Ask your questions about Renunciation and Relinquishment of United States Citizenship and Certificates of Loss of Nationality.
Please note that the guidelines for this discussion are published here.
Ask your questions about Renunciation and Relinquishment of United States Citizenship and Certificates of Loss of Nationality.
Please note that the guidelines for this discussion are published here.
*I have a question I hope someone can answer. My mother was born in Canada with a Canadian birth certificate prior to 1935. Her mother was Canadian and her father was a US citizen. She has lived in Canada her entire life, only worked in Canada, owned property only in Canada and only had bank accounts in Canada. Two years ago she discovered that she qualified as a dual citizen being born before 1935 and applied for a US passport. She has had the passport for 2 years and does not have a social security number. She is under the 91,000.00 tax exemption limit, and has no intention of living,m having a bank account or owing property in the USA. She only got the passport because she thought it would be fun to have. This has not been fun after finding out that she is to file the 1040 forms which she would not owe anything on, but she does not understand why she would be required to file a FBAR form. If these are only to catch US citizens moving money out of the USA to avoid tax and she has never had any money in the USA, She is a Canadian first and has been for 75 years before becoming a dual citizen. She does not have to provide personal bank account info to our Canadian Government. A cross border accountant advised us that there are huge penalties for not filing the FBAR and that to renounce there is the 450.00 fee and that all her assets would be taxed including her home. How on earth can the USA tax her home when she is on a fixed income and never had anything to do with the States until she got the passport 2 years ago. She has not even used the passport in the last 2 years. All she wants to do is give it back, they sure do not tell you about all the implications when you apply for the passport. They must really be desperate for money if they are going after our Senior citizens who have lived in Canada as Canadians with Canadian birth certificates. What are her options, and whom should she go see. We have been told to talk to the US cross border accountant, an immigration lawyer, a cross border lawyer, or the US consulate. We don’t know which place is going to have the correct answer/ Information would be greatly appreciated. As far as I am concerned all she should be required to pay would be the 450.00 fee to the US consulate. There should not be any tax implication.
@Sadiegirl
Welcome to the Isaac Brock Society site.
There are many posters on this site much more knowledgeable than I am and hopefully they will respond to your post.
By applying for and receiving a U.S. passport, I believe the U.S.considers your mother to be an American. As a U.S. citizen, they expect your mother to file both tax returns and FBAR forms.
You mentioned in your post ‘the 91,000 exemption’. I believe what you are referring to is the Foreign Earned Income Exclusion. That exclusion of income is only “Earned Income” ie income from employment. As your mother was born prior to 1935, I suspect her income is not earned income and therefore would not be excluded under the FEIE. There is another aspect of U.S. tax that could result in no tax owing in the United States. That is the “Foreign Tax Credit”.
Sadie, there are many of us on this site with little or no contact with the U.S. for decades. I, myself, although born in the U.S. have been in Canada for more than 50 years. All my assets were earned here in Canada. I have never had a U.S. passport, nor voted in a U.S. election. When I became a Canadian, I formally ‘relinquished’ my U.S. citizenship. They however, would like to reclaim me. Therefore, I may have to go to the U.S. consulate and file for a Certificate of Loss of Nationality based on my former ‘expatriating’ act. In your mother’s case, however, she has reclaimed her U.S. citizenship by applying for and being granted a U.S. passport.
To be free of the U.S. requirements of tax returns and FBARs, I believe your mother’s option is to renounce her U.S. citizenship at a Consulate. However, I also believe she would then be required to have her U.S. tax returns up-to-date. The U.S. would also expect her to file FBAR forms but she could choose to not do that. The U.S. would consider your mother to be ‘dual at birth’. There are specific rules regarding that and I am not sure of what those rules are.
Your mother’s other option is to remain an ostrich and that could be the best option. You did not mention FATCA in your post. Are your mother’s financial institutions aware of her U.S. citizenship? If they are, this could eventually cause your mom a problem should she decide to remain an ‘ostrich’.
