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.
*@ North Fish – I’m assuming your accountant is aware of Form 5471, yes? That’s the form one has to file if one has a business. It’s a very costly form to complete, but it’s important to be up to date with this if you renounce. You don’t want any nasty surprises.
As was said, it’s good you’ve been filing tax returns. There is an exit tax if one’s net worth if 2 million or more (actually, there are other ways to be a “covered expat” too, and that’s explained in the link Blaze provided above). The net worth/assets would likely include the value if you sold your business, but you need to check with an expert on that. Depending on one’s situation, it’s not too difficult to get bumped into that 2 million dollar category. It’s determined by a pretend sale – selling everything you own – and covers all kinds of assets that aren’t exactly liquid (home, property, etc).
Before taking any steps to renounce, you might want to discuss your specific situation with an accountant who specializes in US taxes and ask them how you would be affected by completing Form 8854. You don’t want any more surprises. You can check with the accountant who has prepared your taxes in years past, but if you just found out about FBARs now, they likely aren’t familiar with 8854 and perhaps may not be able to give you a truly informed and expert opinion.
It’s a cliche, I know but “I feel your pain.” đ All of us here have been/are “shocked, overwhelmed, and angered.” Most people, including “experts,” were unaware of FBARs and extra information forms until the s**t hit the fan last summer. But it’s definitely good you’ve been filing returns all along. That should give you brownie points in the eyes of the IRS when you send in your FBARs.
*@All Thanks for the info, a lot to digest. The clear answer is no one knows what to do or what the repercussions are but I think for now the best thing to do is avoid the border, and IRS, at all costs. It is amazing to me that being born on vacation could be such a complicated thing!
*@Broken Man – “If theyâve also filed five years of returns, except that not all covered expatriates have to pay tax.”
OK, yes, I reread the thread and I understand what you’re saying. Thanks.
*
Wow Broken man on a Halifax pier,
SadCan, and Blaze you have all been a God send! You have helped inspire
us and educate us to begin to
understand what category we fit into. Thanks for the advice to file the FBARs.
We had hoped that we would not have to since we strongly feel it is none of
their business, but if it makes the process go more smoothly then we may have
to. We will keep our eyes out for the OVDP and avoid it, as well as check into
the 8854 and 5471 forms! Thanks!
Good insight; we are our US accountantâs only foreign clients. The company
is very good with their domestic inland issues and we have become a âwhite
elephantâ to them since we moved abroad. We are thankful for the dedicated
service to us throughout the years but they even suggest that they are not
qualified to fully service us. We tried to find someone who was more qualified
and in the end got very poor advise that complicated our life and business, and
gave us a humungous bill. We donât mind paying for good advice but it stings to
pay big for bad advice and to have a mess to work out of. We searched for another
half year calling dozens of accountants looking for someone that could help us
with the dual citizenship taxation and our business or to refer us to someone
that they knew that could help, but to little avail. Finally, the one
international accountant that we thought may be promising basically advised us
to file and pay our tax to both places, no matter the extra hassle and cost, furthermore
donât worry about it. So in 2008 we finally gave up looking for quality help
until just recently when we were slapped in the face with the news of the FBAR
requirements that we were remiss in, along with the upcoming FATCA
reinforcement. It is clear that we need qualified help but where and how does
one find it? Any recommendations or
referrals in the western prairies? Accountant and lawyer, if needed.
Agricultural experience would be a benefit too.
We read on the Exit tax link you
provided and believe that each of us would not qualify as a âcovered
expatâ if those figures are based on per person. So would we still be required to file and pay an exit tax if we have
some assets that would have gains on them? While the asset gain has been
500% as of now, it fluctuates with the economy and demands and could easily
drop as fast as it has risen. 400% of the gain has come about in the last two
years with the shaky economy. Our fear is that if we denounce that we would
have to come up with a large amount of cash to pay this tax and would be forced
to sell all or part of our business to generate cash to pay the tax. It was
slightly reassuring that the IRS would extend credit with interest but not
really the desired alternative, if avoidable.
Would love to stay away from the US but unfortunately we have loved ones
there and aging parents and grandparents. But will definitely keep the times
there for personal only and to a minimal. Is there a
recommendation as to which passport is best to use when traveling to and from
the US while still dual citizens, before denouncing?
