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
“Zed” not “zee”.
Happy Canada day!
Made my day Benedict Arnold. Nice to start the day off with a laugh.
I haven’t yet managed to read through all 652 previous comments though I’ve been through much of the site – please forgive me.
On the one hand it seems only logical for me to relinquish: I haven’t lived in the US since I was 19, I lived in one country for 30 years and a second (present) country of residence for four years, where we are due to obtain citizenship in the next few months; my US tax reporting which I’ve been doing for the last dozen years costs an insane amount for the fact that I have no US tax liability, and on top of everything I am losing my job due to FATCA!
[This last incidentally is without relation to my status as a US citizen – the foreign bank I work for is seeking to reduce its exposure because of the new tax/compliance environment (i.e. IRS bullying of FFI’s) and is closing many of its foreign offices. Less personal perhaps but still I put the blame squarely on the US government.]
On the other hand I ask myself if it is not foolish to relinquish. Maybe I’ll need to go back to the US for an extended period? (I’ve been there three weeks in the last ten years.) Maybe FATCA will be repealed and the US will go over to residence based taxation? (When pigs fly.) Maybe it will all go away and I can just put my passport in a drawer and forget about the IRS? After all, with all the millions of expat Americans only a tiny percentage are relinquishing/renouncing. Would they even bother with me, as my bank accounts don’t even qualify for FBAR reporting? Do I really want to be an ex US citizen?
I go back and forth on this even though I’ve seen my own bank kick out US citizens (admittedly accounts of much greater size than my own). There is a great temptation to put it all down to fringe group paranoia and ignore the problem, which is great until something goes majorly wrong.
Of course this whole site is about people in similar situations but I’d appreciate any words of wisdom and encouragement.
@shunrata,
Welcome to IsaacBrock.
To relinquish/renounce is a personal decision. I moved to Canada as a new bride in the early 60s. In 1972, I chose to become a Canadian in order to fully participate in the country. At that time, I was told by the U.S. Consulate, that my loss of U.S. citizenship was ‘permanent and irrevocable’. Unfortunately, I did not receive a CLN and as has been evidenced on IBS, the U.S. government is trying to reclaim its former citizens and in fact, all it’s citizens living abroad.
Thus, I have spent the last 18 months, researching and finally going through the steps to apply fora a back-dated CLN. To my joy, the CLN was received last week.
On a personal level, I would find it difficult if not impossible to have allegiance to more than one country. But I do realize and in fact I do know of many who choose to be dual citizens. That is THEIR choice. If that is their choice and they want to obey the law, then they must file U.S. tax returns and FBAR forms until such time as the US changes its citizen based taxation.
My suggestion to you is to read and then read some more. But ask yourself, do you want to continue to ‘pay homage’ to a country you no longer live in, and probably will never live in again.
I am more than happy to pay my share of taxes to Canada. After all, they have educated my sons, covered healthcare for my whole family, provide a small pension to me and perhaps someday, if the need arises will provide care fora me in a facility. But I will most definitely NOT pay tax in any form to another country.
Hello shunrata,
Welcome to this site from me as well. You have a lot of research to do before you can make your decision on renouncing (as you are not eligible to relinquish, having a US passport (even if expired) and having filed US tax returns). You know about US tax returns. I just want to make sure that you know that having to file FBAR (Foreign Bank Account Report) is the aggregate, the TOTAL, of all of your accounts in the country in which you live (and have lived for the requisite number of years, which will be more than four (in the country in which you now live). These will also include joint accounts with your husband / partner, etc. The country I live in, Canada, will not collect FBAR penalties for any ‘US Persons’ in Canada, whether dual citizens or permanent residents of Canada. I don’t know the position of the country in which you live on that matter. Hopefully the total of all of your “foreign” (even though not foreign to you as they are held in the country in which you live) do, in fact, fall under the $10,000 TOTAL amount for all accounts you hold.
Everyone has a different risk tolerance and an emotional connection with the US. Some will want to return to the US to live sometime in the future. For them, renunciation or relinquishment will not be an option. For many of us who have made our lives in other countries, the answer is very different. I take the US threats very personally and it is, first and foremost, a matter of principle for me. http://isaacbrocksociety.ca/2013/06/16/an-irs-ovdi-ordeal-with-a-happy-ending-an-opt-out-success-story-as-told-by-not-that-lisa/comment-page-2/#comment-395998.
