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.
No real argument from me, Em.
I just think it’s important to:
a) understand the ramifications of covered status. After that a person can decide for themselves whether or not being a covered expat is tolerable, and
b) understand that things can change in the future and the reach of the US could change for the worse (e.g., tax treaty changes that require CRA to collect on behalf of IRS regardless of whether or not the person was a Canadian citizen at the time). IANAL or anything close, so have zero idea how likely this is. However, I wouldn’t put this down as an impossibility. Even Hodgen qualifies what he’s saying on the subject with Canada having “half a spine and tell the U.S. government to go bite tires”. AFAICT, he’s basically saying that under today’s laws you can be a happy goat, but if you can be a sheep then it’s much cleaner to be one.
Personally, I’m getting compliant so I can log out of Mordor cleanly. That’s what works for me. Others with different temperaments and/or different situations may after deliberation choose differently.
Good plan, tdott. If any of my a) through d) boxes apply then it’s best to be a sheep. And there’s no secure future for a goat, even if you can tick off everything from a) to d). Actually a clean break from Mordor today can be legislated away in the future. That is the perverse nature of the USG.
@Tax compliance test and dual from birth – I agree with tdott on this.
Dual nationality from birth does NOT exempt you from the 5 years tax filing and the final log-out form. What it DOES “give” you is the advantage of not being liable for the exit tax if you happen to have assests valued above the current $2 million US and pay/owe over $155,000 yearly US tax. Many duals from birth are nowhere near those amounts – but if they do not tick the box declaring the (minimum) 5 yrs tax compliance, then they are “covered” even if they have zero assests anywhere.
Medeas advice is relevant – don’t waste your time and money on tax professionals unless they are really competent, and your situation requires their level of competence. You can learn much here at IBS and a couple of other websites if you take the time to read through the comments and keep calm. Another thing to remember is that any “professional” is obligated to various stringent regulatory guidelines/laws and risks heavy fines/loss of licensing for giving advice that may be unauthorised by tax authorities, so you may end up paying lots for incomplete information…
@allou, no it doesn’t which is why I’m doing my back filing – as well as to keep my bank happy. I want to be sure I’ve done everything I should so there’s no comeback like being wilfully non-compliant. My resources come nowhere near the Exit Tax requirements anyway, but I’m glad I can meet the exception. A little bit of icing on the cake to me.
@medea
Right, same here. I did the backfiling before renouncing (now awaiting CLN). It was a very stressful couple of months from the time I discovered I had to file, to getting it all done and sent in. Sad that it had to come to this, but it was a rude wake-up call and made me realise the importance of choosing what is important in life and properly discarding what is not – luckily I was a dual, now just a one nationality person. Thank you so much for your advice and support 🙂
@allou, you’re welcome and I add my thanks to everyone here who’s helped me with advice and support while going through the renunciation process. Though my situation is pretty straightforward it’s still been worrying and having the knowledge and know-how found here has helped me no end.
I’m a couple of years behind in my US tax filing – still within the legal time frame though. I will be filing the last couple of years after I have my visit to the US consulate to renounce. I do not wish to postpone this meeting but wonder now if I should have done my taxes first. Will this cause me to me ‘covered’ or am I still safe from that provided all the papers are in by the time I file me 8854?
@ Nomad,
No need to postpone your consulate meeting. As long as you send in the previous five years returns by the time you complete your 8854, you’re fine. The 8854 asks you to certify on it that you’re tax compliant at the time you’re completing your 8854, not that you were at the time you renounced. Quite a few people here have renounced first, then back-filed.
@pacifica777
That’s awesome! Would hate to have to postpone.
I am reading posts about being a citizen for tax purposes for 10 years and posts that once I renounce at a consulate I am only required to file to that day. Can someone pls clarify that for me?
@ Nomad,
The 10 years of post-expatriation filing has to do with people who expatriated after 3 Jun 2004 and before 17 June 2008.
The 8854 instructions have different instructions for people pre-2004, people 2004-2008, and people post-2008.
Michael J. Miller wrote, “The 2004 Act also … required Form 8854 to be filed annually during the relevant 10-year period by individuals subject to the alternative tax regime.”
