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
I relinquished my US citizenship in the year 2014 and have been filing my US taxes/fbars for over 5 years. Do I still need to fill out Form 8854 despite never having to owe any taxes and not owning any property? I also don’t earn a lot. Thanks.
Sheila,
If you do NOT file 8854, the US will deem you a Covered Expatriate, no matter any other facts. Did you claim a relinquishment (the date of that relinquishment you are claiming; i.e. taking Canadian or another citizenship in XXXX year) or did you renounce? If you will never / do not wish to cross the US border again, you might consider this.
http://hodgen.com/chapter-4-are-you-a-covered-expatriate/
File Form 8854 on Time
The certification must be made on a timely-filed Form 8854.
Form 8854 is filed as an attachment to your expatriation year tax return.
For people living outside the United States, the filing deadline for a U.S. income tax return is usually (but not always) June 15. You can also get a six month extension to file your tax returns. This means if you have a June 15 filing deadline, you can have as late as December 15 to file a timely income tax return.
Absolutely file on time. If you do not, you automatically become a Covered Expatriate.
Someone who is “too poor” to be a Covered Expatriate—even someone who paid no income tax and has a zero net worth—will nevertheless be a “Covered Expatriate” if Form 8854 is filed late.
@calgary411: I’ve been a Canadian citizen for many years now…I was just born in the US so I became a citizen that way, but never lived there or stayed there…I would still like to enter the states from time to time for shopping, but that’s about it. I need to fill out form 8854 only once and then not have to file it again right?
It is a one-time and last form you should have to file with the U.S.
http://www.irs.gov/instructions/i8854/ar01.html (8854 instructions) — with 8854 you are certifying that you have complied with all of your federal tax obligations for the 5 tax years preceding the date of your expatriation. Phil Hodgen (the link I gave you in previous comment) has written extensively on the subject and his writing is pretty easy to understand.
Two copies must be filed ON TIME (June 15 of the year after your renunciation date, for which you can also get a further extension):
Where To File
Send your Form 8854 (or a copy of your Form 8854 if you are required to attach the original to a Form 1040NR or a Form 1040) to this address.
Department of the Treasury
Internal Revenue Service
Philadelphia, PA 19255-0049
Sheila, you didn’t say whether you renounced or relinquished in 2014. Have you received your CLN yet? Assuming you want a complete divorce, sending off a 8854 would be a good idea. If you choose not to bother, nothing much will change.
@DukeofDevon: I renounced my US citizenship and yes I already received my CLN which had the Form 8854 attached to it…so I assume they want me to fill it out. I believe I’m obligated to send it once and then won’t have to ever again as I do not owe them any taxes.
@Sheila, the 8854 is a once only form. It basically winds up your US tax obligations and gets you out of the system. If you’ve been filing for 5 years – I assume in preparation for your renunciation – there’s really not a lot of point in not doing it. If you don’t file you’ll become a Covered Expat which may give problems further down the line. If you could do without travelling to the US you could decide not to bother, but then it seems to me you’ve wasted the 5 years of filing you’ve done to become compliant in the first place. And I personally would always worry that sometime, somehow in the future the IRS would one day be able to raid my account/s to get their penalty money for not filing the darn thing.
@Medea Fleecestealer: yep, that’s why i’ve decided to file it…can’t wait to get this all over with and not have to keep paying someone to file my US tax returns/fbars despite not owing any taxes…it’s so stupid and a waste of money XD
Just some final comments from me on the dual-status issue.
Simply criticizing the poor publications doesn’t get to the heart of the matter. That presupposes that the laws actually address these issues and that the IRS staff is fully aware of them, but simply haven’t documented them adequately for the broader population. The problem, however, isn’t only the IRS publications; US laws are fundamentally flawed in that they are kept vague, leaving those institutions who enforce them (e.g. Treasury, IRS) to arbitrarily “flesh them out” as they see fit. In other words, IRS/Treasury can make up their own interpretations as they go along. (I recently read an article confirming this and even going so far as to say that the IRS eventually goes along with the consensus of how people file returns, i.e. the more people file returns a given way, the more likely the IRS is to view that way as being correct, independent of any laws. It’s a self-fulfilling prophecy.)