A British customs agent in the airport recently told me that he uses his British passport to enter Britian and his Canadian passport to enter Canada. He added, there is no extra paperwork to track you if you us the country’s passport. Know anything about that?
Thanks again folks for sharing your experiences. Sure appreciate the pain
you suffered to gain this knowledge to share with us. Perhaps we too will be
able to help others after we pass through the waters.
*If your assets at expatriation (individually) are under $2M, and your average annual US federal tax liability was under $140K or something (you’d have to be fantabulously wealthy to pay this much tax), and you’re up to date with your tax reporting, you’re exempt from the exit tax. But you still have to file 8854 to exit the US tax system in an orderly way.
As for the passport thing: do you want to relinquish or renounce? If you want to make a case for relinquishing, it’s a good idea to use your Canadian passport. If you’re thinking of renouncing, it really doesn’t matter.
@I don’t personally know any accountants or lawyers for this issue, but Steven Mopsick, Michael J Miller and Roy Berg have all posted here. Phil Hodgen has his own forum on expat IRS issues.
Roy is with Moody’s in Calgary. The other three are in US.
Roy seems to have considerable cross-border tax knowledge and experience. Because he is in Alberta, it is possible he has some knowledge of agriculture business or that someone else at Moody’s does. Here is a link: http://www.moodystax.com/meet/our-team/roy-berg.html
Steven has 30 years of litigation experience with IRS and is now in private practice. We have had many healthy, helpful and at times heated debates with Steven over the past few months. Steven is now on the advisory board of American Citizens Abroad. Check out Steven’s recent posting about Too Little But Not Too Late http://isaacbrocksociety.ca/2012/07/01/steven-j-mopsick-comments-on-irs-new-filling-procedure-for-americans-abroad-too-little-but-not-too-late/ and other posts from Steven. Here is also a link to more information about Steven. http://www.mopsicktaxlaw.com/Steven_Mopsick
Steven suggests “noisy disclosure” as a way to file back returns and FBARs with IRS. Michael J Miller is a proponent of “quiet disclosure.” Michael alleviated tons of stress for those of us who expatriated before 2004 in a recent post: http://isaacbrocksociety.ca/2012/06/19/if-your-expatriation-date-is-before-2004-the-rules-are-different/ I don’t think this would apply to you, as you maintained your US citizenship. You can learn more about Michael here: http://www.robertsandholland.com/MMiller
Phil Hodgen has his own forum which is a wealth of information. Here is a recent article about another US citizen driven to renounce due to the complexity of US tax demands: http://hodgen.com/another-expatriation-driven-by-u-s-tax-complexity/
I can’t personally recommend any of these professionals because my knowledge of them is limited to learning about them here. But, based on that, they all seem well qualified and helpful.
In terms of traveling across the border, US law requires US citizens to enter on a US passport. So, yes, while you are still a US citizen, you should use your US passport. You should return to Canada with your Canadian passport. There is currently no reason why you should not be free to travel to see your aging parents and grandparents, although some legislators want to make that more difficult in the future for anyone who renounces US citizenship. For now, take it one step at a time.
I hope you will hang around with us and learn more as we have and will continue to do.. I’m certain as you get your own knowledge ramped up, you will be contributing here. We all started off in the shock mode you are presently in. We have learned and supported each other along the way.
*@North Fish – Regarding passport use: As Broken Man says, if you want to relinquish one should just use the Cdn passport, however, if you’ve been using your US passport since you became Cdn citizens in 2003, and/or if you voted, and filed taxes (which you’ve been doing), it may be difficult to relinquish. Ideally, one relinquishes at the time of an expatriating act (e.g., becoming a Cdn citizen). But there is lots to read on this site, plus read the renunciation guide website and you can determine what is best in your situation.
In general, it is the law for US citizens to enter the US on a US passport. We know, however, that for umpteen years Cdn/US people have used just a Cdn passport to cross the border. Things are changing and I know people personally who’ve been told recently (this spring and summer) by US border agents to use a US passport when they cross the border.
Regarding referrals – ah, that’s a tough one. It really is buyer beware and lots of accountants and lawyers are not as up-to-speed as one might expect. If you’re in the Western Prairies, I’d suggest checking out Calgary professionals. As you probably know, Calgary has a TON of US citizens.
