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 for your response. At present I would not be a covered expatriot, but in a few years, if I am still working in China, I could be. I have used my US passport since my Irish one was issued as my China work visa was issued in my US passport. However Ireland considers me having acquired citizenship at birth as I am born to an Irish born citizen. If it were my grandparent that was born in Ireland my citizenship would have been based upon registering in the foreign births register and my citizenship would have been valid from the date registered. As I am considered an Irish citizen from birth I was unde the impression relinquishment was not an option as I did not voluntarily do anything to acquire the Irish citizenship.
@Lyn, no, signing the W-9 won’t have any effect because you haven’t gone through the Geman citizenship ceremony yet. Once that happens and you relinquish and get your CLN you will need to sign a W-8EN instead.
@Uncle Tell, no, it doesn’t need to be a valid passport. An expired one will do nicely.
@Medea
In that case I’ll have to place my expired passport next to the tons of “Goldvreneli” that i have. 🙂
@Andrew
Yes, you are right, Irish from birth, then you can’t relinquish, BUT as a dual from birth you are excused the exit tax as long as you are tax compliant and have lived outside the US for the requisite number of years.
◦You became a U.S. citizen at birth; and
◦You also became a citizen of another country at birth; and
◦On your expatriation date you “continue” to be a citizen of that country; and
◦On your expatriation date you “continue” to be taxed as a resident of that country; and
◦On your expatriation date you were not a U.S resident for 10 of the 15 tax years that end with the year that you expatriated.
I guess you would have to be living in Ireland for that to apply to you!
@Uncle Tell, no you’ll need to take it with you when you go to the embassy/consulate to renounce. They’ll take it off you probably, even though it’s expired, but will likely send it back to you with holes punched in it to show it’s no longer valid when they send you your CLN.
@Andrew, then you couldn’t relinquish through gaining Irish citizenship. Only if you’ve worked for a foreign government or served in a foreign military might it be possible.
Lyn and Walter. Walter plans to obtain German citizenship and get a German passport with the intention of relinquishing US citizenship
This is all that is required to obtain a CLN. There is no fee . The law requires the US consulate to accept the facts. Intent is all important. Filling out tax forms is not a prerequisite to relinquishing or to obtaining the CLN.
Then the decision becomes. To file or not to file (taxes). A strong case can be made for either.
@ UncleTell
No, you don’t need a current US passport when renouncing. Mine had long expired, but you do need to take your last one with you to the appointment.
Andrew. Yours is relatively straightforward. Fortunately, you are tax compliant. You can renounce, pay the fee and obtain a CLN. Then you can file the 8854 and final year tax return. You should be able to do it yourself.
Since you are under the exit tax threshold, you will NOT be deemed to have renounced for tax purposes. Traveling to the US will be the same as for any other Irish citizen.
Besides that, Andrew, you are not required to give the consulate your reason for renouncing. You’ve been filing your taxes, how could that be construed as renouncing for tax purposes anyway? I’ll renounce many reasons, one of them being the difficulties and costs associated with filing US taxes, not the tax per se.
@Andrew et al
Our Canadians friends who instigated Brock are in a David and Goliath lawsuit against their Gov challenging the implementation of FATCA. They are the only country at present to have the courage to do this. Any donation towards their effort would be gratefully accepted.
I am a US citizen who obtained an Irish passport (due to my grandparents birth) about 30 years ago. I have been living and working in the UK as a teacher since then, and am married to a British national. I pay UK taxes through PAYE and have not paid any US taxes over the last 30+ years. I have used my US passport since obtaining my Irish one, and I have voted in a US election.
I own a modest house with my husband (£200,000 at most) and have all my bank accounts as joint ones with him. We have some modest savings, but nothing exorbitant. However, If I divest myself of those accounts and let him become the sole name on the house, I’m not sure it absolves me, as I am just about to retire and claim my teacher’s pension and annuity, which will be in my name. If I renounce my US citizenship, I understand that I will most likely be deemed as wilfully not having paid taxes, and so will be hit with a ridiculous number of years back payments. So I’m not sure that’s the best option. I have only just today received the bank’s request for me to fill in the W-9 form (it was triggered, I think, by us opening a new current account once we paid off our mortgage). If my husband removes me from that account, will it all go away and I can just go on as I was? Or have I somehow now fallen into this dark abyss?
