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
Lyn. Not really. There are currently no provisions to bar former US persons who have a valid CLN and Visa.
The Reed amendment was, like so many, a bad US law passed at 4 in the morning 4 days before adjournment. Senator Moynihan called it embarrassing it was so badly written. Moynihan was smarter than most and favoured a tax on accrued capital gains. The regulations to enforce it were never put in place. Actually it was aimed at former US citizens who wished to return to live rather than just visit.One caveat however; apparently Reed has not given up trying.
@PortlandPLC
“Reed has not givern up trying”
And so has Schumer…
http://isaacbrocksociety.ca/2014/03/23/definitive-ex-patriot-news-information-thread/
@George (@Lyn @Walter)
It’s the other way round. They will not be able to obtain German citizenship until they have relinquished/renounced US citizenship. Strictly speaking, they will need to present the CLN before naturalising in Germany. Once applying for German citizenship, they have up to 2 years to obtain the CLN, at which point they can become German citizens.
There is one possibility to expedite the naturalisation process which the German authorities may or may not accept: After applying for German citizenship and having initiated the relinquishment/renouncement process with the USA, contact the German authorities and explain that receiving the CLN will take many months. Provide them with any proof (letter, receipt, etc.) from the US consulate that the relinquishment/renunciation process has been initiated. If they go by the book, they will demand the CLN first. If not, they may accept such argumentation.
Hello, my husband has already checked on the citizenship and has an application, they said he would get a vorläufig paper that is not permanent but to show he has applied, then he has to give his US up. they said it should be not a big problem because he went to school here was raised here, and his mother is German.
I have my fingers crossed
thank you.
@lyn
Yes, that’s correct and it sounds like he shouldn’t have any trouble. As far as the US is concerned, the date he applies for German citizenship is the official date he relinquishes his US citizenship. The CLN is required to document his relinquishment on that date. Assuming his decision has been made, my advice would be to apply for German citizenship ASAP and also to make an appointment at the closest US consulate for relinquishment ASAP (there will be a waiting list).
I’m in the process of helping my children (all born in Canada) register for their Irish citizenship. I stumbled across these tidbits:
https://www.dfa.ie/passports-citizenship/citizenship/how-do-i-renounce-my-citizenship/
https://www.dfa.ie/passports-citizenship/citizenship/can-i-reclaim-my-citizenship/
As an Irish ex-pat, there is really no need to renounce your Irish citizenship– Ireland doesn’t hound its diaspora for fictitious taxes or conscription. But if you need to renounce, there’s a simple one page form you mail in. The fee? It looks like it’s free. Buyer’s remorse? If you want your Irish citizenship back, send in another free one page form and (if you were born in Ireland) your Irish citizenship will be returned.
Across the board, the US is an outlier. I believe in US exceptionlism– the US is exceptionally cruel towards its expats.
Thanks for the interesting comparisons, BC_Doc. US exceptionalism again and again.
@BC_Doc….firstly, a Happy New Year to my fellow Irish brother on the other side of the pond.
Did you not know that Ireland is the land of the free? Unlike a certain other place….
Oh, there are some other countries where you can renounce and then reclaim, and I think the reclaim would be a US expatriating act.
http://www.usvisalawyers.co.uk/article14.html
Here is an article I found dated January 2015 can someone explain ? Does this mean that Reed Amendment has been passed or is this stil at this time a scare tactic..
Also it looks like relquishing isnt going to easy?
@Lyn, yes the Reed Amendment passed some years ago, but the law has been so badly written that no one has been able to come up with any workable procedures to implement it yet. Not that Mr. Reed hasn’t been trying, but so far unsuccessfully.
http://en.wikipedia.org/wiki/Reed_Amendment_(immigration)
It’s been pretty much overtaken with the changes made back in 2008 on the tax side anyway.
http://tax-expatriation.com/2014/06/29/senator-reed-again-proposes-special-tax-expatriation-legislation-adverse-to-former-citizens-not-lprs/
@Lynn
I am not sure if you read my answer to you in a previous post, so here it is again.