There are so many different scenarios. You have started your research at a good and supportive place — with input from all walks of life, all professions and circumstances. Read, read, read and then read some more. There are many good resources links at the right and at the bottom of the Home Page, http://isaacbrocksociety.ca/.
No one can answer what might be best for you (and your husband / partner), but we are here to answer any questions you might have as you do all the research needed to make a truly informed decision.
Good luck and, again, welcome.
@Shunrata, forgetting the IRS as a US citizen probably isn’t the best strategy. The US has massive fines for non-compliance and is aiming for your foreign bank or maybe even your foreign employer to report your foreign income directly to the IRS by 2016 no matter where you live or work. So, if the Foreign Earned Income Exclusion is dropped in 2017, Americans abroad will have to pay double-taxes or get kicked out of their banks as “tax cheats”. It might not (hopefully) become that bad, but it has been worse in the past and there are currently very few indications suggesting that the situation might improve.
It pretty much boils down to if you really want to move to the US to live or work. If so, then you’ll have to do what the US expects from you. From my experience, life in the US can be nice or difficult. There is no guarantee that a move to the US will be a good choice.
@ Shunrata,
It looks like you have the option of relinquishment as you say haven’t obtained citizenship in your country of residence yet. I think Calgary missed that line (or I’m misreading) – overall I think her comment is excellent advice.
You’re right — I missed that important detail. Thanks, pacifica!
shunrata, if you become a citizen of another country NOW, without any more connection to the US (like renewing that US passport or filing another US tax return), you will be able to relinquish if that is what you intend by becoming the citizen of a new country.
I’ll add this for you as well as a link to important information that will pertain to you if you choose to become a citizen of the country where you now reside (or another) and thereby relinquish your US citizenship. Don’t worry about this step now (and I don’t want to alarm you but it is something that you need to be aware of) — you should acquaint yourself with the final IRS Form 8854 to make sure you completely sign out of the USA and are not deemed a covered expatriate (which you’re apparently not … unless this final step is not completed). This step will not apply to all who can relinquish in earlier years but, as I see it, it would pertain to you: http://isaacbrocksociety.ca/2011/12/16/did-you-relinquish-before-february-6-1995-then-you-did-not-have-to-inform-the-state-department/
Sorry to have led you astray a bit. Good luck with your particular decision.
If you decide to try and relinquish here’s the blog that will tell you what it’s all about and how to do it:
http://isaacbrocksociety.ca/2011/12/12/relinquish-dont-renounce-if-you-can/
and this will also help:
http://isaacbrocksociety.ca/2011/12/16/from-the-archive-did-you-relinquish-here-are-some-proofs-that-the-state-department-uses/
As others have said, it’s a very personal decision. Like you, I haven’t lived in the States since I was a teenager and when I found out I was supposed to have been filing tax returns for all those years I was shocked. But the main problem for me was the threat of closure of our bank accounts if we didn’t allow our bank to pass our bank info on to the IRS. It really made me sit down and think about staying a citizen or not and what I would actually get from keeping it. Much as I love my birth country, the answer was precious little – a passport renewal every 10 years was all. It also made me look at my attitudes and world viewpoints and I realised that my outlook on life is no longer American, but British/European. So in the end it wasn’t too hard a decision for me to give it up.
I don’t know whether you’re based in Canada or elsewhere, but you can find out how people have fared at various embassies around the world when relinquishing/renouncing by reading about their experiences here:
http://isaacbrocksociety.ca/wp-content/uploads/2013/06/Consulate-Report-Directory-2013.06.12.pdf
Wow – thank you all!
Maybe I should have been more specific (it was late at night after many hours of reading).
We should be able to relinquish as we will be making a declaration of loyalty to the great Commonwealth of Australia. The Australian policy on FBAR is not yet settled as far as I can tell but it seems most countries are caving to the US which I still can’t understand.
Every time our clients sign a “non-US person” declaration (yes, everyone has to do that now when opening or joining a bank account or doing any other paperwork) I say to myself “lucky you!”. It’s still pretty hard for me to even comprehend emotionally what the US govt is doing to its citizens.
Re FBAR, my understanding is that the $10,000 is aggregate – i.e. if I have minus accounts that is part of the picture. In which case on account of bank loans I have effectively zero if not less :-/
And as I said I have been filing tax returns for over ten years even though I owe nothing. This just strikes me as stupidity on the part of both the IRS and myself….. good for my accountant though, he makes a good living from all these US expats.
