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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Hi Eva
You may find this info from phil hodgen expatriation tax lawyer , useful in understanding the US dictates when one renounces citizenship or gives up a green card.
https://hodgen.com/exit-tax-book/
But bird person gives good advice that if one has no US assets then one can ignore any tax filing and just return your green card with the appropriate form as many have done with no repercussions.
If you are a Singaporean citizen , the US does not have a tax collection agreement with Singapore .
@Eva
If you were issued the Green Card in or after 2015 and you file the I-407 before the end of 2021 you will not be a long term resident and the 877A exit tax rules won’t apply to you.
@Eva
A lawful permanent resident is
Any individual (other than a U.S. citizen) who has been a lawful permanent resident of the United States (a “green card” holder) in at least eight out of the last 15 taxable years ending with the year in which the “long-term resident expatriated” (i.e.,ceases to be treated as a lawful permanent resident of the United States).
To avoid exit tax consequences
Relinquishment. A “green card” holder can voluntarily relinquish his or her “green card” by filing Form I-407 (Record of Abandonment of Lawful Permanent Resident Status) and avoid coming within the eight out of 15-year test by surrendering his/her “green card” before the first day of Year Eight.
Lee wrote me that they’re concerned about an IRS notice they received, especially given that a year has elapsed since they filed their 8854 and they figured things were wrapped up. Now this notice has them worried.
2019: Lee renounced.
Spring 2020:Lee filed 8854, 1040, 1040NR and related forms with IRS-Charlotte Processing Office sent copies to Philadelphia IRS.
Summer 2020 then Early Autumn 2020: Lee received letters first from IRS-Charlotte then Austin Processing Office, asking Lee to send Austin copies of some documents Lee had sent to Charlotte and from Austin how some figures were calculated on the 1040 and 1040NR. Lee replied and did as requested at that time.
Six months later: Lee receives letter from Austin, saying, “We are working on your account. However we need an additional 60 days to send you complete response on what action we are taking on your account. We don’t need any further information from you right now.”
Have you received such a notice? Can you shed some light on what this may mean or if it is a routine mailing? Thanks!
And while we’re at it, has anyone who’s renounced and *not* filed an 8854 (or much of anything else) ever received any correspondence from the good ol’ IRS?
I renounced in October 2018 and refused to file any US tax paperwork. I’ve never heard a thing. I should mention that I’d never filed any US tax returns in my life and I don’t think the IRS even knows that I exist.
@ Lee & Pacifica 777
Spouse and I renounced in 2012 after leaving the US to retire back home to Europe. We sent in all our final filings 1040, 1040NR & 8854 separately as was required when expatriating . When we had been resident in the US the previous year, spouse and I had filed and paid jointly the appropriate taxes owed for that year . 6 months after renouncing, I alone received a letter from a different office stating I owed them money for unpaid taxes, I didn’t. It took over a year of letters and tax demands until at last I was able to get through on the phone to someone in their office in Philadelphia and get the demand cancelled. They had credited my so called tax debt to my spouse !
They are completely dysfunctional and take months to deal with any query . There is little or no communication between offices and they send aggressive letters to scare you and put you on the back foot to cover for their incompetence . Don’t lose any sleep over it!
“We are working on your account. However we need an additional 60 days to send you complete response on what action we are taking on your account.”
–I suspect it means that they are training one of their staff in Austin on Form 8854 but its taking longer than they originally expected.
As per usual, hapless souls who try to comply are the ones who wind up with the problems. The conclusion is obvious.
The IRS is a chained bear. Why does anyone voluntarily enter within reach of those teeth and claws?
@ BirdPerson,
If you mean specifically re filing the 8854, some people file it because they’re already in the system and/or have assets in the US. But if there’s no connection to the US, then I’d opt to steer clear.
Yes, indeed, if a person has no reason to file, then best to stay away.
Sadly too many people are still panicked into doing themselves harm.