Your mother definitely needs advice. You have found IBS and I suggest that you read all you can about “Renouncing and Relinquishment” and also read about FATCA. I would not suggest booking an appointment with the U.S. consulate at this time.
One more option could be to formally renounce and then ignore the IRS requirement of filing any forms. Others on this site would be better able to advise you.
*Thank you for the reply. My mother had only filed one 1040 which was returned to her as she does not have a social security number.and does not want one. I don’t see how the USA can force her to get one. When they returned the 1040 to her they did not say she requires a social security number and she has not heard from them since. If this was mandatory they should have also made her apply for one when she applied for the passport. We just last week found out about this FBAR form. Her only income is Canada Pension and Old age security other than that it is just want she has to w/d from her RRIF’s each year. She is not sitting on a plie of money. Her RRSP (RRIF) are under 90,000.00 total. She pays her income tax in Canada which is a very small amount. I am joint on all her accounts and her home and am 100% Canadian. She receives no money from the USA for her retirement, how do they have any right to tax her total assets including her home if she want to renounce her citizenship. Getting this passport is the dumbest thing we have ever done. She was proud that she qualified at one point. I think they should change the rules so if you swear an oath in front of a lawyer or judge or consulate and the USA does a search to verify that you have never owned property, worked or earned any money there you should be able to renounce for only the 450.00 fee. If they penalize and fine her some ridiculous amount of money or tax her few assets including her home, who is going to support her and give her money to live on the rest of her life, the US government????? I don’t think so.
@Sadiegirl,
You make very good points. What the Americans are doing with their ‘citizenship based taxation’ is absurd. As far as her not having a social security number, there are many people on this site without a SSN.
I do think your mother’s choices are to be a ‘full ostrich’ and do nothing or to renounce her U.S. citizenship officially at a U.S. consulate. Renouncing would require her to affirm that she is tax compliant. From the information you give above, in all probability your mother would not owe any tax to the U.S. and her home would be safe from tax. However, you need a professional to look at the situation. Just be very careful with tax lawyers and tax accountants. Besides reading the IBS, I suggest you read both Jack Townsend and Phil Hodgins. You can access both from this site.
*Do nothing.
*@sadiegirl Sorry to hear your mom got herself into this mess but I don’t think she has anything to worry about without SSN and having a Canadian birthplace. She won’t have any trouble in the future at a Canadian bank because she has a Canadian birthplace. Just don’t mention the US passport if she is ever asked. As far as the IRS, they can’t do anything to her here in Canada. If she has no SSN, she is off of their radar. This is just my unprofessional opinion, but if I was her, I would just do nothing.
Just my 2cents on this.. We have lived through this horror show so know quite a bit about it…I this time I don’t want to go into all the gory details about us..I learned a lot about what to do from the Serbinski site. http://forums.serbinski.com/viewforum.php?f=2&sid=f431045a371ffb4e3942ef81bc856a12 A person named nelsona is the resident expert.Post your problem on that site and see what he has to say.
I think you have really poked a hornets nest…My gut tells me you should do the Ostrich trick since I don’t think your mother will get caught up with FATCA with a Canadian birth certificate..but having the U.S. passport and filing a 1040 has let a lot of hornets out of the nest and you can never tell if that will come back to bite her…If she wants to get legal she has first get a SSN and then file 5 to 6 years taxes and FBARs in a quiet disclosure with cover letters explaining why…then she can keep her dual status or go to her nearest U.S. consulate and make an appointment to renounce and be free from them…Be an Ostrich or become compliant it’s your only two options…Sorry
@Sadiegirl
I tend to agree with iamquincy. Do nothing. Of course, only your mother can make that decision. I certainly would never use the U.S. passport – use only a Canadian passport. With a Canadian place of birth and no SSN, it sounds like FATCA should not be a problem. To quote Schubert1975 from another thread “Don’t wake the sleeping bear”.