Then the 2008 Act came into effect, so you’ll be acting according to it.
Michael is a US tax lawyer and he writes about this on page 5 (2nd or 3rd paragraph) of his article Expats Live in Fear of the Malevolant Time Machine. This is a really good article – amongst other things, it gives a good plain-English explanation of the differences in these three time categories.
Yes, your relinquishment/renunciation day is the day you use for the cut-off point for filing. I have to do back filing of FBAR’s which I’ve done up through 2012 and will file the 2013 one with figures only up to my renunciation date of March this year. That’s why it’s always best to try and get an idea of your tax filing obligations before you decide to renounce/relinquish. Earlier or later in the year can make a big difference if you owe anything.
@Nomad,
You file a 1040 for your income covering Jan 1 to the day you renounce.
If you have US-source income after you renounce, you file a 1040-NR covering from the following day to Dec 31. You report only your US-source income on this.
If you do not have any US-source income, I’m not sure if you need to file the 1040-NR for the balance of 2013 – I’ve heard you don’t need to (which sounds logical), and I’ve heard you are supposed to and just fill in zeros (which sounds weird, but a lot of US tax law sounds weird to me). So I don’t know. But someone here knows and can clarify that.
Where the 8854 asks for the value of your assets, that’s their value the day before expatriation.
@pacifica777
Yes, that’s the way I did it, i.e. 1040 from Jan. 1 to the day before renunciation. I don’t have any US source income, so I didn’t file 1040-NR for the remainder.
Well that’s what I’ll do then – when the time comes:)
Just for giggles, say I complete the 8854 as a dual from birth, write zeros for the tax obligation for the preceding 5 years (stay at home mom), and check no to having met previous 5 years filing obligations. This makes me a covered expat. If my net worth is less than the $600,000+ exemption, as recorded on the 8854, wouldn’t that make me a covered expat with $0 exit tax? Process complete. No tax filing mess.
Comments? I don’t care if I ever set foot in that country, I have no connections.
The Mom, yes, and if your net worth was below zero then they would, technically, owe you money! I had calculated my net worth as being below Zero, since my non-US spouse owns half of me and I’m responsible for the mortgage.
The Mom. What you suggest is reasonable. However it would be even easier if you didn’t bother filing the 8854.
KalC, I agree. Something I read made me curious just what the ramifications of being a covered expat would mean for myself, and others. Being the contrarian that I am, it’s not out of the realm of possibility that I may appear in a news photo, proudly displaying my 8854, completed in crayon, listing a 1967 baby bottle and rattle as the sole items in my net worth statement, at the time of exiting the US.
SwissPinoy, yes, that’s interesting. My net worth is totally derived from my Canadian husband’s hard work, and income. It’s interesting that the US believes it can impose an exit tax on “foreign” assets of non-US persons, via a financially non-contributing spouse, with no tax obligation. My current income is 0, my current net worth is probably less than $20,000.
FWIW, there’s a $10K fine for not filing 8854. Whether Mordor could collect it is another issue, but thought it should be mentioned.
Hi All, I just wanted to share some exciting news for me today.. I am Proud to Announce that I became a CANADIAN CITIZEN TODAY!! After 36 Years in Canada! Now for my next step toward FREEDOM!!
A CLN !!
@ Saddened,
SUPER! Delighted to hear! Have a great celebration tonight! Looking forward to your next step to Freedom, which should be real soon — it’s sure been a long couple of years — but you’re almost there!! 🙂 🙂 🙂 🙂 🙂
@Pacifica777, Thank you so much, I appreciate all your support, you have been a wonderful friend to me.
I can’t wait to get through the next step!! Hopefully in the next several weeks. Thanks again!!
Saddened
I’m so happy for you. Now on to the next victory!
Oh happy day in Canada, saddened123! That’s great news. Strong and soon to be free. My husband is heartened to think his citizen ship may be ready to dock in a few months too, like yours just did. I hope you can find a smiling frog for a new gravatar. 🙂
Congratulations, saddened. We hope you’ll now be a Happy Canadian Gal.