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
@ Heidi, thank you for your comment, and Fred B’s. Yes, I’m planning to renounce this year. I’ve been filing U.S. tax returns since I had my first job many years back, and after I moved to Germany I continued to do so, so there are no gaps. Once you’re in the system, it makes no sense to discontinue. One year the IRS aledged I didn’t file eventhough I did (they must have lost it). I re-sent it and other documentation to prove my point but that didn’t work either; penalties and interest were already considerable so I had to resort to a “first time abate” to get them off my back. Since then I send everything I send them return receipt requested, or electronically. And, although my opinion on the matter is strongly opposed, I’m up to date on the FBARs. So what I was looking for was someone who doesn’t charge an arm and a leg to guide me through the process, look over my returns for the last five years, do the last return, and do the 8854 & dual return which are filed the year after renouncing. I will look into Turbo Tax, and maybe H&R Block. Nonetheless, if someone at IB knows of a reasonably priced, reputable firm that specializes in the renunciation process, I’d appreciate knowing that, too.
@ELise
I was also up to date with filing fbars etc but my US based accountant had never met an 8854, so I decided to use one here, an enrolled agent from the Embassy list for the last filing, BIG mistake, they were absolutely useless, I had to correct at least ten items before submission and it would have been better to do it myself, which I more or less did. That was 5yrs ago and all quiet.
So if you can, do.
H&R block have had some bad reports from some here on IBS.
I believe someone used a firm called expat tax services with good reports.
@ E Lise, I’m not sure that you can’t simply do it without an accountant. If you’re up to date with your filing what good would it be for an accountant to look over the last 5 years since they’ve already been filed? The 8854 is fairly simple, you can download and study it at your leisure (www.irs.gov then search for 8854 to get the form and instructions). Then you just need to do the same 1040 form you’ve done before plus possibly (some debate about whether you need this one or not) a 1040NR for the outstanding part of the year you renounced in.
Of course if it will give you more peace of mind to consult/hire an accountant then by all means do so. I was lucky and only needed to do the FBARs, but even so not knowing anything about the US tax system I opted for an accountant to do the checks for me before I filed them (paper copies back then) via Streamlined as I wasn’t up-to-date with my filing. They also did the 8854 form and final FBAR for me. Cost around CHF4,500 in total iirc, but for me it was worth it.
@ELISE
Here is the link to a tax preparer I believe some here used, although I can’t attest to it
https://www.greenbacktaxservices.com/customer-reviews/
My $ 3,000 was not worth it, but it did carry the added signature of a US tax preparer, for what that was worth.
@E Lise
I agree with Medea Fleecestealers advice. If you’ve already been doing US taxes for decades, no professionals (and certainly not HR Block!) will be able to do it better than you. (You may even end up spending a lot of time explaining to them what you’ve done and what’s required…). The only form which you haven’t filed already is 8854, which looks intimidating, but actually isn’t. Some sections may be skipped, and a plausible best-guess on your part is all that’s really necessary. The main thing is that it gets filed at all. (Just aside, I’m surprised you have both US and German citizenship. Generally that’s not possible, yours must be an exceptional case.)
@not amused
Probably dual from birth. Born in the US to German parents. Jus sanguis Germany, jus soli US.
@E Lise – I also would say it’s better to do the 8854 yourself. You’re the only person who can decide what information about your non-US assets you’re prepared to share with the IRS once you’re no longer a US citizen.
If you do it yourself you can fill it in sensibly. By the time you’re completing the 8854, you’ll no longer be a US citizen; so you should act like the NRA you’ll then be, and tell the IRS about all US assets and income, but decide for yourself how/whether you want to list your non-US assets/income on the 8854. Would be my (personal, non-professional) advice.
@Heidi
That makes sense. Thanks.
@Heidi,@Medea Fleecestealer,@notamused,@iota
Thank you for your helpful and encouraging replies! You are right, although I did use an accountant for my tax returns the last years, I should be able to do the renunciation myself since the returns were all accepted by the IRS in the respective tax years. And if I do have a question or an issue, I can still contact someone for help. And yes, I am a dual German-U.S. citizen per “jus sanguinis, jus soli.”
