Just Saying No: Not Renouncing/Relinquishing Nor Complying
Some people cannot afford to renounce (or relinquish and get a CLN) and some people will not renounce or relinquish because they do not consider themselves to be US citizens.
This thread is a place for people in this situation to share information and experiences. Thanks for sharing — your stories will be very helpful to others!
Thanks everyone! That gives me a lot more perspective. It’s hard to know what to do when you have no real info.
I do own some US stock through my work but I’ve only told them I’m Canadian so that shouldn’t be an issue I’d imagine. The amount is certainly not enough retire on…
I think for now I’ll just keep on as before, but I’ll seriously consider renouncing in the future, sans tax returns.
Thanks again guys!
“I was made a US citizen when I was 16, quite some time ago, as my mom is an American.”
‘Would they have anything that even shows you’re aware you have citizenship?’
At age 16, some procedure similar to Consular Report of Birth Abroad? The victim is likely to be faintly visible on someone’s radar. Back to the original question:
“Hey guys, I was wondering if those of you who have renounced have all filed taxes before renunciation?”
If a final return is made (if the person has a reason they don’t want to become a covered expatriate, or for other reason as might be the case), it’s impossible for the final return to be made before renunciation. So the answer to this question is always no.
As for returns other than the final one, some people submit before renouncing, some submit after renouncing, and some just say no. For the final return, after renouncing, some submit and some just say no. You have to figure out which is best for you.
“I do own some US stock through my work but I’ve only told them I’m Canadian so that shouldn’t be an issue I’d imagine.”
I have a feeling that if the IRS wants to confiscate that stock they might be able to. If you decide to do your best to stay off the radar, don’t file anything but consider selling the stock now.
My son turns 18 soon. Has 2 passports, but never lived in USA. Does anybody have any experience renouncing between the age of 18 and 18,5? Do you still have to pay the fee of $2350. Can’t afford it.
Unfortunately the $2350 does still apply.
Was your son born in the US?
If not born in the US, your son can simply not make use of his US citizenship – never renew his US passport, never register to vote in a US election, etc.
@John
Two factors that determine whether one needs to renounce: country of birth, country of residence.
If he doesn’t have a US birthplace on his non-US passport, then in most countries he can very easily just pretend that his US citizenship doesn’t exist, and won’t have any problems.
If he was born in the US, life can be easy (Canada) or difficult (Switzerland) and renunciation May be necessary to lead a normal life.
The only advantage to renouncing before 18.5 is, I think, dodging the exit tax, which only applies to the very wealthy teenager. Otherwise yes, same damn fee.
My son was born in Europe. His US passport expired couple of years ago. Still strange that you can sign up for free to become American at birth and pay $2350 to cancel “your subscription”. Back then nobody told us anything about the consequencies of dual citizenship.
Your son has the option of doing absolutely nothing then. Just ensure that he answers “no” when banks or financial institutions ask about US citizenship. If he is tainted by association with his US parent, then he should open new accounts at different institutions, and deny US citizenship when asked.
I assume he is a citizen of his country of residence? That provides an extra level of protection.
I would only be concerned about lying if he pursued a career where US citizenship would present problems, if for example he had signing authority over an employer’s accounts.
Since there are no downsides to his having US citizenship, by virtue of his ability to conceal it thanks to being born outside the US, it’s not a bad thing to keep for a few more years, at his age. It may be very useful for work or study purposes. (My daughter is in exactly the same position – she will keep it a deep dark secret unless she wants to take advantage of it, or can renounce later if it presents a risk.)
The $2350 is necessary for anyone with a US birthplace, because we may need to prove loss of US citizenship.
Since your son doesn’t have a US birthplace, he can just use his other citizenship. Nobody’s after him.
My Europe-born Europe-identifying children were registered and had baby passports, but as adults they didn’t want to be American so they dropped the citizenship.
if you need to be able to prove you’re not a US ci
A Canadian friend told us about your helpful site. After looking at it extensively, we are encouraged – and confused.
