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
Thank you all very much for the responses. Sorry about the confusion re the pension. In Japan it is called a personal pension, but maybe for US taxes it would be something more like a “fixed term annuity” (?). It is in Japan and pays out $8,000/yr for 10 yr, for a total payout of $80,000, or it can be cashed in now for $50,000, a $15,000 gain over the $35,000 that was paid in. Either way, the gain is taxable in Japan; it seems relatively advantageous to take it over 10 years, but not if is going to affect my 8854. So the question is should I cash it in now before the date of my CLN, or not bother and declare it someplace under net worth on the 8854?
I’ve never filed FBARs; I’m just starting to find out about that now. Most of our savings in Japan are in my wife’s name, and the small bank accounts in my name have no record of nationality. Since all interest income in Japan is taxed at a flat rate of 20% at the source, I guess Japan never saw a need for that; maybe that has changed for new accounts. I’m not sure what to do about filing old FBARs.
If I close my US account of about $70,000 in cash and wire the money back to Japan to an account in my name before the date of my CLN, it would seem that that account would obviously be required to be reported on a FBAR, but if I wire it after the date of the CLN and prior to filing 8854, then it would only have to be reported under net worth and also for any income it had earned in the past year. Does that sound correct? Transactions performed after the date of the CLN are considered to be performed as an NRA?
Re the time required in Tokyo to relinquish, someone who just completed the process a few months ago took about 5 months: 1 month to schedule the first appointment, 2 months to schedule the second appointment at which the paperwork was accepted (which would be the date of the CLN, except that when the CLN was received it was actually dated 10 days after the appointment), and then 2 months for approval/confirmation from the Dept. of State. Based on that timeline, I expect to have a CLN date of sometime in October, with confirmation by the end of 2014. Is there any reason to try to delay the CLN date to 2015?
My primary intention was to obtain Japanese citizenship, which was a fairly long and involved process, but now I’m finding that relinquishing my US citizenship (or at least the tax reporting part of it) to be much more complicated and onerous.
Thanks again for any comments or advice.
@TokyoRose
Officially Fbars should only be filed for the years in which you had over ($10,000 TOTAL) in any foreign bank account anywhere. Any account shared with your wife can be halved. Your call for the non US flagged ones.
“If I close my US account of about $70,000 in cash and wire the money back to Japan to an account in my name before the date of my CLN, it would seem that that account would obviously be required to be reported on a FBAR, but if I wire it after the date of the CLN and prior to filing 8854, then it would only have to be reported under net worth and also for any income it had earned in the past year. Does that sound correct? Transactions performed after the date of the CLN are considered to be performed as an NRA?”
That sounds correct, BUT if you want to move the money before you inform them of your relinquishment you could send it to an account only in your wife’s name to avoid Fbar filing.
Those Canadians will be asleep right now but I will let them advise re pension.
@TokyoRose:
Pension valuation: you will need to obtain a supportable value for your annuity or defined benefit pension for form 8854. The IRS does not require an actuarial analysis. My suggestion would be to use the “cash value” of $50,000 since this is its value today and is an approximation of its present value. Another approach, which should give a similar value (but possibly higher value) would be to determine what it would cost to buy an annuity that would “pay out $8,000/yr for 10 yr” starting at the same age as listed in your current annuity/ defined benefit pension. I see no reason to cash in your annuity/ pension based on the facts you’ve presented.
@Innocente
So you think I can value the annuity at its current value of $50,000 rather than the 10-yr payout of $80,000 even if I do not cash it in? The reason I ask is because of the discussion on valuing pensions over estimated lifetime. In any case, in spite of my mistakingly calling this a “pension”, it is only a fixed term of 10 yr at a fixed amount of $8,000/yr with no provisions for any additional interest payments.
@heidi
I considered wiring it to my wife’s account, but thought if I’m going be considered an NRA after the date of the CLN (from what I understand it, the CLN will have my date of Japanese naturalisation as the date for loss of citizenship, but the date of the CLN will be the date I become an NRA for tax purposes ?), I could open a new account (using my Japanese passport as ID if needed) for wiring the funds. Also, I neglected to answer your earlier question: I have not used my US passport or voted or entered any US territory since naturalising to Japan; the only “American” activity I’ve performed since naturalising was to file my 1040. Since I had not yet reported the relinquishing act yet, I filed the 1040 as I’ve always done in the past.
@TokyoRose
I didn’t relinquish, I renounced, so the date on my CLN is the date of my second appointment at the Embassy and all my tax , asset calculations were based on the day before I took the oath to renounce. I already had another citizenship from Birth, so I couldn’t relinquish.
As I understand, if you chose to Relinquish, then the date on your CLN will be backdated to the day that you received your Japanese citizenship, ie you performed a relinquishing act with the INTENTION and full knowledge that in doing so, you would lose your US citizenship,
BUT all your tax calculations will be based on the day you inform them of your relinquishing act.