Many thanks for your words of wisdom.
Does your bank know your citizenship and/or where you were born?
There are lots of options so take time to sort them out. Remember FATCA was meant for Americans living in the US who deliberately hid accounts in Swiss, Israeli and so on banks. It wasn’t meant for you so you need to think carefully.
@SylvanMoon
The banks I believe are doing ‘due diligence’ for new accounts and will not trawl through old accounts looking for US persons until some time in the future. Many are hoping that FATCA will have died a death before then.
You have a few options.
1.Renounce your US citizenship and back file 3 years of tax returns and 6 yrs of FBARS as part of the ‘streamlined process’, with an accompanying statement saying that you were not aware of the filing obligations until now. Many have done this with no problem so far, I doubt the IRS has the resources to go after a minnow.
2. Take your name off that account and wait. (But it will be hard to claim ignorance of filing in the future).
3. Renounce and do nothing, re filing, you will then have a CLN for the bank, but this would make you a ‘covered expatriate’ , which may be a problem if you have any funds or inheritance in the US and traveling there in future may be a problem if the IRS and immigration get their act together.
You and your husband should also be aware that there are other problems for an ‘alien spouses’, where one is an American and the other is not.
http://blogs.wsj.com/expat/2014/11/16/ask-an-expert-tax-tips-for-expats-with-alien-spouses/
Read carefully the info on this site before making your decision.
Others may chip in advice here that I may have forgotten.
Good Luck.
Heidi says
@SylvanMoon
The only thing I’d add to that is if you do not want to be a “covered expatriate”, then you’ll want to file 5 years of tax returns. 3 years is the minimum required for Streamlined, but you can file more than that. If you don’t know what the ramifications of being a “covered expatriate” are, then you should find out before making a decision re the number of years to file.
Thanks Tdott
Yes, To become compliant and then renounce require 5 yrs of back tax returns and 6 yrs of Fbars as you need to attest to 5ys of Tax returns on the 8854.
To become compliant and stay American only needs 3 yrs returns and 6 yrsFbars
@SylvanMoon, no it won’t just go away really. Yes, you could have your name removed from the accounts, but your pension will still trigger the need for the signing of a W-9 when you start to receive it. You will not necessarily be deemed a wilfully non-compliant if you start to back file US returns. The Streamlined program is designed to bring unwitting Americans back into the US tax fold so that could be an option for you.
Above all don’t rush into anything. Research both here and on the IRS website (search for Americans Abroad there for a starting point on your obligations) before making any decisions regarding renunciation and filing or not filing tax returns.
Note that to renounce will cost you $2,350, but if you are eligible and want to apply for British citizenship then you could do that, showing at the same time that you intend to lose your US citizenship. You could then relinquish at the embassy/consulate and not have to pay the fee. See here for more info on how to do it:
http://isaacbrocksociety.ca/2011/12/12/relinquish-dont-renounce-if-you-can/
@SylvanMoon, let me sharpen some of the already mentioned very good suggestions.
Your Irish registration was an expatriating act BUT you reclaimed your USC when you got the passport. But who knew what would happen.
You are not a possible USC, you ARE a USC.
No good will come by staying in the spiders web.
Does your Irish Passport or UK License have any US indica?
It is always better to relinquish as that gives you more options.
Did you become a teacher before or after you got the US Passport/voted?
Have you switched teaching jobs after you got the US Passport? That would be a new employment which would be an expatriating act with a political subdivision.
The other option is to become a UK Citizen. It will be cheaper to pay the UK Government to become a UK Citizen than to pay the US to renounce plus it will give you more satisfaction paying your own government then some foreign government.
A CLN is not a requirement to lose ones citizenship. The loss of USC is automatic by law if you perform the act with the intention.
A CLN is a pretty handy piece of paper to have. You should assume it is a required document to enter the USA.
In the UK/EU other than CHF, some financial institutions will accept your statement that you are not a USC with a UK Certificate of Naturalisation provided.