My partner and I are duals by descent, Dutch/US and Swedish/US, retired teachers, living in France, no connection to the US. Thinking for a long time about renouncing – we are Europeans, not Americans. I am ready, but my partner is worried.
Our dilemma: we have never filed, live on our pensions, would not owe anything if we did file, cannot afford both the renunciation fee over 2000€ (x2) plus paying someone to do the tax. We are not tech-savvy, the route of back-filing online by 15 June using free tax software is obscure. Somewhere you write that people who can’t afford to file are of no interest. But would we suffer algorithm fear for the remaining time we have on earth? Is there any clear choice?
Three questions: 1. Renouncing without filing makes you a ‘covered expat’: what does that mean, practically speaking? It seems a terrifying prospect.
2. Is there any “best time”/”worst time” to renounce? (time of the year). 3. We dreamed of visiting a friend in NYC for our 75th: could we do that safely if we renounce without filing, even if we get en ESTA? Thank you.
Thoughtful Peter:
If you weren’t born in the US, and don’t want the US passport or other citizenship benefits, you don’t need to do anything. Use only your non-US citizenship and passport, and confirm to banks when asked that you are tax-resident only in your country of residence.
If you were born in the US, you can renounce without filing US tax forms. It’s perfectly legal and is your right.
Nothing can be done about the fee, alas.
“We dreamed of visiting a friend in NYC for our 75th: could we do that safely if we renounce without filing, even if we get en ESTA?”
If you renounce without filing you can certainly visit New York. Just take a copy of the CLN with you.
@ThoughfulPeter
Welcome to Brock
First of all you may get a better response to your questions by posting on the
“ask your questions’ section
http://isaacbrocksociety.ca/renunciation/
You can read past questions and answers in this section to help you.
There are no easy answers it is mostly a personal choice
First of all you do not say if you have an American birthplace. Many who do not, chose to ignore the fact that they are American citizens and are able to deny it to banks etc.
Some here have chosen to renounce and do not file and as far as I know there have been no reports of problems entering the country on ESTAs.
Some have chosen not to file as they are below the fining limit but have sent in 8854 to avoid covered status.
Covered status is a threat if you have American heirs, in which case anything you leave them will be taxed at the top US rate currently 40%. The reed amendment which seeks to bar covered status renunciants has proved to be unenforceable.
You do not say if you think your banks have reported your accounts on FBAR, if so you can send in late back filed FBARS with a note to say you didn’t know you had to file, IF compliance is your chosen route.
“Renouncing without filing makes you a ‘covered expat’: what does that mean, practically speaking? It seems a terrifying prospect.”
It’s not a real thing, it’s just IRS jargon.
When you swear the renunciation oath, you lose US citizenship there and then. There is no need to file any US tax forms or worry about the IRS (assuming you have no US assets or income).
I was born in the US but left long ago. Never filed US tax returns from the day I left. Two months after I heard about FATCA, I was $2350 lighter and no longer a US citizen. It was very easy.
If you do choose to file US tax returns, it’s best to file truthfully and completely, including Form 8854; and be prepared to pay the exit tax if applicable. By filing, you accept the liability and agree to pay.
If you don’t file any US tax returns, there is no liability.
Losing US citizenship is your right, and you do not need to do anything except:
1) contact the US Embassy or Consulate to ask for an appointment to renounce;
2) prepare documentation as instructed by the Consulate;
3) keep the appointment, pay, and go through the ritual.
Later, you’ll receive the CLN – your proof of nonUSness.
@ThoughtfulPeter
The exit tax is only applicable if you have over $2,000,000 in assets and then it is only payable on any ‘unrealized’ gains you have over $699,000.
If you have no US assets and have the citizenship of the country in which you reside any tax assessment or penalty is uncollectable in the USA.
http://isaacbrocksociety.ca/?s=netherlands+sweden
“If you have no US assets and have the citizenship of the country in which you reside any tax assessment or penalty is uncollectable in the USA.”
Uncollectable, but legally due.