Are there any cases of people who’ve appealed on the grounds that they renounced under duress? Like if I renounced but the US magically became inhabitable 10 or 20 years from now, could I say that my Canadian husband forced me to renounce and I felt trapped because most of our money was in his name? I highly, highly doubt that this would work, because 1. it’s not true and 2. this is the US government we’re talking about here.
I’m on the waitlist to renounce, after chickening out in the past. I can’t help but feel that I’m paranoid to renounce (why don’t more people do it?) but I’m also afraid that if I chicken out again they’ll deem me unstable and not give me a third chance. (Also afraid that things are just going to get worse and it’ll get harder to get out.) And I’m sure it’ll be a while before they schedule anything.
I think I’m younger than most of you folks, which is why it feels so fraught for me. But I’ve been seething about this for years and it’s not healthy.
@cee
More people don’t renounce because they can stay under the radar ( at present) and can avoid the banking and investment problems that CBT imposes on US citizens abroad which have become more and more onerous since the introduction of FATCA .
Only the very few have managed to have their citizenship reinstated because of so called exceptional circumstances such as Liz Taylor and Lee Harvey Oswald! I doubt the likes of the common citizen forced to renounce because of unfair US laws would count! All I can say is that there are a few reports of sadness after renunciation but also accompanied by a relief and a feeling of freedom. Nothing will be lost in your relationship with the US except your chains.
There are all ages of folk here on Brock but maybe the more senior have time to post!
Here are couple more reasons more people don’t renounce:
1. The cost is $2350, which is out and out extortion. Many younger people don’t have that kind of money. Others who do, like myself, flat refuse to pay that ridiculous fee if they are able to stay under the radar.
2. They purposely and severely limit the number of available appointments to keep the numbers down. Otherwise, there would be a mass exodus which would expose their pathetic system and make the US the laughingstock of the world.
If it cost a hundred bucks and could be easily done, the numbers would be much, much higher.
As Phil Hodgen (a very well known renunciation lawyer) said about a decade ago, “Get out now. Its only going to get worse.”
He wasn’t wrong. It has gotten steadily worse and will continue to do so.
I just can’t help but think I’m overreacting by renouncing, but I’m absolutely terrified that I won’t be able to get out later. I’m not off the radar because I was dumb enough to work in the US in my 20s and keep filing from Canada.
I’m the worst liar on Earth and I don’t know how I can live my life if I have to go through my life making up a fake backstory for banks and financial advisors and lawyers. I’m tainted with a US birthplace. I can’t even update my life insurance to make my husband the beneficiary because they’re going to ask me FATCA questions.
And yet most people in my situation just… live their lives as “real” Canadians and ignore all this? How? What strain of weed are they smoking? I should buy some. I try to talk about this with people and I just end up sounding like some libertarian conspiracy theorist holed up in a bunker in Idaho with 800 guns.
Gut instinct is that renouncing is right but I’m just so mad.
I never filed any US tax returns, and I never will. I renounced in 2018 because I couldn’t plan for my retirement. No financial institution would allow me to set up a private pension plan or unit trust investments because of FATCA. I was rather angry at the time, and I did shed some tears, but two years I’m happy with my decision.
The fee however is more than I earn in a month! Outrageous.
@cee
Well, you are either going to have to get used to lying or get used to renouncing. Probably both. It doesn’t bother me in the slightest when I lie to a bank because they are asking questions about stuff that is none of their business so they deserve answers that are, shall we say, slightly inaccurate.
If you are sick of filing, simply stop. The IRS won’t even miss you. I stopped about a decade ago and have heard nothing from the IRS since. Don’t let this ruin your life but do what you need to do to protect yourself and your family.
@cee
“Are there any cases of people who’ve appealed on the grounds that they renounced under duress?”
That’s an impossible scenario. Embassy staff have to rule out duress during the renunciation interview. Do you really think that, years down the road, State is going to say, “Oh, our agent missed the duress by their sheer incompetence, so welcome back!”
“Like if I renounced but the US magically became inhabitable 10 or 20 years from now….”
