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.
@KalC and @MedeaFleecestealer, Thank you once again for reconfirming about my 2004 date of expatriation. I did email the US embassy in Toronto today and they replied informing to read their email thoroughly and to complete the forms as @pacifica777 mentioned earlier. They said there would be a $450 charge and I did specify that I want to relinquish not renounce. They didn’t specify the fee only pertaining to renunciations and not relinquishers. They also asked me to provide and express post envelope I guess prepaid so they can mail me the loss of citizenship form when it comes back. I just wanted to know if anybody can clarify better as they asked me to bring my Canadian citizenship certificate to prove me date of citizenship but what I have is a photo citizenship card which does state ONLY the MONTH and YEAR that my card was issued. Is that okay? It doesn’t say the day. Is that what they are asking for when they asked for the certificate? I read that they now issue paper certificates and not the wallet sized photo card anymore.
I keep coming back to this question about the FBAR reporting, and would I still have to do that if I am pre June 3, 2004 relinquish? What are the chances that the IRS is going to harass me for the Form 8854 and all the other things like back taxes etc? What would I say or do if the IRS disregards the date of my relinquishment of April 2004 and harassed me to comply with previous tax filings or the exit tax form? Another silly question, please forgive me… Will I see that they will request my relinquishment date sent to the US to be April 2004, because I’m worried that mine will come back saying the loss of citizenship date is the day I went to the embassy and they class me and renouncing and not relinquishing. How do I make i clear and know the difference? It seems they tend to think everybody is renouncing and the difference between that and relinquishment is not clearly different. I have read on here that members said that to relinquish is free but to renounce you have to pay $450. I will pay it if they insist but I was just a little confused. Some have even said they had to correct the official at the embassy that they are “relinquishing” not “renouncing”
I plan to go to the seminar tomorrow in Toronto if the driving conditions aren’t as bad as they forecast. I would love to meet some of you from this forum if any of you were to attend as well. I went from being super paranoid and OMG!!! to feeling much more prepared to handle all this unexpected news. I have to thank many of you for your posts as well as your replies. It has been so informative and helpful 🙂 THANK YOU
I’m so sorry, I forgot to say that I have used my America passport for travel to the US since obtaining my Canadian citizenship. I have been scolded and reprimanded by customs officials when I had traveled there using my Canadian passport. Would that affect my application for relinquishment?
As well, one of the questions in the relinquishment application asks do you have any ties family or social to the US? My mom and brother as are there. Would that be a problem?
Because I’ve seen these issues brought up in some previous posts it made me wonder how those things I mentioned will affect my relinquishment application. Can anybody help answer my above questions?
@CD888,
I spoke with a vice consul at Toronto prior to my visit, who told me to bring my certificate (with the date on it). I brought my card too, just to be safe as I was coming from out of town, but they didn’t ask for it.
The exact date is important because it’s the date of the termination of your citizenship, which is why I think they would want proof of the date. If the card doesn’t have the exact date, I think it would be wise to clarify that point (is the card okay or not) with the consulate ahead of time because the date of the relinquishing act is important.
The clerk (first person I saw) at Toronto was confused that I was renouncing instead of relinquishing. I didn’t make too big an issue of it with the clerk, because it’s the vice/consul who really deals with it – and it never even came up with the consul, who saw it was a relinquishment (and knew the difference) from the get-go.
Here’s a link to the schedule of fees from Code of Fed Regs 22.1. http://cfr.regstoday.com/22cfr22.aspx Renunciation is under line 8, but nothing about a fee for relinquishment.
I’m not sure if I’m answering your question. Both dates will appear on the CLN.
The CLN has a line “That he thereby expatriated himself on [the date of your relinquishing act will appear here] under the provisions of Section …. …”
At the bottom, the consul will sign it with the date you appeared at the consulate.
The vice/consul will let you know if they have a problem with making a positive opinion on you case. His/her opinion is one of the most important elements of the file, according to the DoS manual at 1226 http://www.state.gov/documents/organization/120546.pdf Which makes sense, as they’re in a position to ask a person to clarify something that may be questionable. So far, no one has reported here having a positive recommendation overruled. If the vice/consul is fine with things, I’d feel very confident.
@ CD800
Use of a passport, given the circumstances, doesn’t necessarily negate the relinquishing act. The decision is on a balance of probabilities, one factor is not necessarily determinative. The reason a person used a US passport is important. You were scolded and reprimanded by the border officials to use a passport.
Several people reported here that they had used a US passport after relinquishment because they were told to, and were approved for a relinquishment-based CLN. Look for David’s report in the Directory, in Vancouver in late 2012. The consul there contacted Washington for guidance on this. This situation has been dealt with successfully at Halifax, Merida and (I think) Toronto, too.