@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 and people who are not tax compliant could be flagged. 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, to enter the US, it can be done simply on line. If you have a US birthplace you should always carry a copy of your CLN (certificate of loss of Nationality) to show at the border in case you are challenged.
It sounds as if your tax returns should be simple and there is also a $90,000 + 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.
Also look at (not amused) comment also above about relinquishment. It does not seem that your husband will have a problem relinquishing. I do not know your situation.
There are a lot of scare articles out there, many are written by tax professionals or lawyers looking for business.
Take time to read the information on this website carefully, it has helped many of us.
@Heidi
You mention in your post to Lynn that there is a $90,000 * income exclusion when filing back taxes. What exactly does that mean? I’m going to try to go for the streamlined route and do it myself, although the tax forms look absolutely daunting to me. For those of you who have done it, can you give me a rough ball park what is the likely amount of penalty I’ll have to pay? For the last 6 years I have owned (with my non US husband) a house worth £180,000, and have worked as a teacher earning between £36,000-40,000. I have no investments or other savings bonds and no foreign assets. Will they want 5% of all of this as a penalty? (the explanation on the IRS site of how you calculate it, at this point, is gibberish to me).
@SylvanMoon,
I have not had experience of claiming this myself but others here may have.
Here is a link to info and the IRS website page.
https://en.wikipedia.org/wiki/Foreign_earned_income_exclusion
http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion
I believe that if they accept that you had no knowledge of the filing requirements, there will be no penalty from streamlined.
Hopefully others will chip in who have more info/experience.
Good luck.
Sylvan moon. Take a deep breath. You will owe no taxes, no penalties, no interest; nothing.
On your UK earnings, there are 2 deductions or credits to reduce your US taxable income to zero. 1 is the foreign earned income exclusion The first 100000$ is excluded from your US taxable income. This amount is adjusted every year. The other is a full credit for UK taxes. Use whichever is simpler. Google FEIE.
Your house is irrelevant
SylvanMoon, regarding Penalties, you can make a Reasonable Cause Statement.
http://www.irs.gov/uac/Newsroom/Information-for-U.S.-Citizens-or-Dual-Citizens-Residing-Outside-the-U.S.
Robert Wood, Forbes, has an article on willfulness: Are You Willful Or Ignorant About Taxes? (Hint, Ignorance Is Safer)
@SylvanMoon
The fact that you quoted a 5% penalty suggests you are looking at the Domestic Streamlined program (“Streamlined Domestic Offshore Procedures”). That is for US residents and not the right one for you. You want the Foreign Streamlined program (“Streamlined Foreign Offshore Procedures”) as you are not a US resident.
As mentioned by others, the foreign Streamlined program has no penalties. The worst case scenario is that you owe back taxes plus interest on those taxes. However, given your stated financial situation, you should not owe any taxes due to use of the Foreign Earned Income Exclusion and/or Foreign Tax Credits. The one caveat to this is if you did something like sell your principal residence (not taxed in UK, taxed in US), then you could be on the hook for taxes a la Boris Johnson. There are some other tax gotchas as well, but that is the big one. But, like I said, if your financial situation is as straightforward as you stated, you should owe no taxes. Note that a number of people here at IBS have gone thru Streamlined (including me).
Some of the above repeats what others have said, but I suspect that at this point it can’t hurt to reinforce the fact that you should be fine.
A reminder for the benefit of other people reading the above, the FEIE “Foreign Earned Income Exclusion” is for _earned_ income, which is literally income from employers, and does not exclude pension income or (I’m pretty sure) investment income from US taxation. This leads to double taxation in ones retirement years making it a non-option for many people to retain USC and file taxes while permanently living abroad. Just one of several reasons, really. Another just mentioned above is if you sell a house and realize a gain of more than US$250,000.