When you become a UK Citizen it would be wise to state in the miscellaneous section of the UK Application that you are voluntarily relinquishing your USC immediately upon attaining UK Citizenship. You can then request a copy of that file and you will have proof of intent with a stamp on it that says official copy. 🙂
If you relinquished based on teaching for lets say Chelmsford, a CLN will be much easier to proof loss to a bank.
When you opened your various financial accounts what did you state for citizenship? Irish ? If they are old accounts you will likely never be bothered. Have you been proudly declaring you are a USC or “dual” all these years?
Personally, I would not want to be outted with a FATCAD bank. You could completely close the account because you simply no longer like them which happens millions of times a month!!
Your UK Spouse could then open an account alone with another High Street Bank.
You could search out a credit union as no UK credit unions are registered for FATCA. You could find a teachers credit union or a credit union based on where you live. Your teachers pension could then be paid into the credit union account without the inconvenience of FATCA.
You could also consider a Building Society as many are not involved in FATCA. Look carefully online first.
@MediaFleeceStar, @Sylvanmoon, “but your pension will still trigger the need for the signing of a W-9 when you start to receive it.”
It will be a UK Teachers pension, there is no W-9 and its solely subject to UK tax by treaty.
@George, If it goes into a bank account in her name surely she will still need to sign a W-9 for it? Just because it’s not taxable by the US doesn’t mean the account it’s paid into won’t have to be reported does it?
@Lynn @Walter, you need to apply for German Citizenship ASAP.
On the application form, clearly state in the “Other” section that you are voluntarily relinquishing your US Citizenship. That adds to your documentation.
You need to check the current German citizenship to verify they still do not allow you to keep the prior citizenship. The law has been subject to change and not sure what passed.
Immediately upon being naturalised, you need to notify your bank that you are a German citizen and have relinquished your USC. If German Law is still the same as in no dual citizenship, the bank under German Law should be satisfied.
You then can apply for a CLN and it SHOULD be easily approved. But who knows how long for an appointment. In the interim after naturalising as you need to live a life, you need to tell people you are solely German having naturalised, dual is not allowed under German Law and here is your certificate of naturalization.
If you did not want to get a CLN, you can probably get by solely as a naturalised German. But definitely assume no US travel.
@MediaFleeceStar, its a UK defined benefit pension payment being deposited into a UK account. Think of a monthly cheque payable for life from the NHS National Health Service when you retire at age 60.
Form W-9 is a US Form for payers of income.
There is no authority in UK Law for US Form W-9 to be used by the payer of a UK state based pension or for UK employers.
Under the IGA an FI can ask for a W-9 but that is for the account not for deposits made into the account from employers and alike.
@MediaFleeceStar, a UK monthly state based pension paid into a UK credit union will be completely FATCA free.
The pension itself will be fully exempt from US tax for a UK resident individual by treaty.
A USP receiving the above will still likely have personal reporting obligations.
George,
I am under the impression that if we “ignore” the tax filing, we will not be able to enter the states at all….even as German citizens with or without CLN. is that right? although i do not want to travel to the US I still have a brother there. and may need to eventually go.
@George, thanks for the clarification.
@Lyn
If you ignore the tax filing you will be classified as a ‘covered expatriate’ .
The Reed amendment has sought to bar persons entry into the US, whom they consider have given up citizenship for so called ‘tax purposes’ and they include ‘covered expatriates in this classification. This has never been put into practice and would be very difficult to implement. But there is talk of the IRS and border agents sharing info in the future. If you back file 5yrs of tax returns and 6 yrs of Fbars, you will not be ‘covered’ and will be treated as any other EU citizen and allowed to enter the US for the permitted time, 120 days/year rolling average, (but there is a complex formula calculated over a 3 yr period.). As an EU citizen, you will have to apply for an ESTA visa waiver, done simply on line. If you have a US birthplace you should always carry a copy of your CLN to show at the border in case you are challenged.
It sounds as if your tax returns should be simple and there is also an income exclusion. You could start by trying to do it yourself to the best of your ability. There are many here who have done just that and would help you with any questions.