Regarding this, David wrote: “I explained to the consular officer that I did this only because I believed that I was required by US law to do so until I received my CLN. … The key question was not my actual use of the US passport, but intent in using the passport (In other words, was I claiming the right of a US citizen to enter the States, or was I simply trying to comply with the law as I understood it.”
Not at all. Quite a lot of US-born people have family in the US. US social ties (friends) are fairly common, and besides, you probably have more in Canada anyway. BTW, you don’t have to list names. You can just write, “my mother and brother,” “a few friends,” whatever.
@Pacifica777 Thank you so much for all the detailed replies!!! Honestly, I am so grateful for the help I’ve been getting here on this forum. I don’t know how I would handle this OMG moment and all the media scares if I had not found this forum. I will keep reading and learning and I will update any new information after I make my appointment with the embassy.
THANK YOU 🙂
I’m guessing by now many of you know by all my questions how confused I am and nervous. I was wondering if anybody here can recommend a tax lawyer/immigration lawyer offline who specializes in cases like ours? I am wondering if I should be clearing up whether I will need to file back taxes and FBAR reports after relinquishment even though some have said that since I got my Canadian Citizenship in April of 2004 I would be exempt from that legal requirement?? Is it based on solid legal facts that I can know for sure or is it based more on interpretation and presumption? And that the IRS cannot collect or make you pay fines or penalty if you are in Canada is that also fact or assumption? I don’t mean to disrespect or question the great advice and info I have been given here, I am just one of those people who has a low risk tolerance and suffers from anxiety over the unknown.. Has anyone on here relinquished pre June 3, 2004 and can confirm they didn’t have to back file or submit a FORM 8854 to the IRS? I have children whom I have joint accounts with to assist in depositing money to them if they are short on cash. Thinking of how FBAR will drag them into this when they are born Canadian. The cobwebs just don’t seem to untangle. Had I known about this I never would have opened joint accounts with them. Now will they also have to go through renouncing even though they are born in Canada but have one american parent?There is just so much more than filing your taxes, it almost seems like bait and fish thing where they want it all. Anybody and everybody they can catch into their net is more for them. I’m worried for my children and my ex. My mind just keeps revving as I think of more things. I know I should try to relax but this is all so overwhelming.
I don’t have money to blow, I’m just thinking maybe I can afford a 1 hour consultation to ask some questions. I am not wealthy, I am definitely not a high income earner at all, and I don’t own much in investments. I would doubt that I would owe the IRS money, but just to know if I have to invest thousands of dollars to just file back taxes and the required FBAR reports to be compliant post relinquishment is more of my concern and what if they whack me with fines for never filing? This is why I want to know where I would stand if I am granted a CLN back dated to April 2004. The fear of the costs to accommodate compliance is what is making me feel nervous and sick. There seems to be a lot of relief once one has relinquished or renounced but I am guessing that is mainly because once one does so they are not entangled in this nightmare after they do. I’m sorry if I seem like a pestering poster on this site, but I really am just very confused and fearful of the unknown.
CD888 – The more details I see on your case, the fuzzier it feels. You’ve had several “advisors” giving you their views. Some of those views look one-sided to me, lacking the explicit humility of this is just my personal opinion — and take it for whatever you think it may be worth, nothing more. [My nothing-but-a-personal-opinion is you will have to renounce rather than relinquish.] You may be heading now toward the displacement question: how do I find a professional opinion I think I could trust? That’s a hard one too. The professionals I found my way to, I still don’t think I could have done better. At the end is the matter of real closure, which only comes with long passage of time and — if all goes well — nothing to break the infamous IRS silence. Try to start from the ultimate peace that you should be OK if you never put yourself in hazard of entering US territory and hold no US assets, and work backward from that. You’re undergoing initiation into the club of interacting long-term uncertainties. FWIW
“This is why I want to know where I would stand if I am granted a CLN back dated to April 2004. ”
What makes you think a lawyer will help you? It’s a crapshoot whether or not you get a knowledgable one or one who will push you into unnecessary filing.
We have given you the facts. For some reason you choose to doubt us.
Fine.
Schubert addresses this issue clearly on Maple Sandbox at 8:53 on jan 23.
http://maplesandbox.ca/2012/renunciation-and-relinquishment-what-are-the-differences-is-there-a-difference/comment-page-29/#comment-11804
Please retread it.
@CN888, You will need the actual date, not just the month and year as this is the date that will be used for your relinquishment date. This was posted by Lagoon over on another thread so may be of help to you:
To get a copy of the citizenship oath you can:
1. Make an access to information/privacy request to Citizenship and Immigration Canada to get a copy of your citizenship file. I asked for both paper and electronic records (two requests). You file should have a copy of your oath.
