Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part Two
Ask your questions about Renunciation and Relinquishment of United States Citizenship and Certificates of Loss of Nationality.
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NB: This discussion is a continuation of an older discussion that became too large for our software to handle well. See Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part One
@CycleVancouver:
Thanks for the report and congratulations on your successful relinquishment. All the best to you for the future!
Hello everyone, I became a Canadian citizen last Oct. and got my Canadian passport. I will be traveling to Chicago June 6th. My U.S. passport expires July 5 2014 and I have no plans to renew. In fact, I was thrilled to have my Canadian passport and used it when buying my Air Canada flight. However, I did not realize that this might be a problem in entering U.S. I went to Florida in Feb. and had both with me (luckily) and was able to produce the right one then, BUT, my question is should I show my U.S. passport for June visit? I’m not going to renew and I’m in the middle of sending back forms for renouncement appointment to Toronto consulate. And should I tell them that?
thanks, as always!
@monalisa1776, Rev Susi, allou,
Help – I’m still stuck on the mechanics of if/how the 1040 and 1040nr information interacts. monalisa, you stated on another thread “my accountant reported all my connected income onto the 1040nr, using it as the tax return with an attached 1040 as a statement. The 1040NR covered the entire twelve months even though I renounced in early 2013.” So does this mean that ANY of your income reported on the 1040
was ALSO REPORTED on the 1040nr? I’m really confused about this point and would like to get these
two forms filled in so I’d really appreciate your feedback on this point. It seems kind of weird to repeat
all that income info onto the 1040nr but it also seems weird to put zeroes everywhere on the 1040nr if
its supposed to be the actual return for the whole 2013 year.
I was reading through pub 519 today and found in chapter 3 that they say a resident alien may be able to claim the FEIE or foreign housing exemption but for non-resident aliens they only talk about claiming a foreign tax credit with 1116. Again the confusion over this business of being dual status in year of expatriation (resident alien/non-resident alien), I guess the IRS based their decision on the 1040NR return and concluded that you were a non-resident alien period and thus no FEIE. I agree with Rev Susi that I would have thought the FEIE pro-rated for the part of the tax year that you were still a USC should have been available but who knows with the IRS.
@allou,
As far as the personal exemption is concerned, it does seem clear in pub 519 and the instructions for 1040nr that we can claim the full $3,900 as both US citizens and non resident aliens are entitled to
their own personal exemption. So whether you file only 1040 or you file 1040/1040nr you can claim this
amount. What I’m not sure of is if you fill in this exemption info on both the 1040 and the 1040nr.
@ moonstruck. I haven’t done the return myself, and I haven’t seen what my accountant will do. But the 1040NR only records the income you will still have to declare as a NR, not the rest. Your other ‘worldwide’ income is declared on the 1040. I don’t know how you report the income that goes on both forms, nor do I see how to take the personal exemption on both. Sorry. I won’t know until closer to the June deadline.
Moonstruck. Why do you think you need to file a 1040NR?
@Swanee
For years we traveled back and forth from Canada to the US bringing both passports with us. Going into the US, we have shown our US passport, coming back we have shown our Canadian passport. Now, most of these trips have been by car. Flying is different as the airlines want to know these things in advance. I would suggest you arrange your ticket using your US passport; you will have to show this going into the US and at the airline kiosk coming back but you can pull out your Canadian passport when going through customs once you have arrived back on Canadian soil.
Get the renunciation done as soon as possible (I just renounced at Toronto about 10 days ago) and then when crossing the border bring your CLN (or documentation that you are in the process of getting your CLN) with you when crossing into the US. I was given only a receipt for the $450 that I paid for the renunciation but I have emailed Passport Toronto asking for an interim letter (such as Em or her husband got out west) documenting the renunciation (they told me a CLN would take 6-9 months to arrive).
Good luck!
@swanee
If you are a resident and citizen of Canada, I would travel on a Canadian passport. Just carry your US one with you. Hopefully it will be for the last time.
@Swanee– If you relinquish using the date you obtained your Canadian citizenship, you will save yourself the $450 US fee. If you plan on relinquishing, you should enter the US on your Canadian passport. Use of the US passport will make a relinquishment claim more difficult.
