Relinquishment and Renunciation Data (as reported on Isaac Brock), Part 2
US RELINQUISHMENT RENUNCIATION.m2
Above is a link to data we are compiling on Relinquishments and Renunciations — a work in progress.
(We are starting Part 2 as Part 1 has now over 1,000 comments.) Link to “Relinquishment and Renunciation Data (as reported on Isaac Brock), Part 1”
This Relinquishment and Renunciation database corresponds with the Consulate Report Directory, which tracks individual experiences for each Consulate, along with a timeline chart.
Note: We are using numbers instead of blog names for this public posting so there will be no compromise of private information. Your facts will help give a snapshot of relinquishment and renunciation activity and where that occurs.
Please submit information in the comments below (or someone can contact you privately if you leave a message).
This database and the Consulate Report Directory have proven valuable resources for those new to the subject of relinquishment and renunciation. They can see numbers for and read others’ experiences of relinquishment or renunciation at various US consulates throughout the world — as reported by participants of the Isaac Brock site.
Thanks for your addition to the Relinquishment and Renunciation database. Your input will definitely help others.
The following is information I received and is without any guarantee. I am neither a lawyer nor a CPA!
As a nonresident alien and assuming no DTA (Dual tax Treaty) you file a W8-BEN with the SSA requesting them to withhold 30%. That’s it! No filing of 1040 NR required unless you have other US based income.
In addition the instructions give an income threshold below which no 1040 NR (independently of the type of income).has to be filed. (Check 1040 NR instructions).
Maybe some one else can either confirm or correct the above?
Both my SS and Civil service Retirement income are reportable and then excludable under the UK-US tax treaty. Both are paid gross and then taxed in the UK. This is what they decided, not what I did. But nowhere does it say that I need not file a 1040 NR yearly to claim the exemption. So I’m operating under the rule that telling them I owe nothing (and why) is better than letting them poke around when I suddenly drop off the radar. I have to file the 1040 NR for 2013 with this information, and nothing changes after that. I don’t imagine they will close my account forever. And treaties change. My bank and broker here have asked for W8BEN (and FATCA will require them to hold that information), but I don’t see any way to tell IRS that I’m no longer subject to US tax, probably because that could change from year to year.
I had quite a bit of contact via phone and email with Social Security staff assigned to my “case” (based in the Philippines) over a six month period when I first made my claim. They know I am no longer a citizen. I have not been asked to file a W8-BEN nor have I received any Form SSA-1042S showing the total social security benefits paid to me in 2012, although I have received other forms from them confirming my address etc.
Thanks @notamused for the 1040NR instructions. Like you, I also do not want to do anything to put myself back on the USA’s radar (and would rather forgo the benefit if that is the case). The Social Security benefit is the only money I receive from the US and that amount is certainly below the threshold for submitting tax returns. Also, as one gets older (and possibly senile!) the burden of continuing to file for the rest of my life (and keeping up with changing rules) is something I do not desire. I feel that submitting my 8854 was informing the IRS I am no longer subject to US tax and in my situation, no longer required to file returns.
@Rose: Thanks for the comments. Interesting. If I may ask do they (SSA) withold anything (max 30%) or are you under a dual tax treaty?
@jgl51: Yes, Australia has a tax treaty with the US but the final written information I received from SSA said they would be withholding tax from my payments but did not give the figure. And I don’t even know if the amount they said I qualified for was before or after the tax. With the considerable fluctuations in our exchange rate, it’s impossible for me to figure.
I thought I was finished with US bureaucracy when I renounced. Then the Australian government informed me I had to apply for US SSA and my reaction was not a happy one! It turned out to be a very messy process which took almost 10 months. In the end I was just glad the process was over and haven’t been in the mood to question it or make any further contact!
@Rev Susi and Rose
Thanks for your comments. I really hate having open questions like this so I did some more digging around the IRS website.
According to my findings, you generally have to file Form 8833 (Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)) to state that you are claiming tax exemption based on a tax treaty. However, for Social Security benefits, there is an exception for this and it does not have to be filed (see http://www.irs.gov/pub/irs-pdf/p519.pdf and http://www.irs.gov/pub/irs-pdf/f8833.pdf). According to what I’ve quoted previously on 1040NR, if you have no other US source income you don’t have to file.
@notamused: Just what I want to hear! Many thanks.
Has any one here taken distribution (in part or in whole) of an IRA (Individual Retirement account) after renunciation? If yes did you file forms 1040 NR (and 8833 Dual Tax Treaty, if applciable)?
@Rose – You’re very welcome. Presumably you would be entitled for a tax refund based on that treaty, but unfortunately Australia isn’t on the list of countries for which no withholding is done, so you’d need to file to get it back. 🙁 I fully understand that you don’t wish to do so.
For anyone else interested on SS benefits tax withholding, I found the following information here: http://www.socialsecurity.gov/international/AlienTax.html
Nonresident Alien Tax Withholding
The countries listed below have income tax treaties that exempt Social Security benefits paid to residents of these countries from nonresident alien tax withholding.
Social Security Administration will not withhold nonresident alien tax from your benefits if you provide the evidence we require to show that you qualify for this tax treaty benefit.
