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.
@tdott
I am immensely grateful for your buzzkill blurb in the past. Well on my way to extricating myself from USP-hood
usx –
I love you too.
@final filing/dual status
This is from the IRS manual 519Chapter 6:
“You have a dual-status tax year when you have been both a resident alien and a nonresident alien in the same year. Dual status does not refer to your citizenship; it refers only to your resident status in the United States.”
So for those of us who are former USC and non-resident in the US and with no US income or assets : we are not dual status aliens, we are former USC and now 100% aliens! Our obligations to file to IRS/Treasury end as of date of renunciation (unless we are covered expatriates)
@notamused/others
RE:”In my last year I only filed 1040 up to my renunciation date. Since I have no US source income, no 1040-NR was required. It wasn’t a “dual status” return, as the IRS definition of “dual status” didn’t apply to me, i.e. neither a resident alien nor a non-resident alien. Since I have no US source income and am neither a US citizen nor resident, green-card holder etc. none of those.”
This is me too. How did you deduct your income earned and taxed abroad (where you live) Did you file the 2555EZ computed for the days up to renunciation, or the foreign tax credit 1116 form? I have previously used the 2555EZ and hope I can use it for the final filing too.
@allou
Form 2555, as usual.
I’m not sure this is the right place to post this,but I need to post it for those moving towards renunciation (especially in Toronto).
Copying the “interim CLN letter” that was sent to Em (or her hubby?), I emailed TorontoPassport asking if they might provide a similar letter (by email and/or snail mail) to me given that I had my renunciation appointment there on April 15 and all I received was the receipt for the $450 renunciation fee. Here is their reply to me this morning:
Thank you for your recent inquiry.
The Consulate General in Toronto does not issued such letter as the only official proof that you have submitted an application for a Certificate of Loss of Nationality is your Official Consular Receipt.
If you wish to travel to the United States prior to receiving your Approved Certificate of Loss of Nationality, you may show the Customs and Border Protection officials you Canadian passport and official receipt.
So much for consistency between consulates in the same country…….GR@!x#>?!!! This lets us all know that there is no policy in this regard, just the willingness of the local consulate staff to assist.
So now all I have is the small receipt and the hope that the CLN will not take more than the 9 months that they said (imagined) would be the outside limit before it might arrive….
@ LM
That is so disappointing about the interim letter. The Calgary consulate was so gracious about giving that letter to my husband. He was relinquishing so there would be no official receipt. He explained he was worried about his ailing 90 year old uncle in the USA. As it turned out his uncle died while we were away getting the relinquishment (we didn’t know until we got back) so there wasn’t enough time for him to apply for a Canadian passport which he would have needed to attend the funeral. We’re hoping my husband’s CLN will arrive at least by the end of this year. His relinquishment was early February and the consulate would not give him an estimate of how long he would have to wait.
@Em
Sorry to hear about your husband’s loss just at the wrong time. Hopefully he has been able to do what he needs to do for this loss since then.
Any idea if relinquishment CLNs and renouncing CLNs take differing lengths of time to come back? Is there rhyme or reason?
BTW, the 3″x 6″ receipt for the $450 that I paid to renounce does have a non-raised seal of the Department of State of the USA, a header (below this “seal”) saying US Consulate General TORONTO, my name, the date and time, the Register (Toronto ACRS), the Transaction number and, below the line indicating Quantity/Service/Country/Visa/Price it shows: RENUNCIATION OF USC. Then, below that, it shows Balance ($450.00), Amount Paid ($450.00) and Change ($0.00). The footer says CUSTOMER COPY ALL TRANSACTIONS ARE FINAL – NO REFUNDS
I’ve put this in the clear plastic passport cover that used to hold my US passport so that this receipt doesn’t get lost or damaged along the wait. When I went to renounce, their credit card services were down (I had no notice of this before I headed off to Toronto a day earlier) so it was a good thing I had decided to bring cash….. So now I just wait…..
@LM, “CUSTOMER COPY ALL TRANSACTIONS ARE FINAL – NO REFUNDS”
There is an almost bit of comedy with that line.
Thanks for the receipt description. It sounds far more thorough than I thought they would provide and seems like it would work.
So if you relinquish in Toronto you are SOL.
@ LM
My guess is there is no rhyme or reason for who waits for how long. I think you’ll be good to go with your receipt. It sounds like it’s at least more official than a ticker tape receipt that you would get at a grocery store.
@LM
The clerk in Calgary said that relinquishments take longer because they are processed by the law department (or similar) in DC, whereas renunciations are “practically rubber-stamped”.
@LM, if the receipt is one of those made of heat sensitive paper, (like many cash register and bank machine ones) it will degrade and become unreadable over time. You might want to make a photocopy extra.
