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
@calgary
Phil Hodgen states that if you are a dual from birth then you are exempt from covered status whatever your net worth as long as you attest to filing the last 5 yrs of returns and have lived outside the US in your other citizenship country for 10 of the last 15 yrs, 5 being the last..
@calgary
Just reread your post.Sorry, didn’t see ‘late’ proviso.
Yes, if 8854 filed LATE, then your covered regardless of dual status.
Will govs protect you? Who knows. I am sure banks won’t, and will freeze accounts if they are hit with a 30% withold.
Correct, the attestation is with Form 8854, which then would be related to statutes of limitatons for other filings. I don’t think there is any kind of statute of limitation for the actual form 8854.
Phil Hodgen’s *Are You A Covered Expatriate?*: http://hodgen.com/chapter-4-are-you-a-covered-expatriate/
Help for late filing (possibly): http://hodgen.com/form-8854-help-for-a-possibly-late-filing-expatriate/
Will government protect us? Who knows? Canada states it will not collect for the US for Canadian citizens; i.e. wouldn’t cover permanent residents. Yes, the banks are a whole different layer of injustice in their own protection from 30% withholding, but they won’t actually collect on behalf of the IRS — just try to force us to do so to be able to bank with them in our local *foreign financial institutions*.
@EmBee, thanks for the toque tip. 😆
AND I filed the 8854 LATE. 😀
The nasty letter was a companion to the nasty written statement provided with my renunciation documentation. I take all opportunities to say FU to the US government.
Steven Jacobi has some good content on Twitter: http://isaacbrocksociety.ca/media-and-blog-articles-open-for-comments-part-3-of-3/comment-page-13/#comment-7128703, including:
Question for you,… Sorry if it’s been asked before or if it seems dumb.
I’m dual US/Australian. My children are born here in Australia. My daughter is 18 in June and my son will turn 12 in a few weeks. My husband is Australian.
I’m up to date with my tax filing requirements, with the exception of 2015, which I’m working on at the moment.
I want to renounce asap. I understand I’ll need to contact the Consulate or Embassy and arrange an appointment, or multiple appointments.
I believe once I’ve filed 2015, and it’s been finalised, I can make the appointment. Please correct me if I’m wrong. I also believe that I’ll be liable for any period during the calendar year from beginning of year until renouncing is finalised. Again, correct me if I’m wrong.
My question is this, I’ve never registered my children with the US consulate, so they are, so far, ‘off the radar’. (Although we did just go to Hawaii in December. Me entering on my US passport and the rest of the family on their Australian passports. Had zero problems.) Do my children need to renounce? Do they need to be tax compliant? Their bank accounts hold less than AUD$2000 in each of them.
I don’t really want them ‘entered’ into the system, so to speak. But am curious if they need to do something or anything to keep it that way.
I do fulfil the residency requirements for them to take on citizenship through me.
I hope this isn’t as clear as mud in my questioning.
Thank you in advance.
@Jennifer Kohen, welcome to IBS.
You don’t have to be up to date with your tax situation to be able to renounce, they’re two different things so go ahead and make that appointment asap. You’ll need to file for any part of the year that you were still an American up to your renunciation date at the embassy/consulate – at that point it is finalised, even though you’ll need to wait for the State Department to confirm and send you a CLN. You’ll also need to file an 8854 form to finish up your tax obligations so all figures for that are worked on your worth the day before you renounce. This has to be done by June 15th of the year following your renunciation – so if you renounce this year you have until June 15th 2017 to get the 8854 form filed.
Do nothing about the children unless they want to become American citizens. As you say they’re not in the system so there’s no trace of them as far as the US/IRS is concerned.
@JenniferKohen
Now you are liable for 2016 too. You are liable until the date you renounce.
1. You can make an appointment to renounce now, you don’t have to wait until you’ve filed for 2015. Next year, you’ll need to file your final returns: a 1040NR, attaching a 1040 for the part-year period from Jan1 2016 through the day before your renunciation oath. You’ll also need to file Form 8854, to exit the US tax system cleanly.
2. Since your children were born in Australia and are Australian citizens, there’s no reason on earth for them to claim US citizenship unless, when they’re adult, they choose to do so. My children are adults, born in the UK. They hooted with derision at the idea that they could be required to file US tax returns. They were right. And it’s very unlikely the IRS really wants to receive yet more pointless zero-tax-due returns.
