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.
@Shunrata. I thank you for your support and encouragement. Nothing is ever fair. That’s what i learned throughout my life. Yes you’re right it’s been a very difficult one ever since childhood. I was an accidental conception resulting in an accidental birth in the US living an accidental identity not of my choice or doing until i became my true self when i was given landed immigrant status here in in my teens. Anyways i can’t change what happened so I’ll just have to figure out how I’m going to try and get a SSN if I’m required by law to file back. I do want to relinquish based on my expatriate act instead of renounce. I never considered myself an American or lived in America so i feel ripped off if i have to renounce?
I’m happy for you that your case is much more straightforward and you have been compliant since 2000. It must be so much of a relief. I really wish mine was more straightforward. I’m not as confident as you are about FATCA being repealed or collapsing UNLESS the republicans regain power in the next election. Look how hard they tried to fight obamacare and look what’s happened. Hello obamacare!!! Many countries in the world did not want the wars and invasion of the US in KUWAIT, AFGHANISTAN, IRAQ, LIBYA, and the list goes on.
@CN888, not unless the IRS can work miracles. I mean how are the IRS going to know? The banks won’t bother to report closed accounts if FATCA comes into force, there’s no point. It’s accounts in use that the banks and IRS will want to know about.
I don’t think it will make any difference as far as getting an SSN whether you relinquish before or after applying. If you wait on the relinquishment though and it takes two years to get an SSN then that’s two years more of being an American. If you relinquish and then apply at least technically you’re not an American once the CLN has been approved, no matter how long you have to wait on the SSN fiasco.
@MedeaFleecestealer I’m referring to the FBAR reports that have to be filed 6 years back. Does that have any connection to FATCA coming into effect or not? I thought people are already by law having to file those even without the FATCA.
Yes you make a very good point about just relinquishing before applying for a SSN in order to file back taxes. At least once i get the CLN I will no longer be a US person except for their tax policy in which i will have to file back 5 years worth of back filing. At this point, i think my biggest hurdle is how I’ll be able to obtain the SSN or ITIN for back filing purposes after i relinquish. Because if i relinquish soon my only biggest concern i think is to be in compliance with their law of required back filing. Am i correct?
Oh can you or anybody answer this question. When you have to fill out and return the form 8854, after receiving the CLN, is that technically your 5 years of reporting with or on that form? Or will you have to get the taxes filed separately after completing/returning that form?
No, FBAR’s are separate and not connected to FATCA. But don’t worry about trying to file for any closed accounts, just go with those you have open. If you’ve been closing accounts and moving money to different ones, it’s still there so there’s no point in chasing up after closed accounts. That’s assuming you even need to file FBAR’s.
The idea is to do your back filing first if you need to do it before any filing of the 8854. I believe you have until June 15th the following year from relinquishing at the Embassy to file the 8854 and it wraps up your tax commitments by you stating that you’re tax compliant for the past however many years. So if you relinquished in April 2014 you have until June 15th 2015 to file your 8854 form. Streamlined will only require 3 years of back taxes and 6 years of FBAR’s.
@MedeaFleecestealer oh okay, thank you for that information.
Much appreciated:)
Bravo to Pacifica777, CD888. Pacifica does just what you express. She provides so much helpful information to newcomers, always patiently. You can’t imagine the amount of work she has given this site.
Thank you, Pacifica!
IRS Slammed For Unfair Offshore Cash Penalties
“US taxpayers volunteering information about their offshore holdings have faced savage and unfair treatment from the Internal Revenue Service (IRS), according to a consumer champion. Nina Olson, the US national taxpayer advocate claims the IRS has badly treated taxpayers who inadvertently broke tax rules in her annual report.”
At a conference in Arizona, Kathryn Keneally, Asst Attorney General, Tax Division, noted that 106 Swiss banks had joined the “U.S. Programme” under Category 2. The U.S. Programme is a FATCA-like initiative, “agreed” with Switzerland in September, that requires Swiss banks to identify USPs with accounts back to 2008 and report them to the IRS. Category 2 is for banks that suspect or cannot exclude the possibility that they may have assisted USPs to open or maintain accounts at their bank which may not have been properly reported.
Keneally is quoted in the Swiss daily Neue Zuercher Zeitung as saying: “The (US) authorities did not have most of the 106 institutions on the radar screen previously, she said. Every bank, which participates, is a new information source.”
I hate to break the news to Keneally, but the banks which have announced publicly as Category 2 are mostly retail banks with few private banks. The U.S. Programme is simply causing the retail bank accounts of USPs living in Switzerland to be identified. The local retail banks are then sending letters to the USPs requiring them to demonstrate that their local accounts were declared for US tax purposes and, if not, urging them into the OVDP voluntary disclosure program so that they can forfeit 27.5% of their locally-taxed earnings and savings.
Keneally can crow that her U.S. Programme is a great success but she should reflect on the fact that local accounts held by USPs resident in Switzerland are not really “offshore”. The money was earned in Switzerland by USPs and was not transferred over from America. They are just normal bank accounts where wages, pensions and bills are paid and savings are held.
The NZZ article on Keneally’s statements is at this link (German):
http://www.nzz.ch/aktuell/startseite/ueber-hundert-banken-in-gruppe-2-1.18229452
@Just Me
Thanks for that link – I’ve just added it to my NZ submission !