@E Lise, you can always ask questions here if you have any queries, plenty of others here have filled in the forms and may have some insight to help guide you. You could also look at the last few pages of this thread to see if there’s anything there as well.
http://isaacbrocksociety.ca/expat_tax/
@Elize.
Someone’s mantra here(sorry I can’t remember whom) quoted “don’t tell them anything they don’t already know”
Good luck and happy renunciation.
E Lise. It really couldn’t be much easier. You are up to date on returns and FBARs.
Don’t look back at your old returns. They have been accepted so reviewing them would do no good and could be harmful.
File your returns for 2016. Renounce and rejoice. By mid 2018 file 1040 NR for the stub of 2017 and 1040 for the beginning of the year. Phil Hodgen has detailed advice on his blog.
Since you are ‘dual from birth’ you don’t even have to fill in the balance sheet on the exit tax return. And don’t tell them anything they don’t already know. Good luck.
If you feel the need to contact an IRS enrolled agent, there is a referral service based in Holland called americansoverseas.org. They won’t charge you but you will pay the CPA or EA instead. Might be worth a call. This is not an endorsement.
DOD and Elize
Of course, Elize is a dual from birth and would be excused the exit tax( even if she has over 2,000,000 in assets) having lived no more than 10 of the last 15 in the US,. the rest being in her other citizenship country.
http://www.renunciationguide.com/expatriation-and-tax-details-of-current-law/exit-tax-on-renunciants/.
I think they will have little interest in you.
@Heidi, but only if she files the 8854 form. If she doesn’t, she becomes a covered expatriate.
I have to think those who have suggested doing the final return yourself are giving good advice. If you have been filing for years without problems, it is likely your final filing will not be significantly harder, and asking a preparer to do it could result in problems such as bad advice, or the pinpointing of previous minor errors and filings of 1040Xs. If your last few returns resulted in zero US tax because of exclusions and credits and you conscientiously reported all income and accounts, then a similar approach to your final filing of a 1040NR dual status return with a dual status statement for the part of the year prior to renunciation date, and the 8854 and FBARs should wrap things up.
I filed my final paperwork in February. I did it myself using past returns as a guide. I then had the last return checked by a reputable firm before submitting. I had actually completed them correctly except for a few very minor changes. The important thing is i kept control over when i filed and what i filed.
Before last year i never filed a return in my life didn’t know i needed to. So i filed all the 5 years together through an accountant to renounce it was so stressful the interrogation over assets and income, the lack of control over filing and even lack of clarity.
I did a lot of research before filing this year and understood everything on my tax return.
It is very possible to do it on your own especially with similar prior years filings.
It’s been almost 8 weeks now and haven’t heard anything back and i know they arrived. I take no news as good news.
@UK Rose
I filed final returns myself after renouncing. Never heard anything back and it’s over two years now. I keep copies and proof my paperwork was received. Yes when it comes to the IRS no news is good news!
Hello fellow Brockers!
I am about to embark on the arduous journey of expatriating from the U.S. My first question is simple. Is there any standard form or phrase I should use when sending my initial email to CanadaCLNInquiries@state.gov?
My best guess is “I am interested in learning the steps needed to be taken in order to renounce my US Citizenship.”
Am I sweating the small details too much?
Thanks so much for this wonderful site!
@valentina, welcome to IBS and yes you’re sweating the small details too much.
Just say you’d like information about renouncing your US citizenship. And honestly, why contact the State Department at all? E-mail your nearest US embassy/consulate for the information. They’ll provide you with information and it may be on their website too. Have a look here at the info from my Swiss US embassy here in Bern.
https://ch.usembassy.gov/u-s-citizen-services/citizenship-services/lon/
The process is the same usually and quite simple. Get the necessary documents from the embassy/consulate, make an appointment to renounce, send the documents and supporting material back to them, go to the embassy/consulate on the appointed day, check details on documentation, pay fee of $2350 and then stand in front of the Consul/Vice Consul and swear/affirm the Oath of Renunciation. Sign Oath and Statement of Understanding of Loss of Nationality and that’s it. Really. It’s that simple.
