you may incur additional bank charges on every purchase. Check with your bank to see if this applies. The bank fees, often 1.5% or $.75 on a $60 purchase can really add up. So this is another very good reason to pay with cash.
Oh, by the way, don’t forget another one of Paul’s Money Saving Tips — use your “Gold Card” if you are 65 and qualify and get an additional cash discount!
Paul’s Monthly Weather “Report” – August 2012 Data
Let’s see what happened on our mountain at 3950 feet elevation, four miles west of San Ramon, and 9 degrees north of the equator. Here’s the trend over the last 11 months:
- October 2011: 35 inches (normal 13-15 inches)
- November 2011: 5 inches
- December 2011: 2 inches
- January 2012: 0 inches
- February 2012: 0 inches
- March 2012: 0 inches
- April 2012: 11.9 inches (normally 2 inches)
- May 2012: 16 inches
- June 2012: 9.75 inches
- July 2012: 6.6 inches
- August 2012: 18 inches
We took the temperature at 6am, mid-day, and 6pm daily, as well as rainfall totals for the previous 24 hours, measured at 6am. All temperature readings are taken in the shade (just like official meteorologists do). If taken in the sunshine, the temps are usually 8-10 degrees higher. You also have to take into account the altitude — the higher the elevation, the cooler the temps. It gets warmer by about 4-5 degrees per 1000 feet as you descend in elevation.
We’re at 3950 feet elevation and, if you look at the rainfall map above, temperatures and rainfall will be approximately the same in all mountainous areas (the green shaded areas on the map) around the Central Valley. If you were to look at the mountains outside of Grecia, for instance, and where we live, the data would be similar, so it wouldn’t hurt to extrapolate.
It rained 18 inches in August, which is above the norm but on the days of the heaviest rainfall, we got our rain at night which is, again, different from the norm. The normal weather pattern held — sunny mornings, with clouds coming in late mornings and rain after 2pm; in this particular month, often after 5pm, so it didn’t really feel like we had 18 inches.
Rain Data from August 1st to August 31st (31 days)
- 18 inches of total rainfall ( heaviest rainfall: 3.4 inches on 8/7, 2.45 inches on 8/29, and 2.2 inches on 8/15)
- 2 days measured trace amounts of rain
- 5 days with zero rainfall
Temperature data from August 1st to August 31st (31 days)
- 6am average: 62.4°f (lowest reading was 61°f on 6 days)
- Mid-day average: 73.7°f (high of 79°f on 1 day & the lowest high of 70°f on 1 day)
- 6pm average: 65.6°f (lowest reading was 64°f on 6 days and highest was 68°f on 1 day)
That’s it for this report. We’ll continue the weather info next month.
You’ve decided to move to Costa Rica and “no hablo español.” Can you get by with only English? Probably. But to have a richer experience of the culture, get to know some Ticos, and have more fun, you should learn Spanish. Watch our video below for more reasons:
Taxes have been on my mind lately. We filed an extension to the original deadline so for us, the deadline to file our U.S. Income Tax for 2011 is October 15th. We came across the website for Taxes for Expats which has a lot of helpful articles and decided to share some with you in coming newsletters. Here’s the first one, written by I.J. Zemelman, MBA, EA.
Should I File My Expat Tax Return by Myself?
If you have stumbled across this article, it’s most likely because you are thinking about preparing your own expat tax return – which is just fine! Many international employees successfully file their own overseas tax return. If you are new to expat taxation, however, there may be more ins and outs than that of which you’re fully aware. Here is a list of pros and cons to filing your own overseas tax return and a few extra topics to think about along the way.
Why Prepare your Own Expat Tax Return
1) Spend Less Money!
Saving money seems to be the primary reason why expats elect to prepare their own taxes. Traveling across the Universe can get quite costly, and many expats are interested in saving as much as they can however they can.
2) Finding a Trustworthy Accountant or Tax Professional can be Difficult
The process of filing taxes exposes all of your most sensitive information. The current times in which we live have shown us that professionals with titles can be as conniving and dishonest as anybody else. Take a look at Enron, for example, an entire group of ‘professionals’ who were only out for their own good. Just because a person has initials after their name doesn’t mean they are a trustworthy professional.