*Chester12: Thank you for your reply. Sorry to take so long to respond. I’ve been doing a bit more reading and came to the same conclusion as you that I would have no need of the W-8CE. Thank you again!
*Thank you for all he replies. We just want to get rid of the passport she has only had for 2 years. I don’t want her to have any more stress about having her home taxed and possibly loosing it if she cannot pay the tax. Does anyone know what the tax rate is on your total assets when you renounce your citizenship? Why would she need to file the last 6 years when she has only had a passport for 2? Will they really let her go if she does this. I have heard they still won’t release people even after you renounce. She has no intention of ever going to the USA again.
@sadiegirl,
If your mom has no intention of ever going to the US again; i.e. no family there / can go elsewhere for vacations if she wants to — it’s a big world outside of the continental USA, Canada says she will be safe here, especially as a Canadian citizen — safe from any horrendous FBAR penalty and safe from penalty for non-filing of US taxes. Don’t even ask the questions whose answers will never make any sense. I’m sorry that your mom has this worry for doing something “stupid”. Indeed, I did too. I am 68 now and am using retirement money to be totally compliant before my renunciation. At the very least, don’t let your mom be hasty in having someone tell her what she has to do. We are all waiting for further instruction from the IRS. It’s a damn good thing we haven’t all been holding our breath. Please stay tuned in here and try not to worry; it will seem to drag on and on. Check in here whenever you have the compulsion to do anything but nothing for the time being. Remember what everyone is saying here. Have your mom put this all on a shelf right now and get on with enjoying her life.
*Your Mother must do absolutely nothing!! She is perfectly safe. It’s not a question of ‘ Will they really let her go?’ They cannot and will not do anything. We cannot stress strongly enough that she is home free. Do not trust an accountant that says she could be liable for penalties and tax on her home.
*Canada won’t collect taxes or penalties on Canadian citizens. It’s in the tax treaty and Jim Flaherty has stated this as well. Your mom should just ignore this if she has no intention of going to the US. It’s not worth the hassle and cost for her to do all of this paperwork when the IRS can’t do a thing to her here in Canada. She will have no problem at her banks since she is born in Canada. Without a SSN, no one will bother your mom.
*Thank you so much for all the advise. I will pass all this information on to her and keep following the forum for updates
*@ oldgringo, if you don’t care to answer I will understand, but did you contact the IRS after relinquishing or are you taking the pre 2004 route? I have a similar history, came to Canada in 1956, citizenship in 1972, no SSN, passport but suddenly find that I am a desirable commodity in the homeland. It’s great to be popular but I can do without this kind of attention! I’m currently employing a” wait and see” approach while waiting for citizenship records to arrive and then it will be decision time. Do nothing, or apply for a CLN, there is uncertainty in either approach but a CLN in hand would offer some comfort. I feel like an old mob member who is being pressured to do one last job!
@CDN
Your history is similar to mine. I came to Canada in 1961 on a student visa, married a Canadian in 1964 (landed at that time) and then became a Canadian citizen in October, 1972. I received my citizen records from the “Access to Information” department in March.
You are probably already aware that prior to April1973, the Canadian citizenship oath was two parts. The first oath was: “I hereby renounce all allegiance and fidelity to any foreign sovereign or state of whom or which I may at this time be a subject or citizen.” The second oath was swearing allegiance to the Queen and her heirs.
In other words, the Canadian citizenship oath was NOT an ordinary oath of allegiance. It required one to renounce previous citizenship. I was told by the Toronto consulate that my expatriating act would be ‘irrevocable’.
I, too, have not yet applied for a CLN. I do feel that the citizenship document, with the renunciatory oath, should be the only thing required by my financial institution in regard to FATCA rules.