You’re good at generating impossible scenarios.
@cee
There is a psychological component to this. Some people imagine that the sky will fall the moment they lie to a bank by failing to check “resident of another country for tax purposes” on a bank form. (By the way, you don’t need to invent a backstory. Just say “no” or remain silent.) Similarly, they lay awake nights expecting the worst if they fail file their US tax return every year. Others couldn’t care in the least. I’ve lied to banks regularly for years and don’t give it a second thought – though I’ll admit the first time I said it to someone’s face it felt a bit odd. If you are the worrying sort, lying your way past FATCA may not be good for your long-term mental health.
Dual citizens in Canada, even those like myself who were born in the US and spent a few years living and working south of the border, get through this just fine by ignoring it. No weed required; hell, I don’t even need beer to help me violate US law. I stopped filing when I moved back in the mid-90s and the IRS never said a peep. Haven’t filed since. Banking and investing are no trouble at all for me because I don’t disclose my US citizenship. It’s dead easy. I know that the IRS currently has no ability to track me down and no power to punish me in Canada.
For years I refused to renounce because it was unnecessary, I refused to pay the ridiculous fee, and why give the US government any information at all about your existence if you don’t need to? I did recently change my tune and join the queue, for two basic reasons. First, on a personal level there are a couple of grounds on which it makes more sense for me now: a possible move to countries where a US birthplace can be problematic; elderly parents who imagine that the IRS will devour my inheritance, and cannot be convinced otherwise, to the point where it’s now easier to renounce than to continue arguing with them. Two, the US government will now pay the fee on my behalf thanks to the stimulus benefit, so my refusal to spend my own money is no longer valid. I have no intention of filing Form 8854 or anything else beyond the bare minimum needed to collect the free $3200. (In your case, if you’ve been compliant up to now anyway, might as well finish the job by exiting properly – particularly if you suffer from a nervous disposition.)
@cee
A common advice given on this forum is “Renounce now! Don’t file any tax returns!” This may be sound advice for people with no US ties (other than being a US citizen), but it is not always the best advice.
My wife and I are like you: we are not good at lying. Here is a brief summary of our story.
I was born in Canada and I have always been a Canadian citizen. In the early 1980s, I went to graduate school in the USA. There I met my future wife, an American citizen by birth. Upon graduation, we got married, I got my green card, we got jobs, we had kids. In the early 1990s we moved to Canada. My wife became a permanent resident of Canada. We stopped filing tax returns with the IRS thinking that we no longer had to. Fast-forward 20 years. We are now in the early 2010s. I have now known for quite a few years that, as a US citizen, my wife should have been filing an annual tax return with the IRS, but we keep postponing it. During the first half of the 2010s, I was feeling increasingly nervous about my wife’s situation. Finally, in the spring of 2015, I filed 19 years of US tax returns all at once! I include a long letter. Here’s a quote from my letter (signed by my wife): “I have not filed a tax return since 199x. Today I am sending you my 1040 tax returns for the years 199y to 201z”. [I know it was an over-kill. I like to be thorough]. There was $0 tax due. After that, my wife diligently filed her 1040 tax return and her FBAR every year. To be safe, we kept her investments (like her TFSA) simple enough. We kept the kid’s RESP in my name. In 2008, she became a Canadian citizen. Finally, in 2018 she renounced her US citizenship. She filed all the required documents, including the Form 8854.
I always did our tax returns by myself, both Canada and USA. I never hired an accountant. I never hired a lawyer. What can I say, I am a DIYer with everything. Of course it means that I spent an incredible amount of time reading books, websites, forums,… I also spent an incredible amount of time pulling my hair and stressing about all sorts of things.
We never heard anything from the IRS.
It was all worth it. We are free from the IRS and its ridiculous rules.
Cee, you say “I’m not off the radar because I was dumb enough to work in the US in my 20s and keep filing from Canada”. Don’t be so hard on yourself. You are not dumb. You played by the rule. You did the right thing.