If you have any outstanding US tax matters to sort out you can deal with them either before or after you renounce. The embassy/consulate has nothing to do with that side of things except to remind you that you may have tax matters to finalise.
@Valentina,
That e-mail address is set up to send automatic replies, so the wording is not critical. The sentence you’re thinking of sending sounds fine to me. FWIW, I wrote Please send me the instructions/forms for renunciation of citizenship.
I got a robo-reply four minutes later, which has a lot of information in it. If you have any questions about it, this is a good place to ask. Also there’s some useful general info from the reports on specific consulates in the Consulate Report Directory, bearing in mind that procedures and things can change over time (we’ve been collecting reports for five years).
@Medea,
Re: “And honestly, why contact the State Department at all? E-mail your nearest US embassy/consulate for the information.”
Good advice generally, but it works a bit different in Canada. CanadaCLNInquiries@state.gov isn’t the HQ of State Department, it’s just the e-mail address we have to use here in Canada. We used to be able to contact the individual consulate (or the embassy) right off the bat, but now they’re using this centralised system to initiate the CLN process here. They don’t have any details about renunciation/relinquishment on the embassy’s and consulates’ websites here, just a paragraph telling you to e-mail that address.
Thanks for the prompt reply from both of you! 🙂
I have a question in regard to Medea Fleecestealer’s statement:
My situation is pretty simple. I am a dual Citizen who was born in Canada and have never made an annual salary over $70,000 Cad in my lifetime. Despite having no pensions, RRSP, house, property, land etc I am still resigned to the fact that I will have to accept my “Covered Expatriate” status since I haven’t filed any U.S. in over 20 years. (I stopped filing when I moved to Canada over 20 years ago)
Due to an inheritance I have a little less than $100,000 CAD in my bank account and once I learned about the FBAR requirements a couple of years I was afraid if I took the honest route and caught up I would be faced with the draconian penalties of having to pay 50% for each year which would not only wipe out my savings but also leave me in debt.
But I digress. Getting back to the Covered Expatriate issue, there is a question in form 8854 that asks “Do you certify under penalties of perjury that you have complied with all of your tax obligations for the 5 preceding tax years?” I obviously haven’t which automatically makes me a “covered expatriate”.
I am assuming that it will not be acceptable to get my CLN in 2017, file all 5 years of back taxes before 2018, and then answer “yes” to the above question when I file my 8854 and last year of tax in 2018.
So that means if I want to avoid covered expatriate status I have to file 5 years of back taxes now in 2017, and wait to get my CLN in 2018, and then file my 8854 and last year of taxes in 2019. Is this assessment correct?
Is your head spinning yet? I know mine is!
@Valentina
The certification of 5 years compliance is on form 8854 attached to your final tax return. As long as you’ve filed those 5 years before you file the 8854 you’re fine. You can do all of the tax compliance after renouncing – though its probably a good idea to work up a draft beforehand so you know what the tax liability will be, especially if you’re anywhere near the net worth threshold.
OTOH, if you have no US assets and no plans to visit the US, I’m not sure covered expatriate status is really a problem. This is especailly true if you have little in the way of appreciated assets and “foreign” retirement accounts.
@valentina:
“Despite having no pensions, RRSP, house, property, land etc I am still resigned to the fact that I will have to accept my “Covered Expatriate” status since I haven’t filed any U.S. in over 20 years. (I stopped filing when I moved to Canada over 20 years ago).”
You can file the five years all at once, either through the Streamlined programme or just backfile. I hadn’t filed for 50 years when I heard about CBT, but I had no problems getting out. I renounced first (in 2015), backfiled the necessary years (in 2015), and then in 2016 I filed the 8854. Never heard a word. I might as well not have bothered.