2. Contact the library and archives canada, and ask them what the oath was in XXXX year: http://www.collectionscanada.gc.ca/the-public/005-2000-e.html
The CLN when it arrives will have your expatriation date (the date you got Canadian citizenship) and also the date your application was approved by the State Department. BUT it is the date you obtained Canadian citizenship which is the important one. The question regarding using a US passport has been answered by David, you need to point that you only applied because of being harrassed by the border control for not having one. As far as having family goes, it’s merely one of the many questions on the form used to ascertain how closely you may be tied to America and it’s not a deal breaker on it’s own. As Pacifica777 says, many people who relinquish have family/friends in the US and it hasn’t affected their relinquishment at all.
There is no need to consult a lawyer or accountant because you don’t need to file anything. The IRS aren’t going to chase you for a piece of paper, they’re too busy with people who actually owe them money which you don’t. Petros relinquished in 2010 and has not filed any tax returns or an 8854 and has heard nothing. Many others have also relinquished back in the 90’s, 2000’s and not filed and won’t heard a peep from the IRS about it.
Make your application for relinquishment (no fee involved so point that out to the embassy when you get there – sometimes staff aren’t as knowledgeable as they should be), get your CLN and be done with America.
@KalC, please forgive me for asking. I do appreciate all the replies I have been given and I did say I’m that I’m not trying to distrusting of the advice that I was given in this forum. Please don’t take this as a personal attackin your integrity or information given. I’m just trying to gather solid proof to where I stand in the even that
after I relinquish or renounce what is going to happen. If I get a call from the IRS how woukd I deal with their requests and what are the consequences if I can’t due to financial reasons. As I said I’m not rich by any means, I can’t give them what I dont have but what can they do if I don’t. I’m just really scared and trying to protect myself and my family. I honestly did not mean to disrespect anybody here by asking what I did. It’s almost like if this, if you thought you were in trouble wouldn’t one think they should get legal or professional advice? I understand that everyone here is trying to help support one another and that is something I’m very grateful to have found.
@KalC, I still am very thankful that you directed me on the pre June 2004 reading and clause. As I understood, this site is a question and reply forum with many of us in similar situations. It isn’t legal advice and it’s up to us to see where our own situation affects each one of us differently. I’m just looking for that in the event I run into the that situation I may be better prepared. I only found out about the tax obligations to us citizens living abroad 2 weeks ago and had no clue it applied to me since I’velived here all my life and became a Canadian citizen too. These last 2 weeks have been so hard for me as I am the frazzled type. I have been living with terrorizing thoughts that I probably in all likelihood brought onto myself due to my personality. Please try to understand that I’m gathering all the valuable info you and many others have given me and I’m just trying to weigh how all this can impact and affect myself and my family. Cover all corners so to speak. If my question offended you please accept my apologies as that was not what I meant to do.
@MedeaFleecestealer, thank you once again for your detailed advice. I meant no disrespect to any of the members on this board when I wanted to request more info. I
understand that many of you know a LOT about all this and therefore trying to help people like myself who know nothing until coming to this site. I will try to obtain a copy of my citizenship file for the date of my oath. All the help here has been greatly appreciated. Thank you to you and all who have replied to me.
@ CD888
We all understand your terror. I’ve been reading about this for 2 years and still get anxiety attacks now and then. Usually this means several nights without any sleep but the other day I had reached the point where my anger erupted and I just hated me, my husband, my life, the USA and even Canada. I blew up and now I have the shame of that on my shoulders too. I generally have to wait until exhaustion sets in and sleep returns and then I hope that my sanity returns too. I sometimes wonder how many times I can go through this cycle and emerge somewhat intact.
My only advice is to try not to think too many steps in advance. This is a bewildering and infuriating mess that the USA has created and it unjustly expects the whole world to works its way to a solution that may not even exist. Sometimes a system gets so complex that it’s like a maze which never does lead to a prize. Even people who have their CLNs will always be wondering if the USA will come back and whack them again somehow. The USA is one helluva messed up country and there never seems to be a limit on irrationality down there. So the first step, which will not get you into the IRS radar, is to get your citizenship file and then you decide what the next step will be and so on and so on. It’s all any of us can do. Just remember that you are not the problem; the USA’s stupid tax regime is the problem.
I have a general question. Is it better to call or email (where do I find that address – on site -) to find out the status of my CLN. It is over 6 months for me I tried calling the Toronto Counsel number and the line is busy every time.