3) You Know Your Financial History the Best!
A professional preparer of taxes may quite logically ask you a series of questions to maximize your deductions and credits to help you get as high of a return as possible on your taxes. In the event you’re preparing your own overseas tax return, you contain all the knowledge you need. When you take a seat at your computer to begin the long process of filing your return, you will generally recall somebody telling you that specific expenses were deductible. You may also recall the donation slip which came from Goodwill or Out of the Closet. Of course you will have to fish all this paperwork out, but you would have to do that anyway in the event that somebody else was filing your return for you.
4) You Can Take Advantage of the Information Available on the IRS Website
If you are like most expats you have a good head on your shoulders and you are quite comfortable using the internet to find the answers you seek. The IRS has a fully functional comprehensive website with education tools to help US citizens working as international employees file their expat taxes accurately. The IRS has information on their website including various forms and publications, tax software links, foreign exchange rates, and information on tax treaties and SSA agreements in effect with various foreign countries. The most definitive challenge of using the IRS website is the ability to understand IRS jargon. For example, you may consider yourself a nonresident after moving overseas and may be led to believe you need to file a 1040NR. In this case, however, ‘nonresident’ is being confused with ‘nonresident alien’ – a person without a green card and who is not a US citizen who needs to file a 1040NR.
5) Filing Your Own Return Offers You Better Insight as to How to Prepare for Tax Season Next Year
The first time you prepare your own taxes, you may find that the bulk of your time is trying to locate paperwork to back up some of your deductions. Other time is spent simply wrapping your head around the multiple forms and pubs you will need to file your taxes. Tax professionals become more and more versed in this process as the years pass, and so will you. Filling your own expat taxes will give you an idea of how you can better prepare for tax time the entire year. Perhaps next year you will designate one folder for all of your taxable and deductible items to make your compilation process a lot simpler.
6) File Your Taxes on Your Own Time
It will probably take you around 30 hours to complete your expat taxes for the first time. The benefit about doing this on your own is that you are working on your own time – there is nobody else waiting on you to provide them with the information they need. If you have the time it takes to invest in learning and compiling your documentation, self preparation may be the ideal route for you to take.
7) Take Advantage of Guided Tax Preparation Software
Hundreds of thousands of American citizens are taking advantage of tax preparation software to help make filing their returns easier. Many of these programs are intelligent and interactive, informing the taxpayer about possible deductions and exemptions along the way. There is a downside to these programs, however, when it comes to filing expat taxes. Most of the widely used tax preparation software programs are generally designed for the standard US family with double income, a mortgage and 2 or 3 children; thus, they are not geared toward the active and ever-changing lifestyle of the expat taxpayer.
Why Not to Prepare your Own Expat Tax Return
1) Possibility of Overlooking Deduction or Exclusions
The primary reason to rely on a tax professional to file your overseas tax return is to make sure you are claiming all the deductions and exemptions for which you qualify. Even though the IRS insists on taxing your earnings even in an international setting, they are still interested in offering a wide variety of credits to help offset the cost of international travel. An expert is more likely to get a higher amount back for you than if you were filing yourself, simply because they are more aware of that which is offered to you by way of deductions and exclusions.
2) Alternating Tax Periods in Various Countries
Living in the United States, you have become quite familiar with the tax year coinciding with the calendar year. There are quite a few countries, however, whose tax year is not based upon a calendar year, and the process of proration and conversion to adequately and accurately file your US tax return can be a daunting task. A tax professional is generally much more versed in these types of financial maneuvers and requirements of such on your expat tax return.
3) Complicated Mathematical Equations
With all of the varying deductions, exemptions, and credits available to expats, the amount of forms required can be astronomical. With each form is a new set of rules and regulations and a whole new list of numbers which need to be calculated correctly. Not only that, numbers need transferred from one form to others and one ultimate equation being wrong on one form can cause everything else to be wrong. Additionally, all exclusions are calculated differently. For example, some exclusions are calculated by international geographical location and other are calculated by percentages or bottom line dollar values. These contingent rules can quickly become overwhelming for a self-preparer who may become stuck without the help of a tax professional.
