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.
I was born in the US to Canadian parents, and lived there for 6 months. I was not registered as a Canadian at birth. My father swore me in as a Canadian when I was 9 years old, at which point I received a Canadian citizenship certificate.
A few years ago, I needed to replace my Canadian citizenship certificate and I received a letter along with the replacement, explaining that due to the 2009 citizenship changes, I have been a Canadian citizen since birth.
I had to order a long form birth certificate for my appointment at the US Consulate. This had my parents full names, and it included their birthplaces as “Canada”.
I needed the letter, as well as the long form birth certificate to “prove” that I have been a Canadian since birth.
As an aside – I also needed the long form birth certificate to “prove” that I was born a US citizen … which I found extremely ironic.
@Briggs – my relinquishing act was working for the federal government in the 1980s.
Not meaning to complicate things, Briggs, but due to changes to Canada’s Act in 2009, you may be a Canadian at birth:
http://www.cic.gc.ca/english/citizenship/rules_2009.asp
Isn’t it ironic, that naturalized Canadians can relinquish (in some cases) yet Canadian born Canadians cannot. Everything is backwards in CBT land.
@Briggs, since your mother was Canadian at the time of your birth, you are almost certainly (as of 2009) a Canadian citizen from birth. If you want, you can apply for a Citizenship Certificate which will indicate your “effective date of citizenship” as being you DoB. I can attest to this first hand. Did you mention to C.I.C. that your mother was Canadian at the time of your birth?
See: http://www.cic.gc.ca/english/citizenship/rules_2009.asp
FWIW, being a dual-from-birth gets you out of the 8854 net worth test and the tax liability test, unfortunately it does NOT get you out of the compliancy test (5 years of returns).
@tdott, but does Briggs WANT TO BE A CANADIAN FROM BIRTH? If she can manage to slip through both the Canadian and US systems (all the way to ‘relinquishment’) without the birthplace of her mother being discovered, why wouldn’t she want to?
@mykitty
I don’t understand why the US consulate would care about you being a Canadian since birth. That should only have relevance to the IRS and form 8854. Can you shed any light?
@WhiteKat
Since it sounds like her net worth and tax liability are too low to be an issue with 8854, you’re probably right.
@tdott,
When filling out all the forms over the past years for PR card and then Citizenship it always asks birthplace of parents,don’t recall if it asked citizenship though.
@tdott
The person I was dealing with told me that as a dual citizen at birth, I was unable to claim a past relinquishment based on government employment. I could only renounce, or commit an act of treason.
This person used my being dual at birth, to deny my claim to past relinquishment.
Just a FYI for those of you who don’t know … I requested that my papers be sent to Washington anyway. There have been other people who were dual citizens at birth who have relinquished US citizenship based on government employment. I believe I have a valid case.
Tomorrow I will try to find a ph # for C.I.C to inquire if I have always been considered a Citizen of Canada. If it is true is there a benefit? I still am going to shed myself of that US connection at the Calgary consulate in late May. It is near impossible for me to have all the IRS filing completed and in before this time unless I can get a ID number within a few weeks.
Are you penalized differently if one renounces vs relinquish and are you subjected to more BS if you relinquish before filing with the IRS?
@all – looking for some feedback with this:
1. renounced in 2013 and filed 6 years IRS forms and fbars and am now doing 2013 part year returns + 8854. (DIY late-filed on advice of IRS hotline)
2. 2555EZ computed up to renunciation date – 1040 filed with info up to renunciation date – 1040nr filed from renunciation date to 31st Dec. 2013 (even though have absolutely no US income/assets) – schedule B filed together with 1040/1040nr, 2555 ez and 8854. 2013 Fbar filed online.
3. Copies of all forms to both IRS and Treasury address in Philadelphia.
Have I missed anything? Will be happy when this is done and good luck to everyone else dealing with it!
Briggs,
The Consulate will not (or should not) ask you anything about your tax compliance. You do not have to have filed prior to your renunciation or relinquishment. You have until the following year (with extensions applied for) to file the requisite number of tax returns and the 8554, certifying your compliance. As a dual citizen from birth, you would not be subject to the dreaded U.S. Exit Tax, that is unless you fail to file the Form 8854. There are different opinions regarding this. You have to base your decisions on whether or not you want to freely cross the border if things tighten up even more, what your level of risk / looking over your shoulder would be for the rest of your life. Expatriation is expatriation, whether a relinquishment or renunciation, and there are no more penalties for one than the other — just the $US450 fee for renunciation, which many feel a small price for their freedom from the shackles of US CBT.
@ Briggs,
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. (I think you can even get an extension to October, but I’m not sure about that – someone else would know for sure)
See: http://www.irs.gov/pub/irs-pdf/i8854.pdf
allou, it sounds to me like you’re right on track for your departure from the horrors. If others spot something amiss, I’m sure they will chime in.
Congratulations on all your perseverance in getting to this point. Aren’t you glad you’re at the end instead of the beginning of it all?