The actual tax laws don’t even address issues at hand, and even if they did, IRS staff is notoriously incompetent and can hardly be expected to understand them. For these reasons it makes no sense to presuppose what the IRS may or may not have intended on these issues. The “IRS” is not monolithic; ask 10 staff members and you’ll get 12 answers. How could you possibly defend your own (personal and undocumented) interpretation if called into question? If push comes to shove, IRS/Treasury could simply state that your interpretation is incorrect, and you’d have nothing concrete to prove otherwise and defend your interpretation. IMHO, when in doubt, the best one can do is to rely on what they have actually stated in public documents, such as this from Publication 519:
“You have a dual-status tax year when you have been both a resident alien and a nonresident alien in the same year. Dual status does not refer to your citizenship; it refers only to your resident status in the United States.”
In the end, everyone has to decide for themselves on what they’re most comfortable with. Duke of Devon will probably jump in here and say it doesn’t matter either way, just get on with your life! 😉
@ Sheila – The answer is YES, DEFINITELY. I renounced my citizenship in 2014 and also had been totally tax compliant ever since leaving the US before 1970. Filing in ones’ last year of tax forms is necessary to complete this “work” of providing all information before you turn away and shut the door. The IRS is going to want to see your filing from Jan 1, 2014 through the date BEFORE you swore your oath of renunciation. The 8854 is just a documentation/confirmation that this is your last tax filing and that you HAVE complied with all the obligations to complete the work of separating yourself from being a “tax citizen”.[Remember, being a “tax citizen” is a separate issue/status from being a “State-Department” citizen).
If you do not file this 8854, you could (will?) be seen as still a “tax citizen” and will have trouble when next year’s forms don’t come in to the IRS. Being a “Covered Expat” (which is what you will become if you don’t document – – to ‘FORM-NATION – – that you HAVE renounced AND HAVE BEEN compliant with all tax obligations), is NOT a status you want to achieve
@Cal;gary 411:
Regarding your post of 15 Apr, may I have your opinion on the following situation:
– Relinquished US citizenship; Dec 1993 by acquiring Canadian citizenship “with intent”; accordingly, considered herself not to be a US citizen as of Dec 1993, when there was no requirement to inform anyone and no 8854 existed;
– Appeared before US consular official Mar 2014; official approved and sent docs to Washington with a recommendation to accept; now awaiting the CLN.
– Did not file US tax return 1991-2005, but when the media hit the panic button, filed income tax 2006-2013 even though considers herself not a US citizenship; the filing was a result of bad advice given (inter alia) by HR Block; did not file for 2014, assuming that the CLN will be approved.
Here are the questions, subject to the foregoing info:
1. In your opinion, should US tax returns be filed for 2014?
2. If and when the CLN arrives and assuming a positive reply (i.e., relinquishment as of Dec 1993), should the 8854 be filed too?
Thank you.
dt804a,
Perhaps your answer can be found by opinions here by some professionals: http://isaacbrocksociety.ca/relinquishing-acts-performed-prior-to-2004/ — and by others than me here at Brock.
As I’ve given my opinion before, but it is only my opinion (I am only a retired 71 year-old mother of a son who cannot renounce US citizenship and have no expertise, only opinions) as it what makes sense to me that if you became a Canadian citizen in 1993 (before 2004) with the intent of thereby losing your US citizenship — you lost that US citizenship by that act (and should not, of course, been filing any US tax returns, etc. — but you were intimidated into it by H&R Block). It looks as if that filing did not prohibit your claim to your 1993 relinquishment so 1993 should have been the end of any further US tax compliance and reporting obligations as you were no longer a US citizen (again, only my opinion based on what I see as common sense).
