US expat tax and FBAR: Discussion thread (Ask your questions) Part Two
Please ask your questions here about US Expat tax and FBAR.
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NB: This discussion is a continuation of an older discussion that became to large for our software to handle well. See US expat tax and FBAR: Discussion thread (Ask your questions) Part One.
“plaxy writes: “It’s expensive to buy a CLN” – is it really that simple, just a question of asking and paying for it? No dangers or downsides?”
Nope. Email the embassy or consulate to ask for an appointment to renounce. They’ll send you instructions about the forms and documentation you need, and (of course) how to pay (card or cash, etc)
Tobeornottobe, renunciation is simple.
1) Contact the embassy/consulate to request a renunciation appointment
2) They’ll send you a date/time and some paperwork you need to fill in and send back to them
3) Turn up for the appointment
4) Check over the paperwork to make sure it’s correct, pay the fee ($2,350) and swear the Oath of Renunciation in front of the Consul/Vice Consul
5) Walk out the door no longer a US citizen.
Yeah, it really is that simple.
These are the forms:
https://eforms.state.gov/Forms/ds4080.pdf
https://eforms.state.gov/Forms/ds4081.pdf
https://eforms.state.gov/Forms/ds4079.pdf
The last one you may or may not need to fill in and return to them. It seems to vary from place to place on whether it’s used for a renunciation or not.
Unless I missed something, why bother renouncing if your bank is satisfied with your SSN? As someone who’s been through, and continues to be put through the wringer for raising my head, why bother with any of this nonsense? Time for a Brock favourite:
@tbontb
You do not need to be tax compliant to renounce. Some who want to leave cleanly back file 5 yrs of tax returns plus a partial year for the renunciation year . Then there is a need to also file the 8854 where you have to list your worldly assets and IF they amount to over 2,000,000 you will be assessed a 15% exit tax on any unrealised gains over 650,000.
Some renounce and file nothing.You can read on Brock ‘How to renounce or relinquish.
@BB and tbontb
US citizenship is toxic while living in many EU countries, the bank exposure is just a start, investments, mortgages all ask the US question. I can undestand one wanting to keep US citizenship if one has business links there but if tbontb has no US links then why keep it?
I’m one on those who has recently renounced. I have no assets in the USA (left 30 years ago) and I have never filed US tax returns. I am a fully compliant taxpayer in my country of nationality and residence, the UK. After much reading, sleepless nights, and prayer, I have decided not to file anything in the USA. The country I live in now is due my loyalty and my financial contributions, not the one I left.
As I understand it you have already given your SSN to your Danish bank. Maybe the bank will send this info to the treasury department maybe they won’t
Treasury are receiving millions of these things and haven’t the resources to do anything with them.
So far no one living ex the US has received anything. They only seem to use the reports to pile on the bad guys, living in the US, who they already know about . e.g. Manafort .
You are not a bad guy.
Best advive is to do nothing. You are a pensioner minding your own business with no US ties. They cannot possibly harm you in any way.
If you can spare the time and 2350 $. obtaining a CLN by renouncing is straightforward. If you choose to renounce do not file any tax information.
“We pay income tax both in Denmark and France (there is no double taxation treaty).”
But if you don’t live in Denmark, surely you only income on which you have to pay tax to Denmark is income that was sourced in Denmark. If France doesn’t give you a tax credit for Danish tax paid on Danish sourced income, I guess you need to sell your Danish assets and move them to a country that has a treaty with France.
The US manages to be worse. The US gives you a credit for Danish tax on Danish sourced income and French tax on French sourced income, but not for Danish tax on French sourced income and French tax on Danish sourced income.
Anyway, if you want to avoid covered expatriate status, you have to backfile 5 years of US tax forms and FBARs, as well as file Form 8854 with Form 1040NR as a final return. You do this after renouncing and before the deadline for the final US return which is normally June 15. If you don’t mind being a covered expatriate, you don’t have to file anything. If you don’t have US heirs or a US pension or anything like that, it probably doesn’t matter if you become a covered expatriate.