@at the end – yes Calgary I am SO thankful for all the advice and information I found here at IBS – it is just a year ago I discovered that my “obligations” and that set off a chain reaction-OMG-what to do-how to sort through all the info-how not to panic etc. For anyone new to this – good luck, read carefully, wait, don’t panic and definitely try to keep away from the compliance industry.
@briggs
I naturalized as a Canadian in 1996 and because of the Canadian Citizenship Act changes I am now a citizen at birth, thanks to my Canadian mother. Even though I’m not subject to the US exit tax, I feel it offers me a more protection against what our friends south of the border might cook up one day – well worth $450 to me.
@allou,
I’m also working on the filing for the renunciation docs. I have a few comments on your points 2 and 3:
“2. 2555EZ computed up to renunciation date – 1040 filed with info up to renunciation date – 1040nr filed from renunciation date to 31st Dec. 2013 (even though have absolutely no US income/assets) – schedule B filed together with 1040/1040nr, 2555 ez and 8854. 2013 Fbar filed online.”
Comment: I agree about that the 2555EZ and the 1040 and schedule B would be computed only for the part of the year from Jan 1 to renunciation date, but I am not clear about what actually goes on the 1040nr. Some people feel that you only need to include info related to renunciation date to Dec 31st (and in your case you state that you had NO U.S,income so I guess there would be no data in that case)
but I’ve read elsewhere (Serbinski forum) that the 1040nr, as a dual status return, captures the info from the 1040 and also would include any U.S. source income for the period from renunciation date to Dec 31.
Phil Hodgen’s site also made some reference to the fact that the tax (if any) from the 1040 would flow
through to the 1040nr. So I’m really not clear how to fill out the 1040nr. Can anyone who has already
done this please comment about what you or your tax preparer did?
“3. Copies of all forms to both IRS and Treasury address in Philadelphia.”
Comment: It’s my understanding that we only need to send a copy of the 8854 to the treasury address in
Philadelphia and not all the forms.
@bubblebustin
I know what you mean. However, given the less-than-logical world of the US with regards to its expats, I wouldn’t be surprised if one day it somehow turns out to be a negative rather than a positive.
@briggs
…although I do like the idea that some Canadians can stiff the USG for $450USD’s, by not disclosing their Canadian citizenship at birth 🙂
Come to think of it, a relinquishing act is a relinquishing act. The act (citizenship oath of allegiance) itself should not be nullified just because the person is already a citizen. I think briggs could be good to go with getting her relinquishment documented regardless of whether she is recognized as a citizen at birth or not. This is somewhat analogous to mykitty’s case where the consulate person *incorrectly* said that working for the government (and thus presumably taking the oath) was not a relinquishing act due to being born a Canadian.
@bubblebustin
In the end all I want to do is end this claim the US thinks they have on me. If the consulate determines I must denounce so be it, if I can relinquish then that works for me as well. It’s not about saving $450.00. I am sure there will come a time when relinquishing you will be charged for this service as well. If one of these actions immediately ends this claim on that day forward that is what I want.
@ TDott,
There does appear to be some difference between the two scenarios, in that the problem with an oath of allegiance to Canada taken by a person who is already a Canadian citizen not being considered a relinquishing act seems to be based on the following.
The Department of State Manual on s. 349(a)(2), “Taking Oath of Allegiance to a Foreign State,” 7 FAM 1252, describes the conditions of a potentially expatriating oath as:
But when a consulate claims that a person who is already a citizen is automatically disqualified from having their government employment or military service considered a relinquishing act, because they are already a citizen, they’re very clearly just wrong. Nothing in the law or regulations says that and I confirmed it with DoS Legal Affairs in Washington.
@ allou,
Congrats on almost at the end. I am just beginning, UGH! Just wondering if did the streamlined filing. Also, as I navigate around the IRS site I am having difficulty finding the forms I will need to download- 2009 to 2012 1040’s- 2555 ez and past FBARS. Where should I be looking?
@Briggs, Wow, you are brave to be tackling this all by yourself.
I don’t want to scare you, but have you heard of PFICs or ‘Foreign Trusts’? Have you sold your principal house in the last 5 years and made more than 200K capital gains? Do you have registered investment vehicles such as RRSPs, RESPs or TFSAs? Have you invested in Canadian mutual funds at all in the last 5 years?
Living the normal financial life of a Canadian can lead to big headaches when trying to back track on 5 years worth of tax compliancy – its NOT for the anxiety prone. Just be sure you have a general understanding of the complexity and cost of becoming tax compliant for your particular situation before you commit to that renunciation date.
Of course another option is to renounce without going on to become tax compliant, but this could get you in the cross hairs of the IRS down the road; no one knows for sure.
@pacifica777
I think the 2nd part, “or the abandonment of allegiance to the United States”, could still apply to a Canadian citizen taking the citizenship oath, if one accepts that “intent” is the important thing.
Well, this makes me wonder how taking a government employment oath would satisfy the criteria. There’s no legal status change involved, no?
FWIW, I think Briggs should probably do the expedient thing and just renounce, however, this stuff is fascinating in its intricacies and bizarreness.