I think I have to realize that the situation is likely to get worse and not better, and if I have the chance to exit gracefully now I should take it.
Thanks again for the welcome, will read more thoroughly and through the links as well
Shunrata
Hi again, Shunrata.
You might want to get further advice regarding filing FBARs. I was told NOT to report bank line of credit, credit card balances — so they would not be subtracted from the banking and investment accounts you hold to reach the aggregate amount of $10,000, at which you have to file FBAR, and one for each of you* (but I stand to be corrected). Here is a link that might better explain. http://taxes.about.com/od/preparingyourtaxes/a/TDF90221.htm
Also, of course, http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/FAQs-Regarding-Report-of-Foreign-Bank-and-Financial-Accounts-%28FBAR%29
Perhaps someone better informed can confirm this for you.
I don’t want to be the bearer of bad news, so someone I hope can refute what I have said here. If you find you do have to / should have filed FBARs all along, you should also know this:
Also,
Does your ‘making a declaration of loyalty to the great Commonwealth of Australia’ mean that you have become citizens — or does it mean that you have a government position for which you had to make a declaration of loyalty, both of which should, I believe, work for your claiming relinquishment.
When you say ‘the Australian policy on FBAR is not yet settled’ — do you mean FATCA or do you mean FBAR, which Austrialia, hopefully, would likely already would have some kind of policy. (There is a new FATCA form, already required even before FATCA takes effect — Form 8938, which is largely duplicative, but not completely, of the FBAR and has higher $$ thresholds and reportable accounts. Here is an IRS comparison: http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements)
This stuff is not easy to understand, but we must understand it to best protect ourselves and our families from the over-reach of the US into other countries.
@calgary, thanks for the information – bad news or not 🙂
I actually did file FBAR this year which made me EXTREMELY uncomfortable as I wonder what they plan on doing with the information. This was the first year that I hit the $10,000 limit at all, not even taking credit card balances etc into account. (We’re poor migrants….) I just thought afterwards that it might have been a mistake and felt badly about giving them the information. So no problem with non filing there.
We will be becoming citizens in the next few months so hopefully 2013 will be the last year I will have to deal with all this. I asked my accountant about the IRS Form 8854 and he just asked, “What, are you going to have to give up US citizenship?” and didn’t really address the question. I have the feeling he hasn’t dealt with it much if at all.
@SwissPinoy, I hadn’t thought enough ahead about what’s going to happen with my employer in 2016 – assuming I get another job… This whole business is making me sick to my stomach, I think I will get over my emotional attachment to the US quickly on realization that they really are out to get me. 🙁
@Medea Fleecestealer thanks for the personal account. I don’t really feel American – actually when I look at what’s going on over there I keep saying to myself, “This isn’t the country I grew up in”. I don’t really feel Australian either, if nothing else my accent gives me away 🙂
By the way I don’t have a partner but I do have both minor and adult children (all US citizens). The adult ones I have talked to a bit about the problem but at this point they choose to ignore it. Most of them have never even been to the US and just don’t see it as relevant to them.
@Tiger, happy to hear it all worked out well for you. I understand what you’re saying.
I suppose the US, like any country, decides what the rights and responsibilities of citizenship are, and we have to deal with it even if we think it’s unreasonable. So if I want to say “yes I want to be a citizen but no I don’t want to deal with the insane tax system”, that’s not an option. As I can’t change the law, the choice is take it or leave it, and in my circumstances I have to admit leaving it is by far the most logical decision.
This Canada Day is special because I will be fully Canadian once I renounce on Sept 5. I will be clean and Canadian. None of this dual citizen (and taxation) BS. Although we turned off the TV when Harper spoke in Ottawa today. I am hoping that Justin can be the next PM.
@Shunrata, yes exactly. If you don’t feel at one with your country then why keep it’s citizenship? My sentiments were the same, it isn’t the country I grew up in so many years ago.
Do bear in mind that just obtaining Australian citizenship won’t automatically lose the US one. You have to make it clear by declaration, etc, that you are gaining Australian citizenship “with the intent” to lose the US one. Both Australia and the US allow dual citizenship so you have to make your intent clear. That’s why making a video of the ceremony when stating your intention is a good idea as it gives you proof to show to the US embassy if you need it. The first link I posted tells you how it can be done. You can then go to the US embassy and show them if needed that you became an Australian citizenship with the intent to give up your US one because with your declaration you have undertaken an “expatriating act”.