Hi, I have a question about Australian Superannuation in relation to 1040 schedule b. As you may know, there’s only 3 parts. “Interest, dividend and foreign accounts”. I’ve been told, if the only income is your wage and your employers super contribution, schedule B is only required to fill in part 3 (to declare you have foreign bank accounts). Is this true? And in this case what would be the possible “interest or dividend”? There’s been no distribution just wage and employer contribution.
Thank you
Here are two sites which look like they might be comparing interest and dividends from various super funds:
https://www.canstar.com.au/superannuation/
https://www.ratecity.com.au/superannuation
If your fund doesn’t give you a statement of how much income (though not taxable in Australia), you might have to estimate. If you have to estimate, you have to do so. But you had better not say on your Form 1040 or Schedule B that your estimate is an estimate. If your US return says that you estimated something, the IRS might penalize you (though sometimes they don’t) and US courts will refuse to take jurisdiction on whether the US should refund your US withholding. You had better just sign the preprinted jurat, declaring that to the best of your knowledge and belief the numbers are true can correct.
Though if you’re an Australian citizen and if you haven’t been submitting US tax returns, maybe now isn’t the time to start. US law allows the US to do all kinds of bad things to people who don’t file US returns, but as far as we know, the IRS hasn’t actually done that to someone who doesn’t live in the US and doesn’t file a return at all. Non-compliance breaks US law but compliance brings penalties.
Unlike Canada, where the registered retirement plans are not treated as a trust and income is only reported when received, , Australian superannuation accounts are a giant can of worms.
They may be considered by the IRS to be foreign trusts. You cannot afford to have a foreign trust- the reporting is too complex.
This is discussed in detail by Dr. Karen Alpert here.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3097931
You can download the whole paper and read the superannuation section.
Best to not tell them anything about your superannuation. Also best not to use your real name when posting questions
Norman Diamond:
“… if you’re an Australian citizen and if you haven’t been submitting US tax returns, maybe now isn’t the time to start.”
Indeed. And if you’re a dual US/Australian citizen and would rather be simply an Australian citizen, invest in renouncing your US citizenship rather than getting further into the mire by filing US tax forms.
Renouncing is easy but expensive ($2350). It’s not necessary to file US tax forms in order to renounce.
– After renouncing, is there any problem entering the US (on a quick visit, or transiting) with a UK passport? Any advice?
– Anyplace I can see what questions I DON’T have to answer during the renunciation process? I remember seeing somewhere on your wonderful website that some consulates can be pretty heavy… I get easily intimidated, so I need encouragement that this will go well. Thanks.
@Tobenornottobe
Sounds like we have something in common!
I renounced my US citizenship at the London Embassy earlier this month. The officials were very pleasant and professional, even compassionate. i wrote up about it on the IB site: http://isaacbrocksociety.ca/consulate2/comment-page-56/#comments
You are asked to fill out form DS 4079 to establish whether you have already lost citizenship, which I did. However, the consulate didn’t agree to a backdated relinquishment, so I renounced. I understand that the DS 4079 was destroyed. I didn’t provide any statement, but I did say that I was renouncing because, in my opinion, I’d already lost US citizenship when I swore my oath to the Queen in 1993.
Despite being advised that I would not be able to get an ESTA, I applied for and received one within 36 hours of renouncing. From what I’ve read here and elsewhere, I should be able to easily visit the USA. But I do bear in mind that I’m now asking to enter. It’s no longer a right. I fly out of Heathrow on 17 October.
@TBONTB
There should be no problem once you have your ESTA approval (done online)
I f you haven’t received your CLN before travelling to the US, is worth saving your receipt for renunciation when entering the USA with a US birthplace, just in case
@TBONTB
If you would like to carry on a longer conversation, please ask the moderators to pass on my email address–moderators, please accept this as permission to do so. I’d be happy to answer further questions by email.
TBONTB
Re Questions
They do not ask any questions re tax compliance.
It is up to you if you want to give a reason for renouncing, they cannot demand it of you.
If you want to give a statement, just keep it simple, ie I have made my life in this country and owe my allegiance to it. Do not mention tax as a reason.