I first heard of citizenship-based taxation, FATCA, and FBARs last July. I renounced in October, and today I’m posting my 8854. The best $2350 I ever spent. 🙂
Good luck with the appointment. Sometimes it’s quite a wait.
From Daniel Kuettel
Rand Paul, Rubio, Bush and maybe Cruz. Paul has a track record of supporting expats, Rubio has a balanced platform and supports RBT and Bush pledged to make changes for expats. Cruz needs to clarify his platform better.
@Jennifer, “I do fulfil the residency requirements for them to take on citizenship through me.”
You are looking at this the WRONG way.
Your soon to be adult children would need to PROVE that you met the residency requirement.
IF you did not voluntarily affirm or co-operate that you met the residency, would ANYONE be able to prove that you did meet the residency? Likely NO.
I have run across people in the EU who as part of their estate planning are swearing affadavits with their lawyers that they did NOT meet the US residency requirement with respect to their children born in the EU. I do not know if the statements are true or false.
@IOTA, can you describe your OMG moment to us from last July?
@Jennifer, “I want to renounce asap.”
You sound like someone who had US Roots, tried to stay in compliance yet today you want out as of yesterday.
Can you tell us how you got to that mindset and how you feel about renouncing.
@George – I’ve had many thoughts about FATCA and citizenship-based taxation since I first heard of it last July. I was quite alarmed at first, but after copious reading on here and in the various forums and on the IRS website, I concluded (1) that as small-fry I was not likely to be of much interest to the IRS, and (2) that it was time to renounce. (I thoroughly enjoyed R-Day!)
It’s all quite interesting.
So the affidavit is tucked away with the will, ready to be given to the executor once the inevitable occurs, thus hopefully relieving the executor of any responsibility for looking into the issue of whether the beneficiaries are US citizens? Given that the executor is ultimately the one on the hook for ensuring that due taxes are paid (at least in Canada), I’d imagine that it would very much depend on the executor and the size of the estate as to whether the affidavit would be taken at face value. For a large estate that resulted in exceeding the unified gift and estate tax exclusion I’d wager the executor would think long and hard about ignoring the possible US tax implications, unless the executor and beneficiary were the same person. For estates not exceeding the limit, it probably wouldn’t matter as there would be no tax due in any event. So, I’m not sure I see the affidavit having any practical effect – or am I missing something?
If the deceased was no longer a US citizen, why should US estate tax be due?
@iota
I assumed the deceased was a US citizen, because otherwise I didn’t see any real purpose for the affidavit. Maybe I’m missing something.
@iota
If the deceased was a covered expat when he renounced and if his kids were deemed US citizens then their inheritance would be taxed at the highest US tax rate ( currently 40%.) If they are not US citizens then the only estate tax due would be that of the country where the estate is situated. If deceased was not covered, then even if the kids were American, the estate would only be taxed in the country where it was located, according to those laws.
It may be me that’s missing something. I assumed it was about deceased renunciants, but maybe not.
@heidi – that’s what I thought. Thanks for confirming. No need for my beneficiaries to worry then, as I’m not a covered expatriate.
@Iota, such a document would be useful to the descendents so that they DESCENDENTS were freed from being USC.
Though come to think of it, I do wonder, purely as a layperson, whether an executor in, say, the UK, really could be legally required under UK law to pay the IRS 40% of the estate of a deceased UK citizen, without court proceedings.
If I were a beneficiary in such a case I would definitely be taking legal advice.
@George – Sorry, I don’t follow. Could you explain? Are you thinking of a case where the deceased was at time of death a) a US citizen; b) a former US citizen; or c) a former US citizen who was deemed by the IRS to be a covered expatriate?
I am guessing there might be two things at play here. I may have the fact scenario wrong however.
It may be that once the will is probated in the US the tax would be skimmed from the estate- which basically acts like a court order or a function of court order and tax law. Or it may be that the estate lawyer must hold that amount in escrow on behalf of the estate/ executor to be paid when the estate winds up.
But yes, legal advice prevails. I am not qualified in US law and there are variances of course. That is the situation in my jurisdiction.