As Pacifica said..
“Your CLN will indicate that ceased to be a US citizen, because you expatriated yourself, on 15 July 2014. Immigration and Nationality Act s. 349(a)(1).
The IRS, however, according to 26 USC 844A(g)(4) and 8854 instructions, page 1, column 2, will consider your citizenship to have ended on the day you informed the US government, that being 1 September 2014.”
IE You are no longer a US citizen BUT the US tax dept won’t recognise this until you tell them, so all calculations, tax, assets, bank accounts etc should be done the day before you inform them at the embassy.
It may seem complicated, that’s because the US make it so. It is such a relief to simplify one’s life
PS @TokyoRose
I believe relinquishments take only one visit, (you are informing them of an event that has already happened)
Your choice…
1. Move your money to your wife’s account BEFORE this visit.
2. Move it to your account AFTER this visit, but to make sure, I would wait until I have a confirmed relinquishment with my CLN in hand before putting it into a ‘foreign’ bank.
Good Luck
@heidi
Yes, I understand the timing that Pacifica mentioned and it agrees with the other information I’ve read, but the period between submission of the paperwork and filing of 8854 puzzles me a bit. To follow Pacifica’s example:
15 July 2014: Naturalize in Japan
1 Sep 2014: Paperwork accepted at US consulate
15 April 2015: File 8854, etc.
15 July 2014 onward: No longer a US citizen
Up until 1 Sep (actually 31 Aug?) 2014: Treated as US citizen for IRS tax purposes
1 Sep 2014 onward: Treated as NRA by IRS for tax purposes (this is the one that I have difficult in understanding; it seems to give me a window to do some adjustments as an NRA prior to having to reported by net worth, etc, to the IRS; specifically, it seems to exempt me from having to file a FBAR for any account opened after 1 Sep 2014
@ heidi
All recent info on relinquishing in Tokyo on the basis of Japanese naturalisation are reporting 2 visits required, one to explain the procedures and then, after a “cooling-off period”, a second visit where they will accept the form 97025 and complete the other paperwork for submission to the Dept of State. This may not be official policy, but is its definitely the procedure they follow in Tokyo. It is also rather difficult to make appointments, only possible by email, not by phone, and definitely no walk-ins. I’ve only just sent my email request for an appointment this past week; I’ll see how long it takes to get a response.
Correct, but you have to have your relinquishment accepted, it shouldn’t be an issue as yours is straightforward, but if it was me, I would tread carefully until it has been confirmed by the state dept.
That is a strange procedure when you are actually informing them of an event that has already happened and needs no ‘explanation’ but they make the rules and I guess you have no alternative than to go along with them.
If you are in need of the money, then I would move it to your wife’s account now, I don’t think the dollar is getting any stronger! Your call.
@ TokyoRose,
I didn’t mention the filing date for the 8854 in the example, but it’s actually 15 June. I think you can get an extension — don’t know the details about that, but others here do.
Thank you for the advice. I see exactly what you mean about waiting for the actual confirmation of the CLN, which is what I will do. If it is especially late in coming (but no one has been reporting that in Japan; just the difficulty in getting an appointment), then it can go into my wife’s account.
@ TokyoRose
Yes, it’s 15 June for us outside the US but you can file for an extension if you wish to prolong the agony 🙂
heidi, TokyoRose and All:
unfortunately is incorrect. Please note:
http://www.mnp.ca/en/media-centre/blog/2014/6/15/attention-americans-foreign-bank-accounts-reporting-fbar-online-filing-is-now-mandatory
TokyoRose, further to Pacifica’s comment:
Re extension for 8854: http://hodgen.com/chapter-4-are-you-a-covered-expatriate/
Tokyo Rose. Now I understand your pension. Firstly- relax- there is no need to tie yourself up in knots over this. You are too small a fish for them to bother with after you file your 8854. As the English would say- don’t get your knickers in a twist’.
You can put down almost he any numbers you like and no one will bother you. For your pension, put its present value. There is a large body of opinion that filing FBARS after you tell them of your relinquishment is unnecessary. Petros didn’t bother. FBARS are under a separate law.
Thanks Calgary, it’s good that someone is on top of all this BS. 🙂
Thanks, heidi. I’m sure not on top of ALL of the BS — just what I know having gone through the exercise of collecting all back financial account information and then preparing FBARs for myself and my husband, 2005 – 2012. That was burned in my mind for sure — there is (or was) a section on the FBAR (now FINCEN114 to be filed electronically so I haven’t actually looked at that) on which joint accounts were to be listed.
@ Swanee,
So it was Toronto. Thanks for letting us know. Also that’s really good to hear because although we’d been getting consistently excellent reports from Toronto since we started in 2011 through 2013, there have been some problems reported from there more recently. Here’s hoping that your experience is an indicator that they’re back on track and on the ball. Once again, glad everything went well for you!
