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.
@calgary411 @tdott @WhatAmI
5 years – yes, of course. I’m sure I would have twigged on that eventually. Information overload!
(@tdott) “My mother renounced in December so she only has until June this year to file. If you renounce now, you have until June 2015.” So during that period between renunciation and filing – provided I file before the following June 15 – I don’t have to worry about being hunted down as a delinquent?
I want to wait until my Canadian citizenship is finalized before I renounce. It has been a year, already, and could be up to 18 more months. But I would prefer not to wait that long to begin the process of disentangling myself from my Americanness. I’m not very good at living with uncertainty.
You know, I’m so angry at the U.S. right now. And I’m grateful for that anger because it’s helping propel me through this mess. But I know that when it comes time to renounce, there will be tears. It may be only a little bit of me, but it was the first little bit.
Thanks again, all.
@Duke of Devon
Regarding Quiet Disclosure, here is a possibly very large and cumbersome hitch: I require an ITIN.
If I have to file 5 years either way, I don’t see how QD would be more beneficial? And there certainly is a lot of anxiety-inducing talk about how much the IRS dislikes it when people do that. How DARE people fall quietly in line!
Is the difference primarily surrounding the FBARs? I hope I’m not missing something incredibly obvious here.
Hmm. I don’t have to file FBARs unless my personal accounts total >= $10K at any time during the year, is that right? Under the Streamlined program, if I owned a struggling business during the first three years and didn’t reach that threshold, do I file only 3 years of FBARs?
(I told myself NO MORE QUESTIONS. I promise you I will pay ALL of this forward.)
@Wren,
Accountants will tell you to file everything when renouncing even if you are under the thresholds. That’s either because they want to be able to bill you more, or because they don’t trust the IRS to leave you alone by assuming that you are under the threshold.
My mother (just turned 90) didn’t even know she had to file but when I learned that she did, I also learned that she was under the yearly threshold. She’s filing all 5 years of 1040s “just in case”.
There are people here who only filed what the various thresholds indicate.
@WhatAmI
I was thinking that any absence of FBARs (or 1040s) might raise eyebrows. Making sure the paperwork matches the requirements “just in case” sounds better.
My mom’s response to this so far has been “You girls make sure you take care of yourselves. They’re not going to worry about an old lady like me.” Given that she just found out she has something called Venus Insufficiency, and also major dental surgery coming right up, I don’t have the heart to press the point. I figure I’ll wait a month or two and try again.
At least – unlike her slacker daughters – she already has her Canadian citizenship. 🙂
@Wren,
Whoa, you startled me with “Venus Insufficiency”. I thought maybe Venus was going the way of Pluto and being demoted from planet status.
It turns out it’s “Venous Insufficiency”. Poor dear, yes, probably not a good time to upset her.
@Wren,
When did your mother naturalize as a Canadian Citizen? Since that time, did she stop “being American” by not using or renewing US passports, voting, filing taxes?
If she naturalized prior to 2004 and the stars are aligned, she may be able to claim a past relinquishment and not have to file anything at all with the IRS.
@WhatAmI
Whups. I suppose if you’re going to typo, best to make it good. (There’s an analogy somewhere here about planets and citizens but I’m too tired to find it.)
“When did your mother naturalize as a Canadian Citizen?” – I’m still waiting for an answer to that question, for that exact reason. That was one of a very few “need to knows” that I posed as essential to my research while I not bother her for the next few weeks.
Wren, I am so sorry you are having to go through all of this — and for your mom who is ill, it is unconscionable. You’re right; you are your mother’s daughter — your anger will be what will push you to free yourself of the absurdity of remaining chattel of the US.
And, I see Medea’s comment regarding the requirement that you / we, as US citizens, must have a US social security number to file US tax returns. The process to get that is another absurdity.
@anon0percent, what I don’t understand is why the rest of the world don’t realise they have clout too. Two steps they could easily take to ensure the US tow the line. Firstly refuse to allow FATCA to be implemented unless the US agrees to full reciprocity; secondly impose their own 20% (I’ll be generous in not making it a retaliatory 30%) penalty on the US government (not the people making them) for any monetary transactions originating out of the US until the necessary legislation to do so is put in place.
@Wren, any tax filings will require an SSN/ITIN whether you do a quiet disclosure or go Streamlined. As a US citizen you must have a SSN to file US tax returns. Whether you could renounce and then file, including an application for an ITIN is unclear from the little research I’ve done on the IRS website.
Sorry to hear your mother is suffering from Venous Insufficiency. Must be worrying if she’s due to have surgery soon.
