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
@Westcoaster –
From the 8938 instructions, under “Who Must File:”
“If you do not have to file an income tax return for the tax year, you do not have to file Form 8938, even if the value of your specified foreign financial assets is more than the appropriate reporting threshold.”
@ WestCoaster
From a 2012 article I kept on file:
“Married SI living abroad filing separate Form 1040 from his spouse. The married SI who is a “qualified individual” for purposes of Code Sec. 911 during the relevant year must attach a Form 8938 to his separate Form 1040 if the aggregate value of the SFFAs exceeds (1) $200,000 on the last day of the year, or (2) $300,000 at any time during the year.”
That’s all I’ve got. If anything has changed I’m sure someone here will let you know. If there’s something more nuanced about 8938 in a final filing I’m sure someone will let you know about that too.
@ WestCoaster
There you go, iota had the answer and it’s a good one … straight from the IRS instructions.
Wouldn’t you just think they could say the same about FBARs? (No need to file FBARs if not required to file 1040)
What a load of pointless work that would save.
@iota, @EmBee
Thanks! Unless my accountant voices really strong objections, I’m only going to file the 8854 (no date range at the top of page one, so it defaults to the full tax year of 2016) along with a note stating this is the original document, not a copy, as I did not file a tax return as I was below the filing threshold.
And it is for sure going in the mail today via Canada Post Xpresspost USA, which includes tracking and delivery notification. If I don’t get delivery notification by May 31, I’ll ask my accountant to e-file for the 4868 extension but otherwise — touch wood! — I will consider this done and dusted.
Thanks again to all you for the help and support, it means more than I can say.
Well done, Westcoaster. Sleep well tonight. 🙂
@ WestCoaster
Same from me … sleep well. 🙂
@WestCoaster
Accountants seem to have this theory about closing the books and filing that last return. it’s not necessary if you are under filing threshold. they just think it’s a tidier end but it’s not and in some cases can make things worse. One just needs to be able to prove they were under the filing threshold just like any of us have to prove anything on our tax return. not that they will ask for proof.
I am not surprised the IRS agent wasn’t helpful. last night i called after reading some stories here to see if I can find out my status of my last return. i got confirmation my return was received and that’s pretty much it. was told no news was good news and no further help was given in terms of confirming that the form 8854 was one of the forms in my file.
One thing I did learn is that dual status returns take longer to process and pretty much all paper returns go through an assembly line of checks. if you made an error that they can correct they will correct it and if not they correspond. and none of them will answer questions about the form 8854.
Well done to getting through this and try to put it out of your mind now and celebrate your freedom!
Yay! I posted it all off, so now I can finally relax!
Thanks again for the help and support!!!
Phil Hodgen likes to see returns filed even when below the filing threshold because filing them starts the statute of limitations clock. If nothing is filed, then the clock doesn’t start and, at least in theory, the IRS could come back in 5, 10, 20, etc years and ask about those returns. I’ll leave it to you to decide how much or little of an issue that is. I’d also add that given that the final dual-status return does *not* affect your non-covered status AFAICT, declining to file it when below the threshold is IMO likely not a big deal (as long as you’re comfortable with that).
@tdott – “Phil Hodgen likes to see returns filed even when below the filing threshold because filing them starts the statute of limitations clock.”
He does. His accidental filed only the 8854, however. She seems to have been a spirited young woman with a mind of her own – maybe it was her decision not to file returns. Or maybe even Hodgen decided the IRS would be hard put to find any grounds for questioning a teenager with no income at all. 🙂
https://hodgen.com/category/expatriation-chronicles-of-an-accidental-american/
@ tdott
As long as you hang on to your Canadian tax forms, upon which are recorded your income and attached to which are your T slips plus Notices of Assessment to back up what that income was, I would not worry about the IRS coming back at you in the future. Even if you don’t hang on to this proof that you did not have income high enough to trigger the need to file a US 1040 then you can always get copies from the CRA. Phil Hodgen can like whatever he wants but going above and beyond the IRS requirements for filing is not necessary. This is the “reduction of paperwork” in action. The IRS should count their blessings for not having to file away unneeded forms.