You may prefer to remain on the right side of the law and simply renounce. That way you owe nothing and are completely free of US citizenship obligations as soon as you swear the oath.
I said:
“ I was born in the US but left long ago. Never filed US tax returns from the day I left. Two months after I heard about FATCA, I was $2350 lighter and no longer a US citizen. It was very easy.”
At the same time as changing my citizenship, I applied for US Social Security, for the years I worked in the US before I emigrated. The Embassy took care of it all – the SS application, changing my citizenship on my SS records, and setting up payment to my local bank account. The withholding is set by the SSA at the treaty rate (zero for me, in the UK) and the payment comes through every month like clockwork. Admirably efficient!
“Uncollectable, but legally due.”
You may prefer to remain on the right side of the law and simply renounce. That way you owe nothing and are completely free of US citizenship obligations as soon as you swear the oath.”
I agree with plaxy
There is no advantage to entering their system. After renunciation you will be under the law of the country in which you reside.
To reason a little further, a citizen of a European country, residing in that country, is subject to the law of the land.
If they have US citizenship also, they also have a citizenship obligation (unenforceable under the law of the land, and until recently completely unknown to many US citizens) to report their worldwide income to the IRS.
If they renounce the citizenship, the citizenship obligation vanishes with the citizenship.
But those who have been filing US tax returns and/or continue to have US property or investments, may nevertheless consider it right and/or advisable to file their final US tax return in the year after renouncing, in order to report and if necessary pay tax on worldwide income received during the part-year before renouncing; and may or may not consider it right and/or advisable to file Form 8854, and pay the exit tax if applicable.
A personal decision.
@ThoughtfulPeter
I’ll repeat what’s been said above. Advice on a per-person basis.
If you were not born in the US, ignore this situation, and never ever disclose US citizenship to a bank. You are fine.
If you were born in the US, you will need to renounce (for the low, low price of $2350) for either of the two following reasons: (1) your bank knows that you are a US citizen and is reporting your financial information to the US, and you want this to stop; (2) your bank knows that you are a US citizen and is restricting the services available to you, and you want this to stop. If neither of those two conditions apply, then do nothing.
If you renounce, you would be well advised not to attempt US tax compliance. It’s a lot of paperwork that proves you owe nothing, but by entering the system you possibly open yourself up to grief caused by making errors (see here for an example).
The one caveat nobody has mentioned is that you are Dutch and Swedish citizens living in France. France has a mutual collection assistance agreement with the US, which protects French citizens but not others. In the purely hypothetical case that you were major international tax criminals in the crosshairs of the IRS, they could collect penalties from you in France if you were not French citizens. This is not a real-world risk for someone like yourselves, but it should at least be mentioned. It’s another reason to not ever enter the US tax system.
Thoughtful: ‘ Americans by descent.’ If you were not born inthe US, there is absolutely no need to do anything. You will join hundreds of thousands of others who ignore the issue.
If you choose to renounce, there is absolutely no need to file any tax forms. ( you would have to file 5 years)
Plaxy is correct. ‘Covered Expat’ is merely IRS jargon.
Nononymous:
“The one caveat nobody has mentioned is that you are Dutch and Swedish citizens living in France. France has a mutual collection assistance agreement with the US, which protects French citizens but not others.”
The reason nobody has mentioned it is because it’s not relevant to ThoughtfulPeter’s enquiry. The US-France tax treaty is not in any way relevant to renouncing US citizenship.
Not of direct concern to TP but I do feel that the third-country trap should be flagged when those situations arise, for the benefit of others.
Nononymous:
“Not of direct concern to TP but I do feel that the third-country trap should be flagged when those situations arise, for the benefit of others.”
Not of concern in anyway whatever to anyone planning to renounce.
Renunciation is easy, though expensive, and does not require any filing of US tax forms. There is no trap to worry about. If you can pay the fee and you have a second citizenship, you can renounce. Make an appointment at the Embassy, provide the required documentation, pay the fee, swear the oath, and at that very instant, you lose US citizenship.
No worries!