Cee, you say “I’m the worst liar on Earth and I don’t know how I can live my life if I have to go through my life making up a fake backstory for banks and financial advisors and lawyers. I’m tainted with a US birthplace”. I totally agree with you. After you renounce, your US birthplace will no longer be a problem. After she renounced, my wife opened an online brokerage account with one of the big Canadian banks. They required a photo of her Canadian passport. They saw her birthplace. They also noticed that on the application she had checked the box stating that she was not a US citizen nor a US person for tax purpose. They asked for an explanation. She showed them her CLN (Certificate of Loss of Nationality of the United States, the document you will receive after you renounce). The bank is happy. My wife is happy. All is well.
Cee, you say “And yet most people in my situation just… live their lives as “real” Canadians and ignore all this? How? What strain of weed are they smoking?” Funny you should say that. The date on my wife’s CLN is the date marijuana became legal in Canada…
Best wishes!
Key words “we never heard anything from the IRS” They never give you the time of day. Overkill for sure.
Contrast that with CRA . e file and you get a notification on your account the next day that your return has been process and any refund is deposited in your account in about 5 days.
HMRC in the UK isn’t that quick, but I have always found them nearly apologetic if they contact me about an error I’ve made on my tax return. And unlike the USA returns (which I started to complete before deciding to ignore the whole mess), my UK return takes me less than an hour to complete.
“They required a photo of her Canadian passport. They saw her birthplace.”
Of course, with a CLN in hand a person is bullet proof, but personally, I wouldn’t do business with a firm that asked to see my passport and from there launched into a discussion about my birthplace. Its none of their damn business and demonstrates that they are far more concerned about their own interests than their customer’s interests. And all of this before they even open the account. Thanks, but no thanks.
If checking the box “I am not a tax resident of any other country” is not sufficient, then its time to shop elsewhere. But that’s just me. I believe that these cowardly institutions need to be told that they will lose customers by being excessively diligent.
@maz57 @formerpatriot
Regarding this: “After she renounced, my wife opened an online brokerage account with one of the big Canadian banks. They required a photo of her Canadian passport.”
It’s possibly different for brokerage accounts but typically banks only require one piece of photo ID, which can be either a drivers license or a passport (not everybody has a passport). The drivers license does not show place of birth, of course. It’s possible that she could have used a drivers license and avoided the whole conversation, not that it mattered in her case, having renounced.
The lesson here is to never use your passport as ID if you were born in the US.
On a related note I had to update something today on my Euro online bank account. I thought I’d go poke around and see if anything had changed with the FATCA rules. I’m still shown as a Canadian tax resident only, per CRS. But when I went into the basic personal data I could see that they had expanded the data fields from when the account was originally set up, just before FATCA came into effect in 2014. My citizenship is listed as Canadian, but my place of birth was evidently recorded from a photocopy of my Canadian passport; it’s shown as Las Vegas/USA (no I was not born there – just an example). There is now a field for country of birth, which is currently blank. I cancelled on out of there, obviously did not choose to update the info. The birth country field was added post-FATCA, but it’s interesting that their scan for US indicia did not pick up the “/USA” from the place of birth field.
@ cee: I was a dual US/Canadian citizen for many years, filed taxes in the US, no problems for decades, until FATCA etc. After four years of harrowing worry and one aborted appointment, I renounced in late 2018. Awoke the morning after my appointment the same person as before renunciation, but without the gnawing anxiety.
I filed the exit return and 8854, which I did myself—not hard if you take it one form at a time and ask questions here. (I did that because I found the “you’ll never hear a thing from the IRS” assurance to be inaccurate in my case. I •had• heard from them several times over the years. They are not completely asleep. I figured, if they wrote me because of my use of an obsolete appendix to a 1040, why should I assume they’d ignore me re those exit forms?)
The help from Brockers was invaluable. A piece of advice to which I kept returning: someone who said, “Whatever choice you make, you’re not going to like it very much”.
Take your time, come back here with your questions. We know what a difficult, draining situation this is. Bon courage.