@Swanee, congrats!
Interesting that the Toronto consulate agreed to type you up a letter to use while travelling while you awaited your CLN. The official I dealt with (2013) refused to give me anything at all, and he was quite abrasive – asked me for my reason for expatriating as well – which is not at all required, and is none of their business as it is our right to expatriate. On the other hand, he didn’t even ask to see my US birth certificate at all (I had it with me though). I was told 9 months for the CLN, but it came faster after I emailed in about 4 months in order to ask how much longer it would be, and strangely, two weeks after inquiring and being told that they had no idea how long or what stage it was in, they called to say it was being mailed out from Toronto. Coincidence? Who knows. You might send them an email inquiry after a few months and see if that speeds things up – just in case you end up needing it sooner rather than later.
Thanks @pacifica777 and @badger for the good thoughts. Badger, I’ll try the inquiry in 4 to 6 months…can’t
hurt. My official was youngish and female. There was a guy behind the counter, but not doing any inquiries. Think I lucked out or, they have gotten more lenient.
The Federal Statistics Office in Germany has just released this years report on naturalisations. Here are the figures from 2006-2013 pertaining to US citizens who became German citizens. Note that dual citizenship in Germany is generally not allowed, so it’s fairly safe to assume that these US citizens renounced/relinquished their US citizenship before naturalising.
2006: 429
2007: 434
2008: 595
2009: 578
2010: 771
2011: 869
2012: 756
2013: 994
https://www.destatis.de/DE/Publikationen/Thematisch/Bevoelkerung/MigrationIntegration/Einbuergerungen2010210137004.pdf?__blob=publicationFile
I’d say the numbers speak for themselves. Incidentally, if the US official renunciation numbers for 2013 were correct (2999 if I remember correctly), then approximately one-third (!) of all renunciants would have been in Germany. How’s that for a myth!
(Repost from the FATCA discussion thread, probably belongs here instead.)
@notamused:
An analysis of German statistics naturalization table 12511-0005 shows that of 756 naturalizations by USCs in 2012:
673 USCs retained their previous citizenship (89.0%)
83 USCs did not retain their previous citizenship (11.0%)
593 USCs naturalized under “Art.116 Abs.2 S.1 GG, Frühere deutsche Staatsang.” allowing them to retain their previous citizenship.
This is the category used by former German citizens and their descendents who involuntarily lost their German citizenship during the period 1933 to 1945.
https://www-genesis.destatis.de/genesis/online/data;jsessionid=DBA02B154E8D5F3CD8958E333F6E4276.tomcat_GO_1_2?Menu=Willkommen
Notes:
a. Thanks to Eric who located German statistics website.
b. 2012 data is most recent; 2013 not yet available.
@Innocente
Thanks for that update. It’s surprising that so many opted to retain their US citizenship. I’m one of the 83 that didn’t.
I want to thank everyone for their comments and advice. I had some time yesterday and spent about 4 hr reading through this thread and other parts of the site. Not understanding my tax situation was the thing that was holding me back from proceeding with the relinquishing process, even though I naturalized to Japan in March 2013 and am required by Japanese law to relinquish my US citizenship within 2 years of my naturalization. I still don’t understand everything about filling out 8854, but I now realize that calculating my net worth should be quite simple, so I’ll worry more about that later.
So moving on to the relinquishing process. I had made an appointment online for “services not listed above” at the US consulate in Osaka for 28 July and emailed them to say that my purpose was to initiate the process to relinquish. After 4 business days (much faster response than my acquaintance in Tokyo experienced), they emailed back telling me to read about the consequences of losing US citizenship on the DOS website and if I wanted to proceed I should send them by post a completed DS-4079 together with copies of my US and Japanese passports and other docs. They sent me a pdf of a new DS-4079 (sans page 5) that expires Jan 2017 rather than the one downloadable from DOS that expires Dec 2013. I did not compare it word-for-word, but it seems essentially the same as the old form.. They also said I could bring the docs in person on 28 July and have “a brief interview to answer any questions I might have on the process”. So it seems that in Osaka it might be possible to complete the relinquishing process in one appointment by sending in the docs ahead of time. I mailed the docs today, but I’ll go in on 28 July anyway because it is not all that inconvenient for me. So far it seems like Osaka will take less time than Tokyo, where others have had difficulty getting appointments.
I’m not too worried about my relinquishment being approved. While naturalization to Japan alone would be sufficient, I’ve also voted in a national Japanese election, and at the time of naturalization I took 2 oaths to Japan, one of which was to “promptly abandon/relinquish my US citizenship”. I submitted copies and translations of the signed oaths together with DS-4079.
I will report back on how things go, although I’m sorry that it might not be all that relevant to most readers here.