[Different than your situation, I renounced as I could no longer claim my becoming a Canadian citizen in 1975 as my relinquishment even though I was told at that time I would thereby be losing my US citizenship. I was intimidated by what I was told by a US border official and by the first cross-border accounting firm I went to for advice (it took three firms to finally get all my filing done correctly). By those acts, I had entered myself back into the USA tax compliance machine.]
As you can see, I am the last one really to be able to give advice to anyone — I can only pass on my own mistakes for someone else hopefully not to make. In my April 15th comment, I was passing on the information regarding the 8854 from Phil Hodgen to someone who had renounced (born in the US as a dual citizen like Gwen and Ginny), someone who, because she was *born dual*, would not be able to claim relinquishment unless she had taken a government job that would qualify as a claim to relinquishment of that acquired *dual* citizenship.
If the CLN is approved, there is no need to file for 2014 or for the 8854. This is interesting because one question they ask when determining intent is ‘do you file US taxes’?
She should ask for her money back at H & R Block. Maybe she could threaten to expose their incompetence.
@Portland
Of course she needs to file for 2014 – the year she gave up US citizenship. She needs to file up until the day she renounced.
@Polly, she gave up her citizenship in 1993 in a relinquishing act this is not renouncing.
The tax returns she filed 2006-2013 where filed in error by a person who was neither a USC nor a US Resident. She should have neither filed but the firm she used clearly provided advice in error and an errors/omissions claim should be sought.
@dt804a, I agree with Portland on this matter but would like to take it a step further.
I will assume that you had no tax payable so you were out of pocket solely the fees that you paid to HR Block.
You should prepare yourself in advance for the USG asking you for a 2014 return and/or for your CLN being held up because you filed 2006-2013.
The good thing is that the forms you filed do not have a statement that you are affirming you are a USC!!!
If I was you, I would prepare a lengthy letter to the manager at HR Block stating that you were not a USC during this period and that their staff advised you inappropriatly. Further you should demand reimbursement of all fees paid to them and that if payment is not made within thirty days that you hand this matter over to local legal counsel.
Why is this important?
1. You are laying the groundwork with something that you can send the USG if they ask about 2014 or want to audit 2006-2013.
2. If there is a problem with getting your CLN you have paper work to back that up.
3. The compliance industry must, repeat must be called on the carpet and forced to pay up for mistakes they are making to enrich themselves.
I implore you to take a strong position with HR Block and you may get some $$$$ that you can donate to ADCS.
@George
If she relinquished then I dont get why she is paying back taxes at all…..
@Polly, because of bad advice from a firm who should know and understand the laws – HR Block. She also hasn’t said she paid any taxes, only filed when she didn’t need to due to HR Block’s incompetence.
@ Portland PLC
“She should ask for her money back at H & R Block. Maybe she could threaten to expose their incompetence.”
Now, wouldn’t that be an interesting case!!!!!! Perhaps there is a lawyer who might take this on pro-bono? Any ideas out there? Why should she be out of pocket for all those years of profound abuse due to unprofessional practice?
@Medea
That is such a CRYING shame! She goes to the “experts” and pays for their good council – and then they steer her completely wrong! If they have any integrity at all, they should pay her money back and apologise. Has she told them?
@Polly, I agree. I’m with George in thinking she should go back to them and complain, demand her money in fees back with interest.
H&R Block owes dt604a way more than a simple refund of the fees paid. They owe her compensation for damages and the pain and suffering due to their bad advice. For God’s sake, they told her she must file US returns even though she was neither a US citizen nor a US resident.
The problems H&R caused for this poor woman are far worse than hiring an incompetent mechanic or inexperienced carpenter. And yes, that incompetence needs to be exposed. A cross-border expert on another forum regularly refers to them as “the H&R Blockheads”.
@Maz
Sadly Maz- I think she can consider herself lucky if they reimburse her at all.
To the many IBS readers who reply to my post of Apr 19 – thank you.
For the record, the case I presented is not mine, but that of a “US Person” I am trying to help.
Good for you.. Looks like she isn’t a “US Person”