Whatever decision that I ultimately might make (apply/do not apply) for a CLN, I will most definitely not be filing any US tax forms or FBARs. If you have been reading this forum for a while, you might remember that Steven Mopsick (30 year IRS Vet)’s certainly did not recommend filing tax forms. I believe his words were that the IRS would say “Come on, make my day”, if they were to suddenly receive tax forms from people like us who had relinquished years ago.
CDN
you are in the exact position I was in…I was worried about FATCA when it gets here. Like I’ve posted my banks etc. know where I was born ..I never felt I had to hide the fact…I was worried what were they going to do what law were they going to change in the future? How hard is it going to be to get a CLN when millions of people are renouncing around the world?….I was also worried about getting turned back at the U.S. border with a Canadian passport with a U.S. birth place…especially after I learned it’s against their law for a U.S. citizen to come into the U.S. on a foreign passport…All these years I’ve never had a problem at the border..in fact one time years ago they asked me to come into the office and they told me because I had relinquished my citizenship because of a job requirement I could easily get my U.S. citizenship back by only filling out some papers which they gave me…I even thought about it..But decided I was never going back to live there..because of our low dollar at the time and the cost of their health care..what would be the point? Thank God I didn’t….That is why I applied for a CLN and I also applied because no matter what I thought I had to see what my status really was in their eyes…because if they did not give it to me I had to prepare to get compliant.
As far as the IRS is concerned from what I have read and how I feel.. my responsibility to them ended in 1971 and I think that they have bigger fish to fry than coming after a old Canadian with a CLN dated to 1971 in his hand.
.If your interested I also found a very important a court case of a man who became a Canadian in 1971 in B.C. he lost his U.S. citizenship because of the the statement in the naturalization oath, he then tried to get it back and the State Dept. would not allow him to get it back..he even took the U.S. government to court twice and lost both times! http://ftp.resource.org/courts.gov/c/F2/752/752.F2d.1413.82-5991.html and here is more info on the oath that changed in 1973 http://www.americanlaw.com/dualcit.html
From the above web site:
I feel so sorry for people that are waking up to this nightmare..when FATCA comes to Canada the $hit is going to hit the fan!I don’t believe the banks or our government are going to change it…I also don’t think the IRS wants to throw grandmothers in to jail over this and they have as much as said that.
http://www.foodmanpa.com/news/fatca-the-irs-goes-global/
*@Tiger, yes I remember that oath vividly because it was my intention to renounce and I certainly don’t intend to submit to the IRS shakedown attempts after being a non US citizen all of these years!
@oldgringo, thanks , I’ve been aware of the Richards case for some time and it is a source of some comfort but the US has shown a willingness to change the rules to suit their needs. It’s never over till it’s over!
Old gringo…
I put this Stanley Foodman in the category of Trolling for OVDI dollars, under the guise of educating you.
This is just a self promotion marketing brochure, and buyer beware.
I wonder if he just wants everyone to enter the program, or if he has alternate strategies? He doesn’t seem to indicate that.
When I read things like this…
…..I then know he is trolling for Whale clients. His bottomline is most important consideration for him. He is making no distinction between those egregious Whales and many other benign minnows on this blog. I would NEVER EVER recommend that anyone consult with him, as his fees may be worse than the penalties, in my opinion.
*Discretion is the better part of valor with respect to Canadians who have discovered that they are US citizens having been born in Canada to a US parent. Under US tax laws they are required to file US tax returns if their world-wide income is, I think the current amount for 2011 is $9,500, even if the foreign earned income exclusion and foreign tax credits completely satisfy the US tax obligation. As I understand it there is no penalty for failure to file if the tax liability ends up as zero.
But FBAR reports are a different animal. They are required for each year that your maximum value in US dollars of all of your foreign bank accounts reaches $10,000 at any moment during the tax year. And even if you reported your income from these accounts and paid US tax if any was due, the fact that you failed to submit a FBAR report for each year when you were required to do so can result in massive penalties – some $10,000 for each year you failed to submit them. And if you knew that you were supposed to have submitted them but deliberately did not do so, then the penalties can really kill you.
