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.
“However, other experts said that U.S. citizens living and working abroad benefit from federal services–such as national defense, foreign affairs, income maintenance, and basic research–that produce social or humanitarian benefits that are not directly apportioned to specific individuals.”
I can safely say that in the 2 decades as a USP abroad (before unchaining myself) I never had benefits (tangible or intangible) in any shape or form from the USA. Quite the opposite.
@Shunrata, I won’t feel relaxed till at least 2017, either, due to the still-running statutes of limitations. However, one reason why I believe the IRS are probably done processing my paperwork is because they assessed some extra tax and deducted from a refund I was expecting. They rejected my FEIE but I didn’t want the hassle of arguing over what was less than $300. At least it indicates that they’ve rreceived and processed my final tax return.
@monalisa
That’s a positive way of looking at it 🙂
@Shunrata, indeed, I try to keep positive. At least this three year ordeal is hopefully finally coming to an end…I also doubt if the IRS will have the resources or even inclination to go after minnows expatriating. Even if they could squeeze a few thousand dollars extra revenue via aggressive audits, it would still cost the IRS more to administrate than it would receive in extra taxes or fines.
I have mentioned my worry that they could use audits of recent years to nitpick in order to argue that we haven’t actually been fully compliant over the past five tax years; they could thus get many if not most on mere technicalities to insist that even those of modest means are, in fact, still covered expatriates.
It could happen in the future to put off people renouncing but, at present, we don’t matter enough to them to pursue so aggressively. It would be more likely a case of the compliance industry using these audit risks as an excuse to scare more people into relying on their professional services to safely expatriate legally, etc.
@Badger
I feel a bout of Tourette’s Syndrome come on right now! WTF business is it of the GAO to place a value on those so-called benefits of US citizenship without first determining who they’re talking about? The tax returns half a million people out of the estimated 7-8 USC’s living abroad is hardly enough to support this idiotic conjecture! Besides that, virtually every other nation is the world does the same WITHOUT taxing their citizens abroad. What the GAO is demanding is TRIBUTE!
“income maintenance”? We have to pay tax because of what we cost the government to pay our taxes or FEIE “costs”? There’s no hope for any country that would allow its government accounting office to use circular reasoning to support this kind of propaganda and jingoism.
I agree, @Bubblebustin. They want eternal gratitude.
@Bubblebustin, value of citizenship? Seriously, if US Citizenship was highly prized amongst expats the compliance rate would be far higher.
And along those lines, I would happily support an amendment to 8 U.S. Code § 1481 (a) by adding;
8.) failure to comply with US tax obligations for three consecutive years while non-resident from the United States, its possessions or territories, if he has the nationality of a foreign state.
What would that do? It would force relinquishment of those that are not paying their “fair share” in all the “benefits” of US Citizenship. I think that would be sellable to the likes of Reid, Levin and Scumer.
From Victoria’s Franco-American Flophouse blog:
see Thursday, May 22, 2014
‘Overseas Americans Week 2014 – The Video’
http://thefranco-americanflophouse.blogspot.ca/2014/05/overseas-americans-week-2014-video.html
‘Overseas Americans Week Recap’ (AARO and FAWCO)
http://www.aaro.org/aaro-in-action/446-overseas-americans-week-recap
@ Admin
Could someone feature the AARO/FAWCO video in a separate thread? I’m just listening to Victoria right now. She is so awesome! Thank you badger for spotting this so quickly.
There has often been debate on IBS on the requirement to file FBARs after a person has renounced US Citizenship. No clear guidance has ever emerged although most people have suggested that FBARs should be filed for the periods prior to renouncing, including the year of renunciation. I decided to take the bull by the horns and sent the following question to the IRS FBAR email help address:
I received the following email response the following day:
So, no further questions asked and no further FBARs to be filed. Hooray!
@Hogwarts, nice one! Can I paste your question/answer over on the English Forum so others will know please? I’ll also send it to my tax preparer here. Shame I’ve just filed my last FBAR for 2013, having renounced in March of that year. Darn, could have saved some money.
@Hogwarts
Sorry to rain on your parade, but did you actually read their response?
