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.
Tired, Nothing further that I say will convince you. I give up.
If you can explain WHY you think the 1999 abandonment date is good enough when @RMA says that the 2008 filing date of the i-407 is the relevant one I might be convinced.
The rules may have been more relaxed in 1999 …
http://www.irs.gov/pub/irs-prior/i8854–1999.pdf
Long-Term Residents
If you are a former LTR, the date of your expatriation is the earliest of:
1. The date your green card was rescinded by the Immigration and Naturalization Service (INS).
2. The date your green card was administratively or judicially determined to have been abandoned. (If you filed Form I-407, Abandonment of Lawful Permanent Resident Status, with the INS, the date of the abandonment of your green card is on line 6(c) of that form.)
3. The first day of the tax year for which you began to be treated as a foreign resident under the provisions of an income tax treaty and do not waive the benefits of the treaty.
Tired , 1999 or 2008: IT DOESN’T MATTER.
They don’t follow up on I 407s. They don’t care about you. They don’t know who you are. They have more important things to do.
Per #3 There was no duty to give notice back then…simply treating oneself as an NRA and not waiving benefits would have done the trick. Your’re fine. It would be nice if certain lawyers pointed out that the 8854 rules to give notice didn’t apply to pre-AJCA expat.
I don’t think you were an LTR since you weren’t in the us for 8+ years. I don’t know why Hodgen thinks #3 doesn’t apply, but he’s been wrong before.
For future Notice…to satisfy part 3…giving notice after mid 2004 or whenever they required notice even started to apply,, CFR says
http://www.law.cornell.edu/cfr/text/26/301.7701(b)-7
(b) Filing requirements. An alien individual described in paragraph (a) of this section who determines his or her U.S. tax liability as if he or she were a nonresident alien shall make a return on Form 1040NR on or before the date prescribed by law (including extensions) for making an income tax return as a nonresident. The individual shall prepare a return and compute his or her tax liability as a nonresident alien. The individual shall attach a statement (in the form required in paragraph (c) of this section) to the Form 1040NR. The Form 1040NR and the attached statement, shall be filed with the Internal Revenue Service Center, Philadelphia, PA 19255. The filing of a Form 1040NR by an individual described in paragraph (a) of this section may affect the determination by the Immigration and Naturalization Service as to whether the individual qualifies to maintain a residency permit.
@RMA
From all your very good digging up, let me post here from the 1999 form 8854 (http://www.irs.gov/pub/irs-prior/i8854–1999.pdf), this additional bit, which just might be my get out of jail card (no joke here please!)
Former U.S. Long-Term Residents (LTRs)
You must file Form 8854 if you become a former U.S.
LTR. You are a former LTR if you were not a U.S. citizen
but were a lawful permanent resident of the United States
(i.e., you had a green card) for at least 8 of the 15
consecutive tax years ending with the year you ceased to
be a U.S. resident. Do not count as a year of residence
any year that you were treated as a resident of another
country under a tax treaty and did not waive treaty
benefits.
I think I had seen this definition before, and might be why I thought until now that my exit had indeed been OK (well OK enough). Once it is established that one is not a LTR, the filing requirements seem to follow a Dual Status path for the two parts of the year (more or less like I did… I think). Maybe I got thrown off by (more than one) Hodgen pieces I saw last week. Maybe I can relax now, though I am not sure I will ever trust that I truly am free of any possible difficulties.
Not sure how long @EmCee was in the US for. perhaps it applies as well.
INFO FOR THOSE TRYING TO BREAK THEIR GREEN CARD BALL&CHAINS:
http://www.slideshare.net/BigJoe5/who-is-the-green-card-holderarticle
I found this very recent lawyer piece (august 2014) specifically about Green Cards. Lots of knowledge behind this it would seem, though the difficulty for me is trying figure out what applies to old cases versus newer ones, since there have been many changes in the last 10 years.
I might sleep better tonight but will certainly be back. Three people in my family still need to renounce their U.S. citizenships!
@Duke..the problem is the rules changed for LPRs after HEART in 2008. Before that, the instructions didn’t specifically say they had to give notice (i.e. make a treaty election) on form 8833 to be considered as an NRA. After HEART went into effect, the rules on the form say they were required to give notice.
Hodgen’s rules seem to apply to 2008 and after: http://hodgen.com/chapter-2-are-you-an-expatriate/
@RMA
I did not quite follow this last post to @Duke, but you are concluding that I am in the clear right?
@Tired…Even if you nitpick and say that years 1994-1999 do count, then 2000-2007 don’t count since the rules listed on 8854 instructions in effect those years had no notice requirement. In 2008, when there was a notice requirement (treaty election), that would put you at 7 years. That’s below the 8 year threshold, so I don’t see how you could be considered an LTR in any event. Although I know who seems to think this could possibly apply, Michael Miller wouldn’t agree that you could expatriate twice…it being a ridiculous concept.
I think you’re fine.
@RMA
Hummmm. From the beginning, my case always hinged on whether I expatriated for tax purposes in 1999 or 2008. Clearly, in 1999 I was not a LTR (6 years). But if the 2008 date applied, why would you only go back to 1999 and not 1994 (14 out of the last 15 years?).