WhatAmI. The foreign tax credit should cover the pension income of people of modest means such as Sylvan Moon.
Sylvtan Moon. You appear to be determined to become compliant. No worries but once you have started the process, you should consider renouncing. It’s only going to get worse.
@SylvanMoon Is there any chance that working as a teacher is a government job? If so you could relinquish your US citizenship on the date you took your job. If that was before 2004 you don’t need to file taxes, exit tax etc. maybe I missed comments before. Just want to make sure.
@Cheryl
I believe SylvanMoon said she had renewed her US passport and voted in a US election since then.
@Heidi OK sorry. Thanks.
My husband got his CLN yesterday, almost two weeks after I received mine. While mine came as registered mail in a brown envelope, his came in the Canada ExpressPost envelope we gave the U.S. Consulate in Calgary when we applied at the end of March, 2014. It came with the regular mail, not registered. The consulate said that our CLNs would come together in the same Express envelope via regular mail. I wonder why mine came earlier, and via registered mail.
What do we do now? Do we need to have notarized copies made, to take to the bank – if they ask us- or to include with our passports? Will a regular photocopy be enough for official purposes?
Since we expatriated in 1974, before the 1995 and 2004 laws were passed requiring notifying State and the IRS of a relinquishment, should we ask someone like John Richardson to write a letter on our behalf to the IRS and State Depts. explaining that we are not included in that legislation, do not need to contact the IRS, and should not be considered “covered” expatriates? If we do nothing to contact the IRS, will we be able to safely travel to the U.S. with copies of our CLNs in our (Canadian) passports?
In spite of these concerns, a huge weight has been taken off , now that I’m not an American (again).
Queenston. Congratulations. Well done.
Copies of your CLNs should be all you need. Keep the originals safe!
You don’t take them to the bank unless you have to.
Do not contact the IRS. You ceased to be US persons in 1974. There is no requirement to do so. If you did, they would be astonished and bewildered. Travelling to the U.S. will be precisely the same as for any other Canadian except that you take a copy of your CLN with you . It is unlikely you will need them.
Consider a donation to ADCS if you haven’t already done so. Again, well done.
@ Queenston,
Further to Duke of D’s comments.
There is no likely mechanism for enforcement of US tax claims against Canadian citizens residing in Canada. No foreign government – including the US – has any power to collect taxes in Canada. Only the Government of Canada can collect tax claims here.
Under the Canada-US Tax Treaty, the government of Canada will NOT collect a US tax claim from any Canadian citizen (repeated stated in Dept of Finance press releases and the Minister of Finance’s statements), unless the claim itself proceeded their date of citizenship.
And Canadian courts do not enforce foreign tax claims, especially against Canadian citizens protected by the clearly stated exemptions of the Canada-US Tax Treaty. And changing the Canada-US Tax Treaty would require the collaboration of both the US Congress and the Canadian Parliament – highly unlikely, especially since the US is broadly opposed to collecting foreign taxes from its own US citizens.
Finally, on a common sense note: there are hundreds of thousands of Canadians in situations similar to yours. Have you ever owed money on charge card or utility bill? If so, you know that anyone trying to collect on debts will be very proactive in contacting you. Has the US government made ANY attempt since 1974 to collect anything you?
If you saw a mean-looking dog across a four lane highway that is utterly ignoring you, would you cross the highway to poke it with a stick?
Hi everyone, Happy New Year!
I’m waiting for my CLN, since I relinquished at Toronto in July 2014. (Citizen Oct. 2013) Due to IBS guidance, I asked for a letter stating this fact to carry with me, as I would be traveling to the U.S. before I get my CLN. The time is now and I’m very nervous about customs when showing my Canadian passport for the first time. What should I say without getting confrontational? I know it depends on the person I get, but give me some advice. IBS has guided me with good advice for the past 3 years. My gratitude is immense and also monetary to ADCS, as we all should do. Thanks.