Renunciation and Relinquishment Questions – Part 1 of 2
Ask your questions about Renunciation here.
This thread will be focused closely on renunciation questions and answers. If the conversation starts to ramble, those comments will be moved to another thread.
Sub-topics (more will be added as they occur):
Farrell v. Tillerson. Plaintiff is contesting Bern Embassy’s rejection of his CLN application due to his not having appeared in person at the embassy and his having been issued a passport after the relinquishing act.
Previous Renunciation Threads:
Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions)
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This thread is now closed. Please comment on Renunciation and Relinquishment Questions – Part 2 of 2
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I have a general question about renunciation. Is there any reason for a Canadian living in Canada to renounce US citizenship, presuming they have no intention of ever living or working in the US again? So far I have not experienced any banking issues, nor do I file US tax returns.
@ Kelly D.,
I don’t see a need to renounce in Canada, since the FIs here aren’t being over-zealous in trying to ferret out US citizens to report them under FATCA or simply deny them services flat-out,.
I relinquished long ago, for reasons unrelated to FATCA, which didn’t exist yet. But if I were a Canadian with US citizenship today, and was leery of getting involved with the US govt at all (eg, renunciation) or would prefer to avoid the hassle, I believe I’d opt to stay under the radar at this time, but I’d definitely check on the internet periodically to see if the situation has changed, or seems to be changing, and re-evaluate my options at that time.
Only if she has a US place of birth and wants to avoid any possible future problems such as hassle at the border which is quite sporadic
@Kelly D
Currently there is no good reason for a Canadian in your situation to renounce US citizenship.
Two questions:
1. Have you disclosed your US person status to Canadian banks or financial institutions?
2. Were you born in the US, or did you inherit US citizenship from parents?
As mentioned above, flying under the radar is probably the best option at this point in time. Renouncing would cost you money, bring your existence to the attention of the US government, and force you to make a decision about whether or not to backfile returns for a “clean exit” from the US tax system. (Compliance is not required for you to renounce, but some are more comfortable filing the exit paperwork than simply ignoring it. The latter option seems to be perfectly safe, but it’s still a concern for some.)
If a US birthplace causes problems with travel to the US, it’s an option to apply for a US passport, without a Social Security Number if you don’t have one. This will not lead the IRS to your door. Not that they could do anything anyway.
There is one factor which one might be wise to consider when debating renunciation – inheritance. If your parents (or other potential benefactors) are convinced, incorrectly, that the IRS will get their money if they leave it to a US citizen, it may be wise to renounce just to put their minds to rest. Similarly, if you don’t trust your executor not to panic and bring the estate into compliance, needlessly and expensively, it may be wise to renounce.
Hi there, I’m similar to Kelly D I’m wondering about renouncing my US citizenship in the near future. Never filed US taxes, never lived in US past age 3. Want to avoid US tax obligations going forward.
I have disclosed (naively perhaps) my US status to one of my banks but I understand TFSA and RRSP are not reportable under FATCA. Still, want the peace of mind of a formal separation. Feel like under these circumstances it makes sense to go through with renouncing.
A second point of confusion – to file 8854 or to say nothing at all. My total net worth is below the exception amount and I would be a covered expatriate. Don’t necessarily want to put myself on the radar with the form but also don’t want an IRS fine for not filing 8854 to hit me down the line. Wouldn’t intend to file any returns either way. Not sure whether it’s better to skip 8854 altogether and cross my fingers or send in the form.
Grateful for any thoughts or feedback on similar circumstances.
@Uncertainty
The consensus wisdom is that it’s probably better to file nothing at all than to file an 8854 only, without the previous 5 years’ tax returns and FBARs. Doing so means you either claim to be in compliance when you are not, or you don’t claim to be in compliance and freely flag yourself as a covered expatriate, whatever the presumably non-existent consequences of that might be. (I’ve not heard of a fine for failing to file an 8854 after renouncing, which isn’t to say that such a fine doesn’t exist, but in any case the fine would not be collectible.)
You could take advantage of the “super-streamlined” amnesty for people who have never filed before, particularly if you don’t have a Social Security Number. But ultimately what’s the point? If you want to renounce, just renounce. You don’t really need to but if it makes you sleep better and you have the money, go for it.
If you’re concerned about FATCA reporting you could also close your various accounts and move them to a new institution, for which you do not disclose US citizenship. Easily done, and saves having to renounce. We know that banks are not required to report TFSA, RRSP etc. accounts but we have to trust them not to, which is a bit worrisome if you’ve revealed US person status.
If you want the peace of mind of a formal separation, go for it. Renounce. If you have not been filing and don’t have US ties, forget about the 8854. They won’t know you exist. Without a social security number they are toothless.
I would not worry about your bank although after you get your CLN switching to another would really ensure peace of mind.
@uncertainty
There is a mantra repeated here many times that many have followed…..
“ don’t tell them anything they don’t already know”
If you can afford the fee, renounce and rejoice in your freedom.
Thank you for your replies. This site has been a great help.
A few days ago I saw mention of a provided recommended statement to provide to the consulate if they ask reasons for renouncing. I haven’t been able to find that page again.
Any suggestions for good statements so as to not implicate myself? I had been simply thinking to state that I have no ties to the US, am a proud Canadian and have been my whole life, and do not intend to live in the US at any point.