I can’t help but feel that we could end up like the Catholic Ukrainians…
http://www.theglobeandmail.com/news/politics/ukraines-crackdown-singling-out-catholics-canadas-religious-freedom-envoy-says/article16505687/
Ukraine’s crackdown singling out Catholics, Canada’s religious-freedom envoy says
Conservative MPs are concerned.
Polish Ukraine War
http://en.wikipedia.org/wiki/Polish%E2%80%93Ukrainian_War
US person Catholics, or just regular Catholics?
@Marie
regular. I was extreme putting on that link but the Belgium bank lock out of money has freaked me out.
I have a permanent resident expat friend who went to TD to her financial advisor to ask the FP about FATCA . The FP said there was nothing on the website sbout it. My friend does not have a computer nor goes on the internet. I looked up TD’s website and saw a section on FACTCA and how they will make it a comfy experience. So much for honesty.
Financial planners at that level don’t know about FATCA yet. It has not hit the street level yet. Even the CRA street level staff have no clue. The “higher Ups”, the compliance people and CRA’s Competent Authority division are the only one’s that are in the know.
@Marie
I agree what you are saying
But my friend told her FA that TD had FATCA up on the TD website.
I came across this: “Pay Taxes Where You Earn Revenue,” says Australian PM,
which focuses on businesses, but the same should apply to individuals:
Good old common sense: Pay Taxes Where You Earn Revenue / Income!
@calgary411
Thank you for posting that link!
I think this is the first thing Tony Abbot has said that I actually agree with.
Situation along the following lines, not in Canada.
Relinquishing date is in 2008 and I think I can prove a good relinquishing case for that date.
If I renounce, it looks like less paperwork and from this forum it also looks like the CLN could be faster. But renouncing does seem to have a stigma because of name and shame.
The fee is not an issue and I would if I could pay it for premium service relinquishing. 🙂
Arguments either way?
Firstly, if you’re not in Canada make sure the $450 fee doesn’t apply for relinquishments as well. Here in Switzerland iirc it applies to both renunciations and relinquishments so may be the case where you live.
As far as stigma goes, well do your family/friends know what you’re thinking of doing and are they for or against it? If they back you does it matter what anyone else thinks? Very few ordinary Americans are going to be checking the Federal Register list looking to see who’s given up their citizenship. Most of us here see having our name on the list as a source of pride, not shame.
Otherwise there’s really not that much difference. You’ll have the DS-4079 form to fill in for a relinquishment which basically helps consular staff assess your case, but any outstanding tax filing obligations will be the same pretty much. Relinquishment, if you can get it, might be better in the long run if the banks want to know when you gave up your US citizenship should your country be implementing an IGA agreement. But again it depends on what your particular agreement says. Switzerland’s IGA allows the US to know about accounts from 2008 onwards.
@Anonymouse
If you are intending to exit cleanly and avoid covered expatriate status by filing 8854, you need to consider your ability to certify your five years of tax compliance. If you go with a relinquishment date of 2008, that means 2003-2007 plus the 2008 partial year. A renunciation means 2009-2013 plus the 2014 partial year.
@Medea
The look back to 2008 is not a feature of Switzerland’s IGA (or any other country that has signed an IGA). I presume it is a feature of the OVDP for banks.
@ Edelweiss,
I think you’re mistaken about the tax years in question for a 2008 relinquishment. If the relinquishing act was in 2008 and person notifies US govt of it (eg. signs the form DS-4079 statement at the consulate) in 2014, IRS considers the person a US taxpayer until the day they notified the US govt in 2014. 26 US Code 877A (g)(4)(B)
So, the 5 years tax forms would be from 2009-13 plus the partial year 2014 in that case.
The text of 877A(g)(4) is also included in the 8854 Instructions, at page 1, top of column 2
had a very disconcerting meeting last nite with the chap who looks after some of my rrsp’s. i went to the meeting to ask him what i should be doing in the face of the looming facta crisis with my rrsp’s and to see if there was anyway to change them into my wife’s name (she was born in canada)
his reply to me was “what is fatca?” and that all i needed to do was file a FBAR become tax compliant and all my fears and problems would go away.
it is scary to me in that after having spent the past 2 or so months educating myself about fatca and all the other alphbet’s i ended up knowing what he was recomnding was totaly the wrong advice and that there could be others in our situation that are choosing to take his advice cause he indicated to me he has helped a few other of his clients start the process.
on the up side i told him in no uncertain terms that i had no intention of complying with fatca nor would i ever be traveling to the us of a ever again so i asked him about the requirement to prove our us’ness and he said that as far as he was concerned nothing was changing…..so i guess considering he knew nothing about fatca nothing was changing in his world anyways.
@Mettleman
good news….for now.
Remember the americans can break treaties and change rules like any bully. Will our government betray us fo 30 pieces of 30 percent savings for the banks.
@ Pacifica
Thanks. I guess there’s a reason I don’t normally offer advice in situations not similar to my own.
@Anonymouse
Another aspect to consider might be if you had accounts that would be reportable under FATCA. A 2008 relinquishment CLN would likely make them non-reportable.
I have looked many times for the post, done in mid 2012, which broke the story that the FBAR instructions were missing from the Pub 54. The iformation is useful in arguments.
Does anybody know how to find it anymore?
My searches have never yielded the result.
It was likely research done by Shadow Raider, but not sure.