@Em, thank you for sharing your reaction and emotions to what you have been going through. I guess given that it’s only about 2 weeks that I found out about my so called obligation by emotions and fear are not unwarranted. It’s the fact that we are dealing with a country that is so unreasonable and so unfair that concerns me. I didn’t choose to be born in the USA, my parents weren’t even expecting to have a child. So not only was I sort of an accident but my birth taking place in the USA was too because shortly after I was born in think I was 7 months old my father brought me to Canada for my grandparents to raise me. I’ve been here ever since. I dint know the US law or obligations. But they threaten it comes with huge fines and penalties for not doing this or that. I mean for a country that always seems to get what it wants, darn straight in fearful. I guess I’ll just have to first advise the US consulate that I relinquished in 2004 because I officially became a citizen of Canada intentionally. From there, I will have to see where this nightmare takes me. Thank you for replying to my thread.
@Em
“. I generally have to wait until exhaustion sets in and sleep returns and then I hope that my sanity returns too. I sometimes wonder how many times I can go through this cycle and emerge somewhat intact.”
I am waiting for my CLN too but I have had those anxiety attacks and sometimes thought of giving up on life. But. I rebounce and then think before I go. I will spend every last cent I can before the IRS gets it
I have a tremendous anger in me now at the USA…and Obama! I thought he was America’s hope for Change. Boy , was I wrong.
@CD888
You’ve acquired a lot of information in the past week that you need time to mull over, to assimilate it, to evaluate it – and this is happening right after your OMG day, which is a major and disorienting shock, if not *the* major shock of your life.
I think peace of mind starts to come when a person makes their choice of what they are going to do and how they will go about doing it – that is no particular arbitrary deadline decision, but when a certain course of action starts to feel like the most logical thing to do in the situation. The “right” course of action could be different for different people, given their case, their whole life situation, their personality.
I was very anxious, confused, disoriented, depressed at the beginning. It really did overwhelm my entire life, literally 24/7 with serious insomnia and dreams about nothing else but this. As I learned more, though, it seemed that, in my reading and thinking, pieces were just coming together, and that pointed me to take a path that seemed logical to me.
We find ourselves in a convoluted situation involving an opaque government and some of the sections of law affecting us are very poorly drafted, with, to date, no jurisprudence or definitive IRS statement to clarify them. And you have to deal with this when under more stress than you’ve ever been in your life. The whole situation is like Kafka or something.
A suggestion I have that helped me is to try to step out of it a bit. Hard because it overtakes your life. But if you can get fear out of your mind (which I know can be really hard to do) but focus in a detatched sense on what you’re reading, thinking of the logic of it, that may help you develop your plan of what to do. Detached, I mean sort of like you’re researching for a client or preparing for an exam.
I’ve found that fear and anxiety made my mind go in circles and circles and I would get stuck and not see any light. I found that as time moved on further and further after my OMG day, I began to have very short anxiety-free periods, which became longer and longer as time went on. You’ve really been knocked down very recently. I recall feeling completely hopeless at times, living a horrible unfamiliar life in a constant nightmare, but I found over time I began to feel I was getting more and more control of my own life back.
Hope this helps.
@MedeaFleecestealer, after much digging all morning through files of things, I found my citizenship certificate when I took my oath. This shows a different date from Canadian citizenship card. The date I took my oath was Sept. 10, 2004. So what does that obligate me to tax wise and filing of all the reports? I was so happy when I found my certificate only to realize I’m past the June 3, 2004 cut off. The legal language in how those articles are written is very difficult for me to understand. I would be grateful if you can explain to me as you previously have on different questions you replied to. Should I wait until after relinquishing and filing the form 8854 to comply with their tax filing and requirements or would you suggest getting my taxes compliance before? If this is now the case, would it be better to enter a streamline procedure and be up date and then renounce or that wouldn’t make sense? What a let down….:(
@Pacifica777 thank you so much for sharing your experiencewith me and comfort and support as well. This seems like a rollercoaster I can’t seem to get off of or a nightmare I can’t wake up from. I know that it will to come to an end at some point but likely not without having some huge impact on my health and sanity. Now I am facing the dissapointment in just realizing that my oath was taken in Sept 2004 even though the card was issued in Apr 2004. It just gets more and more complicated.
What do you know about entering those streamline programs offered? Those require you file taxes 3 years back and 6 years of FBAR but they say it will get you into compliancy. From what I think I’m reading and interpreting, correct me if I’m wrong, that if you expatriate after June 3, 2004 then the IRS counts your expatriate date effective when you file the form 8854 and will require you to still be tax compliant for the next 10 years following that date. So if I’m correct, would the tax filings they require have also be backdated 6 years, plus having to file the next 10 years?