“If someone is no longer a U.S. citizen or resident at any time in 2014…”
Hmm, on the other hand, they do say “is no longer a U.S. citizen”… so perhaps you’re right. It’s not clear to me from that statement. Typical IRS!
The due date for the 2013 FBAR is June 30, 2014. If someone renounced in August 2014, according to that statement, they wouldn’t have had to file, but at the due date they were a US citizen and are required to! Apparently that statement from the IRS was just a best guess from some call-center employee. I wouldn’t give it any weight unless it could be verified in an official IRS document, which they neglected to provide…
@notamused
This advice is different from what the same ‘authority’ sent me a few years ago. Then they wanted full coverage, including a ‘part year’ FBAR for renunciation year. I guess they do not know, or care, what the right answer is, so just make it up as they go along.
@notamused
I agree with you – I would have thought that the status on the filing deadline would be the deciding factor. I emailed back for clarification but they have not responded. They probably are making it up as they go along, but if challenged in the future I don’t see how they could argue with the email response from an IRS employee.
@MedeaFleecestealer
Yes, do whatever you like with it. If any conflicting opinions arise, please post them here.
Could you spell out the process of renunciation? I am considering it but not sure what needs to be done (and I am compliant to date with all IRS requirements for filing taxes/FBARs). Thanks,
@ Hogwarts
RE the IRS response of: If someone is no longer a U.S. citizen or resident at any time in 2014, then that person would have no obligation to file an FBAR to report foreign accounts held during the 2013 calendar year.
You mentioned in your question to the IRS that you renounced your US citizenship early in 2014. Thus, you were a “US person” for part of 2014. Would that not mean that an FBAR should be sent when you file in April 2015 (for the partial year)? Or, because you were not a “US Person” as of the end of 2014, that no FBAR was required?
I, too, renounced in 2014 (April) and need to be certain of all filing requirements. I will be SOOOOOO glad when this “US Person Journey” is completed – – I guess that won’t be until 2018 after the IRS has it’s 3 years to review all my files 🙁
@greg, make an appointment to renounce at your nearest embassy/consulate – check their website for exactly how you do this as it varies from place to place. Fill in the forms they send you and return them unsigned, along with copies of any documents they ask for like passports. It should be these two:
http://www.state.gov/documents/organization/81607.pdf
http://www.state.gov/documents/organization/81606.pdf
They may also send you this one. It’s not really necessary for a renunciation, but some embassies/consulates use it anyway.
http://www.state.gov/documents/organization/97025.pdf
Turn up on the appointed day and they’ll go over the paperwork you sent to make sure it’s correct – make sure you take the US passport with you as you’ll need to hand that over. Pay the fee and finally stand before the consul and take the Oath of Renunciation. Leave and then wait for your CLN to arrive, meanwhile you can sort out your 8854 form to wrap the tax side up if you’re up to date with your filings. You have until 15th June of the year following your renunciation to do this, but you don’t have to wait that long if you want to do it sooner.
@MedeaFleecestealer
I don’t know why the government still has that old version of the DS4079 (third PDF) up, but it’s no good. It expired on Dec 31, 2013.
Anyone filling out a DS4079 should check to be sure they’re filling out the current version. The other 2 documents do not have expiry dates.
@tdott, is the new one substantially different?
@ tdott
The Calgary consulate gave my husband the 2013 DS4079 to fill out (October 2013). He relinquished in February 2014 and they didn’t insist on a redo with a newer version. I don’t anticipate that being a problem.
That Dec 31, 2013, expiry date on the 4079 came up about a month ago too, and it appeared to be the only form available. Is anyone aware of a new form having replacing it yet?
I know someone who relinquished with the “expired 2013” form at Ottawa in March 2014, and Toronto consulate replied to a renunciation appointment request with a link to that same form this week. Probably worth keeping an eye out to see if it changes at some point, but at this point I don’t anticipate it being a problem either.
@LM
They stated that no FBAR is required for 2013 (on the basis of renouncing in 2014), so I assume that also covers the partial year for 2014 due in 2015.
Why don’t you send them a similar email and we can compare notes on the response?