This is not a recommendation because I know nothing about this person except what I’ve read on the ‘Net, but Roy Berg specializes in this area. Here is a Calgary Herald article:
http://www.calgaryherald.com/business/Taxes+create+cross+border+issues/6690233/story.html
Here is his web page:
http://www.moodystax.com/meet/our-team/roy-berg.html
Here’s a recent blog post:
http://www.moodystax.com/blog/21-us-taxation-services/185-irs-offers-partial-tax-amnesty-for-canadians-with-qlow-compliance-riskq-though-questions-remain.html
Again, I’m not endorsing him because I don’t know him, but I suggest it as a starting place in your research for a professional. Reading about Roy Berg may give you a feel for what you should be looking for.
If I were in your shoes I’d read all I could about this topic (that way you can ask questions and quiz the prospective professional to see if they know what they’re talking about), and check out three professionals you might want to hire.
Also, I suggest you Google “Form 5471” and read about that because that is definitely something to need to discuss with the person you hire. That is an information form relating to your business and a very important form. If you have mutual funds, RESPs, RRSPs, or TSFAs, you will need to discuss this with your tax professional, too, so they have the full picture.
OK, that’s just my two cents. đ
Best wishes to you and your family as you embark on this journey! Please let us know how things go for you!
@North Fish: I should have done what Sad Cdn did and stressed I am not endorsing any of the professional names I provided. Neither I nor Brock endorse professionals. I provided those names as they have been contributors and a great source of learning for me and for others here.
A recent Forbes article on relinquishing your citizenship…
Are You Considering Relinquishing Your US Citizenship Like FB’s Eduardo Saverin?
Last I looked there were 4 comments called out, and I see Don Pomodoro made one of them.
*@Just Me – Thanks for posting this. I will be really curious to see if/when the media finally realize the majority of people expatriating are likely not the super rich, but rather middle class, ordinary people. Or the US government, for that matter.
If an average tax prep bill for an American abroad is $1500 per year, that means in 30 years they will have paid $45,000. For a young person who is looking at 60 years of compliance, that’s $90,000 or more, which is insane. It’s just PAPERWORK that means nothing to anyone outside the IRS.
If an individual went to a financial planner and said, “Do you think it’s wise for me to spend $1500 each year to get nothing in return?” the financial planner would think they were nuts. FPs talk about the “latte factor.” Well, at least if you’re buying a latte you get to enjoy it.
I did chortle over the comment left by some yahoo in response to one of those tax cheat articles. He said “You receive all the benefits and protection of being a US citizen. Don’t get stranded hiking in Iran or in a boat off the coast of Somalia,” he warned. Well. OK. Since hiking in Iran or being in the water off Somalia has never been on my agenda, I don’t think I’ll lose sleep over it. I have lost sleep, however, thinking about how that $45,000+ could make a big difference to me in my senior years, as well as thinking about how I will always have to have the IRS in the front of my mind as I make financial plans for retirement.
Deciding to renounce has been an anguishing decision for me, but in the end it’s a no-brainer. The cost of compliance is too high and too complex and I’ll never return to live in the US. Why do I need that citizenship? I can’t really think of a compelling answer. đ
If anyone signs form 8854 maybe they should write “under protest and duress” next to their signature. It is pure criminal extortion.Someone should end the Federal Reserve and the IRS.
*Great list of references to check out realizing you don’t endorse but know that they are in the industry and that some have contributed to the discussion on this site. Gives us lots of homework to do! But for a good cause. Seaching out the info here will help us to get up to speed and make a better informed descision of what we need to do and to find who is most qualified to help us. We feel so blessed to have found this site to guide us in a direction for our specific concerns. Thanks so much for each of you that has contributed your time to share your experience and knowlege with us. Your generous spirits renews our encouragement in mankind; that not all are greedy, deceptive and out to take advantage of others.
*If I am a dual U.S. and Canadian and renounce my U.S., file the 8854, file the 1-pager renunciation form at the embassy/consulate, and am not in the $2m asset – $140/k tax/year so no exit tax, can I still visit the U.S. for the purposes of family visits?