OMG I think I’m going to pass out!!!
@ CD888
As I understand it, IRS is considering your expatriation date not to be the date you performed the relinquishing act, but the date you furnish your statement of relinquishment to the consulate (see (B) below). .
The thing about the relinquishments from longer ago was that the law didn’t exist at the time they ceased to be citizens – please read Michael Miller’s article, he an experienced US tax lawyer who really understands the law (unlike me) and he explains it well.
http://www.robertsandholland.com/siteFiles/News/03-05-13_Expats%20Live%20in%20Fear_MJM.pdf
http://www.law.cornell.edu/uscode/text/26/877A
A few other things about IRS:
I don’t know much about the streamline program but some people here would know. I know a lot of people have just done “quiet disclosures”, that is just sent in their forms, with no ill results to date.
It isn’t necessary to file prior to expatriating. One’s citizenship status isn’t dependent on their tax status, so the Consulate/State Dept doesn’t really care if you are or not.
You have til June 15th of the year following the expatriation to file the tax forms for the 5 years prior to expatriation year, exit tax form (8854), and the partial year tax forms for expatriation year.
Eg, if you expatriate this year, 2014, you have til June 2015 to do this. Quite a few people here have done this, one I remember renounced in 2011, filed her stuff in 2012, and actually got a refund (one of those stimulus refunds they were giving out in ’08 or ’09).
If a person is dual at birth, as long as they file the required tax forms (2009-13, partial year 2014 partial, and 8854) they will not be charged exit tax, however. The conditions are explained in the instructions for the exit tax form. http://www.irs.gov/pub/irs-pdf/i8854.pdf
If you don’t file, you become a “covered expatriate” with IRS, that is could be subject to exit tax. However, the citizenship remains terminated and the CLN remains in effect
@CD888,
One of the problems with this forum is that there is no easy way to keep track of a person’s history. I’ve read all of your posts but with all the people here I’ve lost track of exactly what you did and when to become a Canadian citizen in the first place. If you were _already_ a Canadian citizen before 2004 and all you did was apply for a citizenship card, then would they count that as an expatriating act? It’s worth pursuing, but it makes no sense to me. You can only lose your virginity once.
If you are forced to renounce, you can do it before or after you file your taxes, FBARs, etc. You’ll get both opinions as to which is better of if it matters. If you renounce in the next few months, you have until June 2015 to file except that, apparently, the 2013 FBAR is due this June. I see on the FBAR form that you don’t need a SSN or ITIN, but you’d need a SSN for filing taxes. It is not easy to get. Stupid, obviously. They make you jump through hoops to get a SSN even if you have already renounced. Makes no sense. I’m not convinced that a person can’t use an ITN with the Streamlined procedure. You can even submit the ITIN application with the Streamlined procedure tax filing. Nobody has agreed with me on this point though.
The 8854 is part of the tax filing. You can’t really submit it before the taxes because you have to certify on the 8854 that you have complied with your filing requirements.
The Streamlined procedure requires 3 previous years of taxes and 6 years of previous FBARs. The 8854 requires not 3 but 5 years of previous taxes, so you submit 5 to the Streamlined procedure. More than one accountant has told me that what they do.
If you were born dual, you won’t be a covered expat (if you files the taxes). The 10 following years of filing that you mentioned is only for covered expats. If you were not born dual, you are only a covered expat if your net worth is over $2M, or if your tax _bill_ was over about $160K for each of the preceding years, or if you don’t file the required taxes.
Most people agree that you do NOT want to be a covered expat.
@nothernstar Re: CLN
I am in the same situation as you, although different country and continent. I have been calling the local consulate and after numerous pleasant talks with an official, who also could not understand why it was taking so long, the local consulate sent me a copy of the papers I signed and which were forwarded to the US State Dept last summer. That is as good as it gets for now – I have my receipt plus a copy of the signed renunciation papers and the problem is (apparently) a backlog on the US side. Obviously processing renunciations/relinquishments must be very low priority over there (despite the non-refundable $450 fee) I plan to file my last part year tax and fbar forms this spring plus the final form – I am no longer a US person as of last summer. If you cannot get through to the consulate via telephone, then send them a registered letter and keep a copy for yourself – remember to include a copy of your receipt for the $450 if it is a renunciation. Good luck.
@Pacifica777 thank for the detailed explanation. Do you know much about where they say that although one has expatriated they will still have to comply with 10 years of US taxes from date of expatriation. Does that mean even if you renounce/relinquish, you still have to file taxes for the next 10 years after your notification date?
@Allou
I relinquished so I did not pay anything. I did not get anything in writing.