@ WhatAmi …. “Renouncing requires 5 years of taxes and 6 years of FBARs “……
Sorry but this is not correct :
When you renounce your citizenship, you want to avoid “covered expatriate” status if you can, because this will trigger a tax bill. You will be treated as selling all of your assets on the day before you renounce your citizenship. The certification test–to avoid covered expatriate status–only requires that you certify that your obligations under Title 26 of the United States Code are up to date. Since the FBAR is required under Title 31, you are not required to certify that your FBAR filings are up to date.
http://hodgen.com/expatriate-without-filing-fbars-sure-thing/
@ MedeaFleecestealer …..
I agree – the problem is that the fight against tax evasion is in many “socialistic” or even liberal countries in europe or anywhere else for that matter a noble righteous cause . Since > 95% of the people,taxpayers have no clue about the “dirty” details and consequences surrounding FATCA, CBT, identity theft etc. it is impossible to get any meaningful representation, hence the american “bully” is free to push the limits as to how far they can take it without hurting their own strategic positions .
I am afraid we are 5 years to early with ringing the alarm bells for the general “populus” and need to be patient and keep plugging away with our protests.
@anon0percent, yes we all know the cause is just. It’s the execution that is wrong. Presumed guilty as the American paint us “tax evaders”.
@anon0percent,
Thanks for that clarification, but I was writing within the context of the streamlined procedure, which does require FBARs. Phil Hodgson agrees in the comments in the link that you posted.
@calgary411
“Wren, I am so sorry you are having to go through all of this…” Thank you so much for your support and encouraging words. We’re all fighters in this family, and I have no doubt that once Mom is feeling better, well, she makes a formidable opponent to say the least. Best to just get out of her way. 🙂
@MedeaFleecestealer @calgary411
Well, am I glad I brought that up! Apparently I was given bad advice and, further, the wording on the IRS website had me believing that I could simply include an ITIN application with my backdated returns. Every time I turn around, another blasted hitch. 2 steps forward, 10 steps back. SIGH. I think I may need to put this away for a day to regroup. Frustration is setting in.
@anon0percent
Thank you for clarifying that – and for the link. I’ve bookmarked it for safekeeping.
@Wren, as I said it’s confusing. Definitely if you’re a citizen you MUST use a SSN. But what the situation is if you’ve renounced and then want to back file is another question entirely. Whether you would then be considered as still un-eligible for an ITIN – all I can suggest is ask the IRS directly. I’ve never heard of anyone using one to back file, but that isn’t to say it’s not possible. The wording does suggest that you could, but then you have to consider whether you’d get a penalty of any kind for using an ITIN when it should have been a SSN. Best ring the IRS and double check if you can, because getting a SSN seems very complicated and takes forever from what I’ve read here. If they say you can do it by attaching an ITIN application then that would be the way to go if you want to get things wrapped up quickly; it would certainly be faster than applying for a SSN and then doing all the back filing.
@MedeaFleecestealer
Boy, am I ever looking forward to my first ever conversation with the IRS! /s Thanks for the advice. I will get on that ASAP. I have also contacted my father (who smartly renounced in the 90s and is now living as a Canadian in Asia) JUST TO MAKE SURE they don’t have an SSN for me lying around somewhere.
Wren, You initially said you were a US citizen resident in Canada. now you also say you don’t have a SSN. Is it possible you relinquished your US status? Are you canadian? If so when and at what age. It might be important.
Question asked by phone conversation re FBAR:
“How do you enter a credit union Membership Share, showing Membership Dividend, on a Foreign Bank Account Report?”
I had no idea, but said I would ask for someone who is uneasy with using computer.
@Duke of Devon
Maybe “U.S. citizen resident” is unclear. Heck, even I’m confused. Sadly I have not relinquished. I was born in the U.S. and have a U.S. passport. I have been a permanent resident of Canada for 40 years (since I was 3 years old). I would be a Canadian citizen were it not for the slow-like-molasses pace of the immigration department. 12 months and counting…
Are Universal Child Care Benefits taxable in the US? If so, does anyone know how I can change the benefit over so that they are received in my non-US citizen spouse’s name instead of mine? I know I still have to claim it for tax purposes in Canada b/c I have the lower income, will that affect my US return? Thanks.
@Wren
I’ve wondered about that myself. All I can say is that renouncing before filing is not uncommon and I’ve yet to hear of someone being hunted down. Doesn’t mean it hasn’t happened, but I don’t think anyone here has heard of it.
@tdott
You probably sense my paranoia. At least I’m among people who understand. 🙂
@Tdott and @Wren, my brokerage tax certificates have Been delayed so my accountant is going to file for an extension to October (even though I’ve renounced) . It’s frustrating because I wish this could all finally be over and done with instead of dragging on and on….
@monalisa1776
I’ve gotta ask: what are the brokerage tax certificates required for? Do you need them for filing your (last!!!) 1040?
@Wren
Just because you’re paranoid doesn’t mean they aren’t out to get you 🙂