@DualCitizen
From renunciationguide.com: “Under current law, the U.S. cannot treat you differently after your renunciation than other citizens from your country. The only law that calls for different treatment is the so-called Reed Amendment (described below), which is unworkable and unused.”
One added note from me. This is “…under current law…”. The recently introduced Ex-PATRIOT act is an attempt to make the Reed Amendment enforcible and workable. Might pass; might not. Ordinarily cooler heads would probably prevail, but not so much with this congress where anything is possible.
*I recall a formal letter that was signed by a notary public re: relinquishing. It was in point form. I loved the format and would like to follow it – but cannot recall where it was. Can anyone help?
To those who renounced: What was the reason for renouncing that you stated on the form and when answering the consular officer? If you mention something related to taxes, can they use your statement to enforce the Reed amendment? Besides the cases that would qualify for relinquishment, it’s hard to think of a reason for renouncing other than taxes (and its related reporting requirements).
@ Shadow Raider
The statement Petros gave should be of some help. It is a good template for someone who is married to a non-American and emphasizes the loyalty one feels to the country which is intended to be one’s permanent home. Someone renouncing would be well advised to not mention the T-word of course.
Petros (Peter W. Dunn)
Here is my statement at my renunciation ceremony at the US consulate in Toronto on April 7, 2011:
I have lived in Canada most of my adult life. I have married a Canadian. After so many years in Canada it became clear that I have a great attachment to Canada, to my Canadian friends, to my Canadian wife and her family, and to my church community in Canada. I felt that it was therefore necessary to become a Canadian citizen so that I may become a full member of this great and wonderful country and its people. Therefore, I applied for Canadian citizenship in 2010, and I also had, even at that time, the intention of relinquishing my US citizenship. For in taking my pledge to the Queen of Canada, Elizabeth II, on February 28, 2011, I realized that it would be absurd for me to be of divided loyalty. My duty to the Queen and to the Dominion of Canada precludes me from maintaining citizenship in the United States of America, since when one country calls me to serve, dual citizenship could potentially create a conflict of interest. To avoid all such conflicts, I have decided with my full volition and all my heart, to relinquish my United States citizenship once and for all, realizing that it is an irrevocable act.
Hi everyone,
After 6 months of consideration, research, and planning, as of today I am currently officially in the process of renouncing my US citizenship (through the US Consulate in Vancouver, Canada.)
I gained a lot from reading this and other websites as I prepared for this process, so I thought I would return the favor by posting my experience here, and responding to any questions anyone might have!
BACKGROUND
I’m a 30 year old male, dual US and Canadian (both acquired though birth) at the start of a career in Canada. For many of the reasons widely discussed on this website, I am reluctantly renouncing my US citizenship.
MY EXPERIENCE SO FAR
I began by studying the step by step guide here: http://renunciationguide.com/Renunciation-Process-Step-By-Step.html
I very carefully prepared everything so that things would go as smoothly as possible at my first consulate visit. I assembled and made sure all my documents were valid and not expired: US and Canadian passports, US and Canadian birth certificates (short and long form), US Report of Birth Abroad (I was born in Canada), driver’s licence, US Social Insurance Card.
I also brought with me all my current contact information and my most recent address in the USA. Additionally I filled out IN ADVANCE the “Statement of Understanding Concerning the Consequences and Ramifications of Relinquishment or Renunciation of US Citizenship” form, and the “Request for Determination of Possible Loss of United States Citizenship” form (DS-4079).
I used the online system to make an appointment at the consulate, in the category of “American Citizen Services (ACS)”, “Other”. It was easy to get an appointment.
I arrived 30 minutes early for the appointment, and that was a good call since security and lineups took up the full 30 minutes. Once I was in, I proceeded to the first window I would need to go to (this was about 11AM). I was in the consulate from 11AM until about 2PM – either talking to one of three people that dealt with me, or waiting in the waiting room. So several times I had to go to a window, then go sit down again, then back to a window, etc.
All three of the people I dealt with were in every instance and in all respects TOTALLY NICE AND FRIENDLY! They did not bat an eye at the reason I was there, and simply did their jobs professionally and courteously. Also, there was no confusion – they knew exactly what needed to be done. They even apologized for the long time I had to be in the consulate – saying it was due to short staffing that day.