@moonstruck
I am at the same point as you. I have read through the instructions and as far as I can see only the prorated 2555/2555EZ and the 1040 are relevant for part-year filing for former USC persons with NO US source income/investments etc after the renunuciation date. I think that you and I are getting confused because there are no specific instructions relevant to our situation. I will post here if/when I hear from Hodgens tax blog about this, I have sent them an email query. Maybe time to take a break for a few days 🙂
@ Allou. I’m confused about the 2555. Where does it say that we can take the exclusion up to the date of expatriation? Or is this a gray area?
LM, Bubblebustin and BC_Doc thanks for your feedback. LM how long did it take to get an appointment with Toronto Consulate once you sent in the required forms they sent you? I always get confused about relinquish and renouncing. I’ll be happy to pay the $450 to get going, but with my citizenship received Oct. 2 2013, by just saying you want to “relinquish” rather then renounce you don’t have to fork over the money? By the way I did my FBAR 6 years back in 2012 and have filed yearly since then. This site is such a godsend for all of us. Thank you so much. Hugs.
Hello, I have a question about when exactly to file IRS form 8854. I renounced my U.S. citizenship on January 14, 2014. I plan to file the usual IRS forms by the June 15, 2014 deadline for the 2013 tax year (and the FBARs for 2013 by June 30, 2014). My understanding is that I will have to file the income tax forms and FBARS for the first 14 days of January 2014 by the appropriate deadlines in 2015. But when exactly do I file 8854? At the same time as the 2014 forms, i.e., in 2015? Thanks for any help anyone can provide. Wyley
Here are all the instructions for 8854 filing: http://www.irs.gov/instructions/i8854/ar01.html.
@Swanee, did you hear anything back after your back filing?
@Wyley, IRS instructions decoded here:
http://www.hodgen.com/when-to-file-form-8854/
The answer to your question is: at the same time as 2014 forms, so some time after 15 Apr 2015. Don’t forget to send a second copy of the 8854 only to Philly, separately from your final 1040/1040nr.
@swanee – if you became Canadian with intent to relinquish, you ceased to be an American on that date. Accordingly, continuing to use a US passport would be incorrect and inconsistent with your underlying intent. If asked at the border, you are within your rights to say that you are no longer American from and after the date you took your oath.
That is completely independent of the question of whether you have to notify the State Department of the change of status (I believe the answer is “yes” since 1996 or so) and, having done so, whether you must file all the tax “stuff” (at least the IRS would say “yes” – what you do is up to you. Lot’s of things to consider, not least of which is how complicated it would be to do what they ask and turn the page). I believe the correct means of notifying State is to apply for a CLN on the basis of relinquishment.
I don’t think the earth will stop revolving around the sun because you used your US passport once or twice post naturalisation, but it is a factor that tends to call into doubt your assertion that you intended to relinquish. Besides, you can always apply to renounce outright (a different form of relinquishment). In your case, very little time has gone by and the only real difference would appear to be the price tag: $495 to renounce vs free to relinquish by reason of naturalisation.
If your net worth is low and all of your financial account balances always under $10,000, it may be a pretty simple affair to file a few pro forma tax returns and get it over with. It gets pretty complicated pretty quickly if you have any registered investments, if you belong to a company pension plan, if you ever bought a mutual fund, if you have ever sold a principal residence, if you have any income other than salary or wages, etc. There are a lot of resources here.
No, I have not heard a thing. I’ve just filed yearly the last two years as I will this year. I’m not wealthy, I’m retired and just want to live in peace, although that’s still a ways off.
@Moonstruck, I believe she just declared my total worldwide income up to the expatriation date on the 1040-NR but with the income details duchess capital gains/losses, interest, dividend income, etc. listed on the attached 1040 schedules.
If indeed the refused me the FEIE because they regard me as a NRA then at least they will no longer be regarding me as a US Person going forward. I am not going to quibble over a few hundred dollars held back from my refund, especially as it means I will be released from this compliance burden forevermore.
It total, I will have lost approximately $40,000 in combined double taxation and accounting fees….as others have expressed about expatriation, though I feel grief, I feel even more relief than anything else.