So tread with great care in this area. If you keep your money in your mattress then FBAR reports are not required. But if you deposit it in a bank account they are.
Just me
Sorry ..what i was trying to convey and doing a very poor job of it was that the USB bank was fined $780 million for not wanting to disclose their U.S. clients. And I’m sure that it would have a chilling effect on our Canadian banks.
“In 2009, UBS AG agreed to deferred prosecution, paid a $780 million fine and turned over 4,000 names of its U.S account holders in order to avoid criminal charges for helping wealthy Americans hide assets.”
I posted that link without explanation, and after re reading it I came to the same conclusion as you..I’m definitely no fan of OVDI ..OVDI is for U.S. tax cheats not for the majority of the people reading this site. I will be more careful in the future what i post.
@Roger,
In addition, for those Accidental Americans in Canada who have a developmental disability or any other type of disability that affects their mental capacity, for which their parents / Guardians / Trustees cannot renounce US citizenship on their behalf even if they deem that to be in the best interest for that person, they must remain a second-class Canadian by virtue of US citizenship versus any other Canadian with a like disability — no savings for them in Registered Disability Savings Plans or Tax Free Savings Accounts or for their siblings in these and the Registered Education Savings Plan. They do have choices, however — never visit any family member in the US or be a Canadian tourist in the US for fear of crossing the border onto US soil OR be protected by the Canadian Government from draconian US reporting and tax compliance laws, and unable to question their second-hand Canadian citizenship status since they are required to retain their supposed US citizenship with no benefit at all from the US. It is called discrimination.
@oldgringo
Not a problem. I was enjoying your comments (actually learning from them) until I saw that link! LOL I understand what you are trying to do…
Cheers
*THANK YOU so much, everyone, for all the info and support you provide on this Forum! It is greatly appreciated!
I decided this past week to renounce my citizenship. Do I need a lawyer to complete this process (i.e., the paperwork for the Consulate)? I’ve read a bit on the renunciation guide site, and of course I’ve read several posts here. It doesn’t seem like a need a lawyer, correct?
I will use professionals to prepare the tax returns, but my understanding is that paperwork gets started after one goes through the renunciation process at the Consulate.
I’ll be going to Vancouver. I haven’t made an appointment yet. Is it best to send an email or to phone? Does it matter?
Fortunately I filed US tax returns all along (over 30 years), but was blind-sided last summer by FBARS and some other forms. I’ve always used tax professionals to complete my paperwork and they were blind-sided, too! And they “specialized” in preparing US tax returns! I paid several thousand dollars last year to get caught up. It was all just pointless paperwork – it didn’t change my tax return results as no tax was owing. (Thank goodness for small mercies.)
I’m approaching retirement with no company pension, just my savings, and should be able to squeak through my retirement years on my savings IF I’m careful. I live a very modest and frugal life – no money for fancy frills or extras – and really can’t see the sense of allocating thousands of dollars for tax preparation fees. I’ll never return to live in the US. I couldn’t even if I wanted to – I don’t have any Medicare or Social Security benefits.
This whole situation is so upsetting. I can’t believe how many hours I’ve spent worrying, thinking, and reading about this subject in the last year. It boggles my mind when I think of what else I could have done with my precious time!! And that’s why I decided enough is enough. It makes me sick when I think about going through this renunciation process. I mean that literally. I’m sick to my stomach. I can’t continue to be terrorized by this topic, fearful of what new forms, laws, restrictions, and regulations might be in the works as the years go by. I don’t need this as I enter my senior years!!
I still want to be able to visit the US as I have siblings and nieces and nephews there. But it seems I should be able to continue to do this after I renounce since I’m up to date with all tax obligations and would “exit” the US in the proper manner. Correct? I’m not a covered expatriate – my net worth is far below that threshold!
Once again, thank you for your help and support!