@ Badger
Yikes, heat-sensitive paper receipt – – I never thought about that! Many thanks for the suggestion to make copies now since the CLN may take 9 months to arrive. Hugs for suggesting this 🙂
Finally a story in the US mainstream media of the issue of the US using the FBAR bomb to extract the legally owned and foreign generated savings that new US immigrants earned BEFORE immigrating to the US. I just read this article http://www.forbes.com/sites/janetnovack/2014/05/02/welcome-to-america-now-give-us-your-money/ which was posted on the ‘The OVDP Drudgery for Minnows’ thread (thank you to Just Me!).
I was thinking of ij, and the stories of others with similar experiences here, as well as the discussion on another thread about the impact of FATCA and the ab-normal US extraterritorial tax system on those – some of whom would be Canadians who move to the US for stays – long or short, who may have perfectly legal assets which cannot be moved or cashed in prematurely or for whom dissolution would result in tax liabilities.
There are plans in which participation is mandatory, and which cannot be accessed until certain conditions are met.
Surely if it is US policy to allow or encourage immigrants to come, then it has a duty to assist their integration and success – which will also benefit the US – by providing the information they will need in order to prepare for the transition to a system which clashes with that of the rest of the globe.
Unless, as with those abroad, the US appears to feel that it benefits more from trapping the unwary and unknowing by continuing to let the many non-willful fall blindly into the confiscatory penalty pitfalls that seem to be a new revenue stream – in lieu of actual assessed taxes owed.
It is all part and parcel of the same unethical approach the US appears to have no qualms about: to tax as much of the world as possible on assets with no US connection or US origin – whether they were generated and taxed elsewhere even before any possible US status came into being, or by taxing them by proxy via the fiction that wherever we are in the world, and no matter how tenuous our non-economic connection is (ex. via a US parent abroad), we are still part of the US “polity” (“A polity is a state or one of its subordinate civil authorities, such as a province, prefecture, county, municipality, city, or district.[1] It is generally understood to mean a geographic area with a corresponding government.” http://en.wikipedia.org/wiki/Polity).
I fail to see how those born abroad who do not live in the US, most of whom cannot register and vote from abroad, who maintain their permanent residence abroad, can possibly be convincingly argued are part of the US sphere of influence – as if the reality of geography and of the sovereignty of other jurisdictions do not exist.
Apparently, the US is such a powerful hegemony, that it can conjure up tax claims that confound both the constraints of time and of space. All that, in addition to one in which taxable status is like DNA – passed down from parent to child. One wonders whether they’ll start to make zygotes file next.
Good comment Badger. Glad you found it. I put it there because I know a few immigrants have read that thread and it might strike a responsive chord.
@badger
Sounds more and more like science fiction every day, doesn’t it?
Thanks for posting that article @Just Me. Hope that some of those who read at IBS who are US residents with pre-existing assets in their non-US country of origin are still reading here and at Forbes to see it, and that their pain will garner some kind of actual recognition by the US because of the media exposure.
@bubblebustin, the US treatment of expats, and the punishment of all of our legal local normal Canadian savings continues to read like dystopian fiction (think 1984, Animal Farm, etc.) and justifications of extraterritorial US CBT continue to be farcical, no matter how many times I reread them.
Hi, this is my first post on IBS. I am a dual Australian – US citizen, born in the US but a long term resident of Australia (20 years).
Where do I begin? The same issues are being faced in Australia. The same problems, with intergovernmental agreements meaning the US IRS can ask the Australian Tax Office to be the collector for unjust US tax claims on the Australian assets of Australian residents whom the US deems US persons—thus, in theory, there is no defense in Australia against any IRS claims. Most recently, 28 April, Australia has posted a draft IGA on FATCA, that is accepting submissions on the draft: https://www.ato.gov.au/General/New-legislation/In-detail/Other-topics/International/Foreign-Account-Tax-Compliance-Act/.
Seems to me, and I’m not as expert as you folks are, there are two major differences between the Australian situation and the Canadian situation.
A) Canada has its bona fide retirement accounts recognised as bona fide retirement accounts by the US in the Canada – US Tax Treaty, whereas Australian retirement accounts are not recognised as retirement accounts by the IRS—a big problem.
B) Canada has protections for its citizens in terms of i) as commented earlier by tdott dated 24 April “The US-Canada tax treaty will protect you (at least in Canada) from the IRS if you were Canadian at the time the liabilities were incurred.” That’s fantastic! Point me to an article discussing this or the treaty article containing this! Australia, to my knowledge, has nothing similar. That is, there is no protection at all for Australian citizens (dual Australian – US citizens) with regard to their Australian assets earned while resident in Australia.
And ii) it appears there is a right of appeal in Canada against US tax claims, whereas in Australia it appears the Australian Tax Office will collect on behalf of the IRS and any appeal must be in the country initiating the claim (the US).
The bottom line is that it appears that Canadians are better protected than Australians, and that Canadians need not necessarily fear the IRS, whereas Australians with any liabilities for taxes or fines need to fear the IRS. Perhaps that is why more Australians don’t speak up.