Throughout the 3 hours, this is what occurred:
1. They collected all the above-mentioned documents from me, photocopied them, reviewed them, etc. They were amazed that I had all the proper documents on the first visit, and said how much easier it would be because of that (missing documents may result in extra visits or correspondence by mail).
2. They asked me some run of the mill questions (contact information etc) and typed into their computers.
3. They explained the ramifications of what I was doing, and made sure I was cognizant and aware of what I was doing.
4. I signed the Statement of Understanding and DS-4079, in their presence.
5. I was asked “why are you renouncing”, and they typed up my answer and added it to the file.(so be prepared to be asked this question). I stated that I did not want to owe allegiance to two countries, and that I chose Canada as the country that I wanted to maintain allegiance to. DO NOT say you are renouncing to avoid paying US taxes, as my understanding is that that is not considered a valid reason to renounce. I think you can state almost any reason though.
6. Right then we booked the second appointment. They offered me an appointment as soon as in 10 days! However since I am travelling this summer, I took an available appointment time in September.
7. They returned all my original documents to me, and provided me with an information sheet giving more details on the process and the next steps.
WHAT IS NEXT
So, according to the information from the consulate, this is what will happen next:
1. At my appointment in September, I will meet with the Consul. At that meeting I think I have to swear or utter some kind of oath, and/or sign an official document in the presence of the Consul.
2. Pay the $450 fee, and they take your US passport at that point.
3. They mail everything to the State Department, who can take up to 1 year to review the file and approve or reject it. At the window they told me that they have never seen one rejected.
4. At some point, up to one year from the second visit, I will receive a package in the mail at home which will contain the Certificate of Loss of US Citizenship. The certificate will be BACK DATED to the date that I took the oath. That will be the end of the process.
5. The point when you receive the certificate in the mail is when you really know for sure that you are no longer a citizen. However, you actually LOST your citizenship on the date you took the oath. This has implications for taxes, since the year you lost your citizenship (not the year you receive your certificate) is the last year you have to file taxes. So in my case, if I swear the oath in 2012, 2012 will be the last year for which I need to file US taxes.
Alright! That’s my story so far. Please ask any questions you might have, and feel free to correct me or add any information that I might have made a mistake on or left out.
Cheers
John
@John Smith.
Thanks very much for information regarding your experience at the Vancouver Consulate. Sounds like you were well prepared and they appreciated that. We are happy for one more entry to the database of Renunciations and Relinquishments (http://isaacbrocksociety.ca/2012/03/14/draft-pdf-compilation-of-relinquishment-and-renunciation-data-as-reported-on-isaac-brock/) and to the Consulate Report Directory (http://isaacbrocksociety.ca/2012/03/24/consulate-visit-report-directory/).
When did you make first contact to get you today’s appointment? Let us know how your second appointment goes and, eventually, the date on your CLN when you receive that (hopefully in less than the year they say it might take).
Congratulations on your first steps and thanks again for joining us here!
Thank you for sharing that, John. It will be quite awhile before my husband can renounce (he’s waiting for Canadian citizenship to be granted) but your step by step account will be on file as good useful information for him when the time comes. Maybe that CLN will come sooner than you think. The log jam seems to be breaking up a bit with CLNs coming faster from Calgary and there’s recently been one from Halifax. Good luck!
@ John Smith
At your second appointment try to get some documentation as proof of your renunciation to have while you await the CLN — perhaps pay with a credit card (if they allow it) or ask for a receipt.
Thanks very much, John, that’s really clear picture of your experience. I’ll add it to the Consulate Report Directory tomorrow. Glad all went well and that they are currently able to schedule second appointments in as soon as ten days.
Thanks all for your comments so far.
@calgary411
Thank you for cross listing my post! I was not aware of those message areas.
I first made contact using the online appointment system, to get the initial appointment about 1 month ago – however, I purposefully booked the first appointment one month away because I was travelling in the time in between. There were in fact appointments available right away! I could have booked an appointment for the following day, upon my initial contact.
@Em
Thanks for the tip about getting proof! They do take credit card, so surely they will issue a receipt.
@Dianne
I am pretty sure the post you are referring to was written by Schubert. I can recall him giving that advice over on the old forum as well. I will see if I can find it.
*Thank you John Smith for the excellent information. It is great to hear the step by step process.