The only important question they ask is to establish that you fully comprehend the ramifications of renouncing and you have not been coercered, that you are doing it of your free will.
Most Embassy personnel have had experience with the renunciation process and are now professional and understanding .
You have nothing to fear.
“After renouncing, is there any problem entering the US (on a quick visit, or transiting) with a UK passport?”
Problems occur at random times, but we haven’t seen any cases where renunciation was a reason for problems.
(For example, Deportland Airport got its name a while back when an immigration official decided he could get revenge on his ex-girlfriend by deporting all Japanese females that came to his inspection counter. Various injustices occur in other countries too though, business as usual.)
Hi everyone. I have been working with a Paris-based organization called Association of American Women in Europe (AAWE) on a survey relating to US taxation and banking issues. While we designed the survey with the members of AAWE (and other FAWCO organizations) in mind, we would also very much like for as many Americans living overseas as possible to also respond. This includes not only current but also former US citizens (that is, those who have renounced/relinquished their US citizenship). It also includes not just women but also men.
If you would be willing to take about 10 to 15 minutes or so to respond to the survey, I would be very grateful. We are hoping that enough people will respond such that we will collect a sufficiently critical mass of data to enable us to produce a useful and informative report. Also, the survey asks one open-ended question where we hope participants will submit compelling stories recounting their experiences. I believe that the more and better-quality responses we get to the survey, the more useful our report could be in contributing to the lobbying efforts to have laws changed.
Please be assured that the survey is entirely anonymous. No records identifying the participants are kept. There is a place at the end of the survey where you can submit your email address for follow-up, but doing so is entirely optional.
Please don’t hesitate to share the link to the survey with all current and former US citizens living overseas who you know and please encourage them to also participate. Please share the link widely
Finally, I know that the members of the Isaac Brock Society are highly informed on the relevant issues and feel quite passionately about them (rightly so). If for those reasons alone they may be skeptical and have (perhaps very good) reasons to find fault with the survey. I won’t pretend that it’s a perfect survey. I would ask you to please be understanding and patient in that regard and to know that we have prepared it in good faith.
Don’t hesitate to let me know if you have any questions. Thanks very much.
https://www.aaweparis.org/limesurvey/index.php/166119
Thanks for that information. A very good survey. I enjoyed having the opportunity to complete it. I’ll pass in the link wherever I see an opportunity.
thank you, plaxy!
@ Laura Snyder
Thank you for doing this survey. Would it be possible to see all the questions BEFORE venturing into the survey? Some people might wonder what question will be on the next page and could it be something they don’t care to answer.
Hi Embee,
Thanks so much for your interest in the survey. I am sorry but I don’t have a list of all the questions. The survey uses conditional logic, in that certain questions are asked only if certain responses are given to prior questions. Would it be helpful to know that very few of the questions “require” a response? If my memory serves me correctly, the only questions that require a response are the questions at the beginning, in order to establish that the person responding does live outside the United States and is either a current or former US citizen or green card holder.
Also, all responses are anonymous. We don’t retain any information that would permit us to identify anyone who responds.
Does that help? Certainly no one who is uncomfortable responding to the survey should respond to it. It’s neither our purpose or desire for the survey to make anyone uncomfortable.
Thanks again for your interest in the survey, EmBee.
I did pause for a bit on encountering the question about income, and the question as to gender. I decided to continue, but I did wonder if those questions were relevant. Would I have been able to skip those questions?
I think so but I’d have to double check. That being said, I hope most respondents will respond to the question about gender. I worked on this survey with an organization called Association of American Women in Europe. Something we are hoping to better understand with the results of the survey is whether or not women are affected by US tax and banking policies differently than men are. If respondents skip that question we won’t have any useful data in that respect. We would also like to see how level of income might affect one’s experiences.
Again, the survey is not meant to make anyone uncomfortable. I’d be more comfortable if those who aren’t comfortable not respond to it, if that makes any sense. Our purpose is to try to help, not harm. Making someone uncomfortable is not helping.