Rather than rabbit on too much here in my first post, I’ll just close with…
My questions would be:
1) Are there other Australians in the IBS? Perhaps we should coordinate.
2) Is there a good analysis of US taxation of the overseas assets of overseas resident “US persons”? Something that might help convince Australian legislators that Australian enforcement of unjust US tax claims on the Australian assets of Australian residents is not in Australia’s best interests. I already know of Bernard Schneider’s 2012 Virginia Tax Review article (“The End of Taxation without End”) and the “ACA Proposal” (the American Citizen Abroad organisation’s paper “Residence-Based Taxation: A Necessary and Urgent Tax Reform” Working Paper, updated March 2013, submitted to the International Tax Reform Working Group of the Ways and Means Committee). Both these are high credibility analyses. However, neither are from the perspective of a non US country targeted to non-US people as to why US citizenship based taxation is not in other country’s best interests.
3) Is there an article discussing that point tdott made “The US-Canada tax treaty will protect you (at least in Canada) from the IRS if you were Canadian at the time the liabilities were incurred.”? Please point me to it, or to where the tax treaty article contains this.
Other countries should learn from Canada’s experience, and it will help Canada as other countries become more active on this issue.
Thank you and I will keep watching this discussion thread.
Yes we have Aussies who drop by at Brock. Just Me who drifts around between NZ, Oz and the USA is a major contributor. He’s not exactly an Aussie but well acquainted with your region. One dual who ultimately got a CLN, ozteddies, sadly passed away last December. John Richardson, our Canadian friend and lawyer, made an excellent presentation to the New Zealand Select Committee. It’s in pdf form so I can’t post it but one of our admins could. It’s also written in an easy style to assimilate. I’m not always sure where people are from unless it’s obvious like pukekonz but hopefully some Aussies will pop in with a comment and you will be able to hook up with them. Good luck! And welcome!
A few comments. We are only 2 or 3 in Sweden on this, even less effective than your group. A few items.
Support (financial and/or communication of Canadian legal challenge or legal challenge in USA). The US legal challenge is discussed on a Brock post a couple days ago. The US challenge folks can be contacted at email found at. Grass roots funding is to be acquired.
https://www.facebook.com/republicansoverseas
Post your question on the “FATCA” post just below this post on the menu. Your question relates first to the FATCA IGA. FATCA is the enforcement arm of FBAR penalty system.
Just Me with a Kiwi and Australia history has some Australian contacts, he should find your question soon.
To: Em (email May 8, 1:08am)
Thank you for your comments!
Can admins see my email and send me that pdf? Or point me to John Richardson’s email address and I’ll ask him directly, and also see if he has any other advice for Australia.
Sorry for my earlier double post. Admin is welcome to delete one of them.
I think it would be useful to alert the Australian government to the protections that Canada provides for its citizens and residents. I think it would carry much weight with Australian legislators for them to know what Canada does on this issue. This for example was my 3rd question above, asking for a source for tdott’s comment “The US-Canada tax treaty will protect you (at least in Canada) from the IRS if you were Canadian at the time the liabilities were incurred.”?
@Mark Twain
An idea perhaps to see what candidates to the EU Parlament Election on May 26th have to say on Fatca? Suggestions as to which national candidates are at least aware of the issues concerned?
@Aussie Jones
Hi, I’m in Australia (Melbourne), also a long-term expat (40 years) and relinquished last year, at present preparing my last tax return and 8854.
I wasn’t aware of the IGA, too busy fuming about the proposed federal budget perhaps.
I have been filing US tax returns for the last 15 years since I became aware of the requirement, and am not liable for any taxes or fines (as far as I know, but considering the US tax code it’s always dubious!) but am terrified of the IRS anyway.
I read through the links you posted and didn’t find any reference to the ATO enforcing IRS claims for tax, “just” the passing of information on to the Americans, can you be more specific as to the source? I may not have read it properly.
The advantage of the Canadians subjected to this horror is that there are more of them and thanks to IBS better organised. Aussie “US persons” seem to be rather thin on the ground, or perhaps blissfully ignorant.
@allou, none of them I suspect. But they’ll be all for it as it’s catching “tax cheats” and EU has its own equivalent in the works as we speak. There certainly aren’t enough Americans in Europe to make it any kind of election issue in any EU country.
Welcome, Aussie Jones.
I’ve deleted one of your duplicate comments.
Here are posts that should be of interest to you: http://isaacbrocksociety.ca/2014/02/04/a-template-for-submissions-to-the-governments-of-every-country-paying-tribute-to-america-by-john-richardson/; and
http://isaacbrocksociety.ca/2014/04/17/new-zealands-capitulation-to-fatca-laid-bare/; and
http://isaacbrocksociety.ca/2014/01/26/a-plea-for-submission-against-fatca-iga-enabling-legislation-in-new-zealand/; and
http://isaacbrocksociety.ca/2014/02/04/fatca-news-break-out-in-new-zealand-is-stealth-coming-to-an-end/