As a point of interest, I do have a SSN (guess my parents got it for me from early on) even though I have never filed. So I was curious about what my bank may have disclosed to the IRS, if anything. Contacted the CRA and they stated that you can find out if your bank has shared information with the IRS using the following channel:
Email name, address, jurisdiction (us/cdn resident), SSN, SIN, name/address of bank where info is held, via email or mail (didn’t get address), to crsigag[at]cra-arc[dot]gc[dot]ca.
Oops, can disregard the question about what to say in the consulate – found that feedback in this thread.
Consensus wisdom is to say as little as possible at the consulate. “I have no ties to the US” and nothing further.
I wouldn’t be too worried about a few FATCA reports. It’s no reason to file US taxes. You can make the reporting stop by renouncing and showing the bank your CLN, or by switching banks.
Implicate yourself in what? You have done nothing wrong. Say nothing. They might ask. Why now? Give a noncommittal answer such as I only thought about it now, needed to scrape up the money, whatever. They know what’s going on.
Uncertainty. You didn’t say if you were a dual citizen when you were born. If you were, you could not be liable for the exit tax. However, in order to avoid so called covered expatriate status, it is required to file 5 years of returns. Better to file nothing.
@Uncertainty
The Consulate are not out to trick you, most are quite respectful and know the reasons for all these renunciations. Remember, It is your human right to renounce. The only thing to avoid is to make any mention of taxation. If asked you need only to give a simple answer , the reasons you gave are quite acceptable. It is a simple process , there is no need to get stressed about it.
Uncertainty wrote:
“Contacted the CRA and they stated that you can find out if your bank has shared information with the IRS using the following channel:
Email name, address, jurisdiction (us/cdn resident), SSN, SIN, name/address of bank where info is held, via email or mail (didn’t get address), to crsigag[at]cra-arc[dot]gc[dot]ca.”
CRA will tell you only IF your bank has shared information and not even WHAT was shared? That seems like a lot of personal information to give up in order to get information that should come to you automatically (like a T5 slip) — a duplicate of whatever information your bank sent the CRA (i.e. defacto IRS agent) to be passed along to the IRS. Will the CRA also pass along to the IRS the fact that you are making an inquiry, along with all the details you provided in order to make that inquiry? Stink-o-meter is pointing to PU.
Think of the anxiety that would be created each year as you try to do an accurate, honest tax filing IF your bank sent a T5 to the CRA but not to you. Think of the extra work involved when the CRA sees a mismatch in the numbers. What will the IRS do when your bank’s FATCA numbers (unknown to you) and your FBAR numbers don’t match? It’s so crazy!
FBAR and FATCA numbers generally won’t match. The former is high balance, the latter year-end balance.
Draw your own conclusions about what use they make of FATCA data.
@ Ron Henderson
Exactly. We know that but do they know that? You have to wonder how useful all these numbers are to the IRS, except to accumulate more numbers. They just can’t get enough of those numbers, can they. They can either say, “Mismatch. So what!” or “Mismatch. Gotcha!”, depending on their mood or their agenda du jour. I still say it’s so crazy. One should think very carefully about ever considering to jump into the IRS’s radar.
I would assume that the IRS knows full well that balance numbers differ under FATCA and FBAR regimes. Verifying FBAR data isn’t really the point. Interest/dividend income numbers reported under FATCA could be compared to those declared on tax returns, however.
It would be worth mentionning why one shouldn’t mention “tax” ,even in the context of filing tax forms, and in the context of someone having no financial connections with the US or being an accidental. What would be the consequences in those cases ?
Probably no consequences to mentioning the T-word but supposedly your request to renounce can be denied if they believe that your purpose is to evade taxes.
DoS doesn’t really care about tax as one’s tax situation has no bearing on one’s ability to renounce, but best to say as little as necessary about anything and tax could be a touchy subject to a particular vice consul (most of them are just fine, but there’s occasionally a jerk and no sense setting them off, so just don’t mention it).
As for tax avoidance (or expressed desire to), that’s not a ground for refusing the renunciation. It could theoretically result in inadmissibility to the US (Immigration and Nationality Act, 232(1)(10)(E), the Reed Amendment,
but, AFAIK, they’ve still not implemented regulations for it, though passed in the 1990’s, and it hasn’t actually been used.
BTW, since we’re discussing tax, here’s a link to the page on interactions between DoS and IRS.
Right. I stand corrected.
The one number that should never be revealed to a bank or the CRA is a SSN. In either case it is absolutely none of their business and no possible good can come from them even knowing you have one let alone what the number actually is.
@RH @pacifica
Thanks for your response. Always wondered with all those renunciations if anyone had ever slipped in that famous T-word in the process. Would think that if properly ( logically) stated ihe T- world should pass but as everyone knows there is nothing logical in having accidentals and non homelanders file anyway. Besides, there may be the fear of lossing the extortion fee.
Does anybody know the answer please? I renounced last January 2019. I am almost done filing my final paperwork 1040, 1040NR & 8854 and FABAR. Does anyone know filling out the FARBAR if one puts the maximum $ amount down in the year or the amount in the account on the date of renunciation in my case end of January 2019?