NOTE: The United States has tax treaties with other countries not listed below, but only these tax treaties exempt Social Security benefits from nonresident alien tax withholding.
Canada
Egypt
Germany
Ireland
Israel
Italy
Japan
Romania
United Kingdom
For those who are not a resident of one of the countries that exempt Social Security benefits from nonresident alien tax withholding, SSA will withhold a flat tax of 30% from 85% of your Title II, Retirement, Survivors or disability, monthly benefits. This results in a withholding of 25.5% of your total benefit.
@notamused
I cannot find any reference in publication 519. And on form 8833 I read, in the section reporting exception: “Reported on Form 1042-S, AND 2. Received by a…”. The AND does not include private individual?
By the way the instructions for 1040 NR are 70 page long….. If I need to pay an accountant to do my filing only because of SS it will be a wash not to take the money!!
@jgl51
Publication 519: Under “Reporting Treaty Benefits Claimed”, Chapter 9, page 47.
http://www.irs.gov/pub/irs-pdf/p519.pdf
“Exceptions.
You do not have to file Form 8833 for any of the following situations.
1. …
2.
You claim a treaty reduces or modifies the
taxation of income from dependent per-
sonal services, pensions, annuities, social
security and other public pensions, or in-
come of artists, athletes, students, train-
ees, or teachers. This includes taxable
scholarship and fellowship grants.”
Regarding The exceptions listed on form 8833, I interpret option b. to pertain to a private individual:
“b. Beneficial owner that is a direct
account holder of a U.S. financial
institution or qualified intermediary, or a
direct partner, beneficiary or owner of a
withholding foreign partnership or trust,
from that U.S. financial institution,
qualified intermediary, or withholding
foreign partnership or trust.”
Why can’t they just write a “poor, frustrated private indvidual” !!! -:)
As a non resident and now recent ‘Alien’ I am due to receive a social security pension from the US with a 15% withhold (tax treaty with Switzerland). Does anyone know if the Swiss will also tax me on this and if so which country can I claim it back from and how?! I have read the document
http://www.socialsecurity.gov/international/AlienTax.html and they don’t mention how to reclaim if possible to avoid double taxation? Thanks.
Heidi There are 2possibilities. Neither should cause double taxation. 1, Check with the Swiss tax people. It’s possible US social security payments are not taxable.
2. If they are taxable in Switzerland, there would normally be a ‘foreign tax credit’ for the amount withheld.
According to my understanding the US will keep 15% of 85% of your US SS. Note that Switzerland has Cantonal laws so I do not know how it is in yours, but normally Switzerland will then tax 80% of the net amount (after US deduction) at your income tax rate. Unless you are in a very low income tax bracket, at the end you will be very close to the 30% tax without the treaty!!
I am neither a tax lawyer nor a CPA!
Thanks Duke of Devon, this whole process has been a nightmare…just what I need in my retirement!
Thanks also to jg151.
In the renunciation process, you are asked whether you want to “swear” or “affirm” your renunciation. In addition they (Embassy) mention it does not make any legal difference!!
If it does not why asking?? Any one has a clue which one to chose?
Some people prefer to use affirm over swear I guess due to the religious conatations: “I swear on the bible”, etc. If you’re not religious you may not want to say “I swear” so you’d affirm instead. I said I’d affirm, but when it came to it I said “I swear” just as an automatic reaction to the situation I suppose. So it’s entirely up to you which you choose. Use whichever gives you the feeling of most commitment to what you are doing. There is no difference between the two for legal purposes.
Good Morning – Does anyone know if participating in a Canadian Citizenship Re-Affirmation Ceremony as an adult (whereby complimenting one’s naturalization as a minor in the past) is considered an act of relinquishment? Thank you – Geri
@Geri,
Unfortunately — No — you will get a “commemorative” certificate. The process does, though, instill in you pride and the importance of your Canadian citizenship! My experience — I did this.
To anyone having renounced and filed: if you renounce early January and must file 1040 for only on a few days, how do you calculate income and taxes for foreign tax credit? Pro- rata based on 220 working days? 365 calendar days?
@Jgl51, I only declared income for the first part of the year (Jan 1-April 7) and that was not sufficient to exceed my personal exemption or Foreign Earned Income Exemption. Don’t pro-rate: rather only declare the actual income that you had that calendar year as a US citizen.
A US person for tax purposes is (1) a citizen of the US; (2) a resident of the US. If you are neither, then that income is absolutely 100% exempt from US taxation (unless of course it was earned in the US).
@Petros (or anyone)
Is it correct that the standard deduction cannot be used in the partial year, but the personal exemption can be? If so, is the personal exemption pro-rated or do you get the full amount? [Hoping to
escaperenounce in 2014.]TIA
If all goes according to plan, I’ll have about one week as a US citizen. Now some tough questions!
1) Assuming I earn US$ 1,’000 in that week AND i take a US$ 30,000 distribution from IRA, will the taxable income be then US$ 31,000 and taxed in the US$31,000 bracket?
2) Is the US$ 90,000 exemption then also prorated 7/365?