@Medea Fleecestealer,
From my reading here and elsewhere, it seems that in taking the pledge with the intent of relinquishing my US citizenship I do effectively lose my US citizenship at that time, as that is when I am committing the relinquishing act. As far as I can tell I am just informing them of the fact.
However I do realize that I will have to convince the US government of that, and it seems that in contrast to previous times when “stripping” a person of their US citizenship was a punishment, these days they try to hold on to you…
Does the video help? Are they interested in seeing it?
Yes, you are. Years ago when the US didn’t allow dual citizenship that would have been enough and you could have used your Australian citizenship papers to prove that you’d lost your US one. But with dual citizenship recognised by both countries you may need more to convince them. That’s why having a video of the ceremony is good. I think it really depends on how often US embassies around the world are having to deal with relinquishments and renunications. If they have been doing a lot, then simply turning up and telling them may be enough, but if your nearest embassy has never dealt with a relinquishment before then having as much info and proof that you’ve met the criteria for relinquishing with you will help get over any hurdles they may try and erect. We’ve had reports here that some people relinquishing have known more about how the process works than the embassy staff and they’ve been able to use that knowledge to their advantage.
Read the two links on relinquishing that I gave you and also check on the embassy you plan to use in the Consular Report link. That’ll give you an idea of how they’re dealing with relinquishments if IBS have had any reports. Then take it from there and ask us any questions you might need clarification on.
Hmm, wouldn’t Shunrata have to renounce (as opposed to relinquish) if he/she has been filing taxes and FBARs up till now?
@notamused, I now have the golden opportunity to relinquish as I should be getting Australian citizenship in a few months. After that I will be very careful not to do anything that will give them an excuse to keep me.
I will have to do more research on the forms for the transition though. I have a general idea what is necessary.
Will I have to file FBAR for 2013 if I am not a citizen by the end of December?
No, because he/she isn’t yet an Australian citizen and is required by the US to do her tax filings. Once he/she relinquishes with the intent to give up US citizenship then they’d only need to do any further filing that might be required to wrap the tax side up, which may only be something like an 8854 form if they’re up to date.
I’ve told my wife. Don’t claim our children on the tax return, File it straight. Spouse Filing Separately. The US government hasn’t been notified of our children’s birth and have never been registered with the US Consulate. We’re not going to apply for any children’s benefits…through the US. The cost is too damned high and we just want the shackles GONE. My children are CANADIAN…and that is final. The USA can kiss my “fat” behind!
@Medea Fleecestealer
By the way I’m a she 🙂
I did check the list of consulates, there were two reports from Australia. There aren’t that many Americans around here it seems. The embassy in Canberra lists about 77,000, but I don’t know where they get the figures. I’m thinking the staff doesn’t deal with this very much so I will really have to know what I’m doing when I contact them.
Is there any value in informing the consulate of my intent to relinquish before getting citizenship in my country of residence? Has anyone done that?
It would be hard for them to deny it’s an expatriating act if they received notice in writing beforehand.
On the other hand it may be best to present them with a fait accompli.
I would mention it when you request the necessary paperwork from them to make sure you get the right forms. You should get from them a copy of the “Statement of Understanding Concerning the Consequences and Ramifications of Relinquishment or Renunciation of US Citizenship” and also get another form – Form DS-4079 entitled “Request for Determination of Possible Loss of United States Citizenship” – where you fill out info about yourself and your expatriating act.
There’s no reason why you can’t or shouldn’t contact them, tell them your plans and get the forms before you do your Australian citizenship. Again it helps to establish that you are doing this with the intention of relinquishing your US citizenship. If you can do it by e-mail rather than phone, then you can make paper copies of your e-mail correspondence as additional proof to add to the video.
@shunrata
“Will I have to file FBAR for 2013 if I am not a citizen by the end of December”
My understanding is yes, for the part of 2013 before you cease to be a USC/USP you have to file all the requested forms – Fbars, Fatca, 1040s etc.
I have a query about that: After ceasing to be USC/USP the social security nr. is cancelled.
Does this mean that one has to apply for a TIN nr. as a non-resident alien in order to (IRS) correctly file the part year 2013 and to file the exit tax form, or can one still use the social security number which would be valid up to the dater of renunciation/relinquishment?
@The_Animal – good thinking, lucky children