Thinking this further, Isn’t it the case that if the 1999 date applies under #3 and without a notice requirement, returning the Green Card becomes unnecessary vis-a-vis the tax issue? The expatriation act (for tax purposes) being simply leaving the country under treaty and stating so by declaring oneself a dual status resident under the treaty?
@Tired…because you were considered expatriated in 1999 according to 8854..
U.S. citizenship, see 8 United States Code section 1481.
Long-Term Residents
If you are a former LTR, the date of your expatriation is
the earliest of:
1. The date your green card was rescinded by the
Immigration and Naturalization Service (INS).
2. The date your green card was administratively or
judicially determined to have been abandoned. (If you filed
Form I-407, Abandonment of Lawful Permanent Resident
Status, with the INS, the date of the abandonment of your
green card is on line 6(c) of that form.)
3. The first day of the tax year for which you began to
be treated as a foreign resident under the provisions of
an income tax treaty and do not waive the benefits of the
treaty.
No one here can give you certainty. If you want a legal opinion, try
Michael Miller – http://www.robertsandholland.com/MMiller
or
Phillip Hodgen – http://www.hodgen.com
If you want absolute certainty, get a private letter ruling.
@RMA
I was just musing about the logic for counting of the years. I am not likely to go for certainty. I feel substantially reassured, thanks in large part to your help.
@Tired…if it helps, I remember a report years ago that a news investigative team did a relatively simple tax return with the same set of facts to about 5-10 tax preparers. They all came up with different results..some vastly different. Given that the IRS doesn’t seem to be devoting their limited, budget cut resources to expatriation provisions, It’s unlikely anyone will know on this forum for certain what their interpretations are. Their main modus operandi is FUD.
@Dillmore
Maybe I will borrow $50k and throw it in my bank account to test FATCA and the IRS machine! Like I said, we have three renounciations or relinquishments to do. What a stupid mistake to take a green card and have our kids born there. We thought these would give them more opportunities. We explained to our 18 year old the life long cost of compliance and the ball and chain that comes with that if you end up making your life in Canada, or even worse, in a country without a treaty. He is the first one to get out!
@Tired..http://mopsicktaxlaw.blogspot.co.il/2013/12/voluntary-disclosures-and-fatca-will.html?spref=tw
@ TiredOfThis, RMA & Duke
Thanks for the excellent GC discussion. Brock is 99.9% about actual U.S. citizens so this has helped me and will help others who get a GC OMG moment (if they find their way here). I never really came at any actions I took or decisions I made from the point of view of definitions coming from the US side of the border. I just weighed the dangers and decided it would be more dangerous for me to try to jump through those US hoops. I also decided to never cross the border or fly over US terrain. I am a Canadian in Canada and if the USA thinks I’m a US person somehow existing in a virtual US residence (for tax purposes and ONLY for tax purposes) then so be it. If I’m being irrational and foolhardy then it isn’t the first time or likely the last for me. Everyone has to weigh the options with their own situation in mind. I’ve made so many mistakes arising from so much misunderstanding of US tax code that I just hope others can avoid going down such a confusing pathway as I stumbled down.
@EmBee
I will certainly be back here soon, but best to you EmBee, only the best to you.
Thanks.
I wonder if anyone can give me some advice on filing 1040NR (hopefully EZ), after expatriating.
I have an appointment to complete relinquishment on 11 September, so 10 September will be my last day as a “US person for tax purposes”. My wife (who is a non-resident alien for US tax purposes) and I have always maintained 2 accounts in the US, one joint and one just in her name. I have my SS No. on the joint account and have always declared any income from that account (it has always been low enough to be offset by exemptions/deductions, so I’ve never paid any taxes on it). Since I will be a non-resident alien from 11 Sep, I’m wondering if closing the joint account or keeping it open will make it any easier or more difficult to fill out 1040NR. I imagine I would have to file a W-8BEN with the financial institution, but since then any income would be covered by that tax treaty it would not need to be reported on 1040NR. Does that sound correct?
Doesn’t sound right. US source income is taxable in the US. You still might have to file a 1040 NR.
@KalC
I guess my explanation is a bit fuddled (again!). Thanks for taking the time to read it anyway.
I know I’ll have to file an 1040NR (I don’t know if it is possible to use 1040NR-EZ when expatriating) for the period from 11 Sep to 31 Dec, but I would think that I would then be under the same tax treaty as my wife, who is a Japanese national and a non-resident alien for US tax purposes.
Her account generates no income for US tax purposes. As long a she files a W-8BEN, dividends are taxed at a flat rate of 10% and there are no US taxes on interest income and capital gains, we just report the income in Japan.
For simplicity, I guess I should just avoid any type of US source income whatsoever for the rest of the year to make it easier to fill out the 1040NR. At least I would then be fully confident of entering zeros for everything.
Cant find any information on this – FBAR in departure year for USC renunciants. When you renounce US citizenship .. do you file FBAR for that year only for bank accounts during the period you were a USC until the date of renunciation? or as off the end of the year?
Lots of info on tax filing obligations but none on FBAR
@Sam Fenn,
While there seems to be no definite US regulation, that has come up here before and there is discussion on your question at: http://isaacbrocksociety.ca/renunciation/comment-page-56/#comment-553177