4) Sense of Calm
The IRS is becoming less and less sensitive to expats who do not file or who file inaccurately. For fear of tax evasion via offshore accounts, the IRS has added to the amount of auditors working on foreign tax claims, and they rely on voluntary disclosure initiatives to identify off-shore activity. You could be a target of the IRS for a simple mistake made on one of the numerous forms required without even knowing it. Doesn’t it bring you a sense of calm to think that somebody with years of experience can help you avoid IRS trouble by filing properly and accurately in the first place?
5) Knowing Whether to File a State Return
Many states in the US have their own tax laws. There are some states which require you to file as an expat if you so much as hold a driver’s license in the state, while others only require you to file if you exceed a certain dollar amount of income which originated in that state. Learning about each state’s requirements can be quite taxing on your time and brainpower, and hiring a professional who knows the detailed requirements of each state can help make sure you don’t overlook this important step if you are, in fact, required to file.
6) Knowledge of All Forms and Publications
Every year the IRS has a way of adding additional reporting requirements to expats and to foreign transactions in general. A large number of our customers are shocked to find out that an FBAR reporting requirement is in effect for any offshore account which contains more than $10,000. Additional sources of reporting requirements are foreign stock, foreign trusts (or foreign retirement plans which are viewed by IRS as a trust to which you are the beneficiary), and many other transaction types.
7) Incessantly Evolving Tax Laws & Regulations
Tax laws which change from year to year can make it difficult for regular citizens to file accurately. You can easily assume that last year’s tax laws will be the same as this year’s, so if you’ve done this before you think you’re walking on easy street, when – in fact – your way off base. A tax professional is constantly learning about tax updates and is prepared at tax season to apply all the changes throughout the year.
8) Widely Varying Tax Treaties
The US has 67 treaties in effect with multiple countries, and each has its own positive or negative implication on your expat taxes. Learning which country’s transactions earn you exclusions or subject you to penalties can lead you through a confusing maze of information and jargon almost impossible to understand. A tax professional who specializes in overseas tax returns has access to and is familiar with every active treaty.
It may have occurred to you while reading this article that we highly recommend hiring a professional to prepare your expat taxes. More often than not, the difference in the amount you get as a return easily justifies the cost of having hired an expert. Each of our reasons why and why not to prepare your overseas taxes on your own may have its own implication to you and your set of circumstances. Odds are, you would be able to ultimately file on your own and adequately submit all the forms and publications required, but you may not be fully aware of everything available to you. If you want to make sure you get the most out of your international employment, make sure to contact us for help.
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Check out our newest posts on www.retireforlessincostarica.com:
- A Day in the Life
- Why We Chose Nuevo Arenal, by Janet Bradshaw
- Why We Chose Costa Rica
- The Rat Race, by Diana Miskell Turlock
- Documents You Need to Open a Bank Account in Costa Rica
- Money vs. Time
- Paul’s Monthly Tip to Live for Less in Costa Rica: Buy Fresh Flowers
- My Visit With The Yeatmans, by Joe Tursi, Heredia City
- Two-Month Window of Opportunity to Invest in CDs
- Our 2012 Annual Cost of Living Update
- Inflation in Central America
- From 11.75% to 12.5% Interest on a 12-Month Certificate of Deposit!
- Paul’s Monthly Tip to Live for Less in Costa Rica: Save on Telephone Service
- How do you define happiness?
- Book Review: Butterfly in the City, by Jo Stuart
- ‘Tis the Season…for Mold and Mildew
- Crime Stats in Costa Rica
- Why retire outside of the U.S.?
That’s all for this month, but we’ll be back in touch soon! If you enjoy our newsletter, please share it with your friends. We hope to see you online!
Gloria & Paul Yeatman
San Ramon de Alajuela, Costa Rica