I have a company pension, and RRSPs and own a house, so it sounds like renouncement is what I fall under. I also get social security pension. That’s fine, I’ll just not renew my U.S. passport and have only the Canadian. I have that right to only have one passport and still travel occasionally to U.S.? They can’t NOT let me in, can they?
@all,
Thanks for the continued feedback/discussion on the 1040/1040nr/2555 filing in year of expatriation. The problem of course is that the IRS instructions and pub 519 do not clearly spell out our situation, namely of being a US citizen part of the year and then a non-resident alien (from U.S. tax perspective) for the remainder of the year. I’ve read through the form instructions and chapters of pub 519 several times and always come away with a big headache!!
@monalisa,
You wrote ” I believe she just declared my total worldwide income up to the expatriation date on the 1040-NR but with the income details duchess capital gains/losses, interest, dividend income, etc. listed on the attached 1040 schedules.” So in looking at the 1040nr, I assume from your comment that
most of the lines on page 1 were filled with zeroes but on line 23 total effectively connected income or
on line 36 for adjust gross income she entered the total amount of your worldwide income as calculated on the 1040 – is that the case? Also, did she enter the personal exemption info on both the 1040 and the 1040nr?
@allou,
Yes, please do post here if you get any answer about this 1040/1040nr filing business from Phil Hodgen.
It is still my understanding that we can either (1) file full year 1040 which means you must declare full year worldwide income or (2) file 1040 as a statement which captures worldwide income up to expatriation date and attach it to a 1040nr as the actual tax return but which only contains worldwide income up to expatriation date + any U.S. source income for the period after expatriation. I don’t have any wages so I cannot use the 2555 anyway.
Swanee,
After your renunciation (and CLN, and even before your are in receipt of that), you should have the same right to travel to the U.S. on your Canadian passport as ANY OTHER Canadian.
@Moonstruck, I’ll try to check tomorrow. I must admit that I didn’t fully understand what she did. It might in fact just be easier , as a Canadian, to file a full-year 1040 for your final year if you’re allowed to do that. I seemed to understand from the Serbinski forum that Canadians expatriating can submit full-year 1040s instead of dual-status returns…but as a UK resident, didn’t have that simpler option.
The obvious advantage of just filing a full-year 1040 is the reduced complexity and also ability to use the standard deduction of $6200 in addition to the personal exemption of $3900. I doubt if you’ll owe any US tax.
@Swanee
Once you are ready (with all your IRS forms up to date and doing the calculating to make sure you won’t be a “covered” expatriate), it doesn’t take long to get an appointment. I emailed them sometime in early-mid March and they electronically sent back all the needed documents. Once I electronically returned these to them (which, for me, was within a few days), they made the appointment (always at 2:00 PM, I think it’s 3 days/week). I could not relinquish because while I had my Cdn citizenship since the early 1990s, I had continued to vote, use a US passport; indeed, we’ve been in Canada since 1969 and I’d no plans to give up the citizenship – – had always filed taxes. But now in my later 60s (and hubby, who does the taxes, is 70), it’s time to simplify life and, realistically, all my (adult) life has been here. Relinquishing is another approach but you have to know and be certain you have followed all the rules for that (I’ll let others answer questions RE relinquishing). In the long run, I didn’t feel the $450 was a major expense. Its OVER!!!!! And you have the right to renounce. Do bring cash with you as their credit=card reading equipment might be down (as it was on the day I was there). Good luck and let us know how things go.
@ Wyley Powell
I think you’ve got it correct; the 8854 is sent in the April in the year following your renunciation (I will do this in April 2014 too but have more days as a USC in 2014 than you). By then we should have our CLNs……
@ Swanee,
The border crossing people can do almost anything they want. If you have a US birthplace, and you come in on a Cdn passport with no CLN or documentation that you have gone through the renunciation process officially (I await my CLN but have a receipt for my $450 payment which says the Consulate service was Renunciation), they can hold you and question you for quite a while – – even to the point of missing a connecting flight (if flying). Many border crossing folks are not fully knowledgable about renunciations much less relinquishing and like using their power. You probably wont be jailed or anything but it could be time-consuming. When we went into the US with son 20 years ago and we had US passports and he (with the same unusual name, standing right behind us) did not, we all were held up for about 45 minutes (at the Pittsburgh airport)… Just something to think about.