Anybody know which line on 8854 RRSPs go on? I’ve read a couple of different views. I keep having little panics at different steps in the fnal filing, until I figure things to the point I’m comfortable. Now I’m fretting that, although the 4868 form was sent in for the extension, I really don’t know it they received it, so maybe I should really aim for June 15th.
@canoe
“Anybody know which line on 8854 RRSPs go on?”
We put them in the Section V Schedule A balance sheet, distributed based on content of the RRSPs.
For example, if you have 10k in foreign company shares (line 3 of the balance sheet) and 15k in US company shares (line 2), plus 5k cash (line 1).
And you put in aggregate totals for the various values. For example, if you have $120 in your chequing account, then you would put $5,120 in line line 2.
Hope this makes sense!
@canoe
Caveat: Keep in mind that mine was the first 8854 my accountant did — so, I’m probably the last person who should be answering your question, because mine might have been done completely wrong! (For my own sanity, I should unsubscribe from this thread. After all, mine’s been sent off and there’s nothing I can do to change the contents at this point.)
@canoe
I found an example Form 8854 online that I used as guidance for my form 8854. I saved it on my computer. This example just happened to have a RRSP (and it was entered on line 19 (other assets) with RRSP written on the dotted line next to it. This was an example from a CPA.
However I have seen people mention in forums that they entered it on line 9 of part V.
I don’t have a RRSP so didn’t file any of these ways. This is just what I have seen while preparing my own form.
Canoe. The safest place is line 19. Other assets write in RRSP or RRIF.
West coaster. Breaking it up just confuses things. But don’t obsess.
All. Don’t ever mention the word trust
All. If you are well below 2 MM US$. it probably makes no never mind.
I also noted that both line 9 (a trust) and line 19 (other) have been used for RRSPs on 8854. I selected line 19 largely for safety, as DoD says, because I guessed that i would probably not be harmed if I called my RRSP an “other”.
If however I selected a line indicating that my little RRSP is some kind of a trust (who knows?), that would mean that I must actually understand the meaning of the word “trust” and the different types of trusts — non-grantor trust vs. whatever etc. and the uncertain consequences of owning one.
My accountant did fill out the final year 1040 and 1040NR but would not fill out the 8854.
My RRSP consisted of ETFs and a little cash, so I put the cash in with other bank accounts cash, line 1, and the rest in line 5 marketable stock and securities, trying to keep things as simple as possible.
Everyone, thank you for your thoughts on my RRSP question. I hadn’t thought about treating my little RRSP contents separately. I had read advice to use line 7, but they don’t fit pensions for work performed ouside of the U.S. Also, other suggestions to use line 9 (the T-word). It’s interesting, @UK Rose, that you found line 19 used in that example. I was pretty much settled on using line 19 other assets for the reasons you both have said, @DoD and @Stephen Kish, and I’m glad for your thoughts. I think 8854 is the last major item to finish.
@canoe
The fact that that there are so many possible ways to answer your question is a reflection of the fact that the documentation on the 8854 is far from complete or clear!
That said, I tend to agree with DoD — as long as your net worth is well below $2 mill, I don’t think it makes much of a difference. The main thing is that you’re declaring the asset. I personally used line 19 to put down the value of my car and household goods, but there are no real guidelines that I could find (I just asked here and that was the recommendation I got).
“I personally used line 19 to put down the value of my car and household goods, but there are no real guidelines that I could find (I just asked here and that was the recommendation I got).”
I should clarify: When I asked where to declare the value of my car and household goods, the rec from fellow Brockers was to use line 19. I never thought to ask about RRSPs, since it was easy to use lines 1, 2, and 3 (and logical to my way of thinking, which actually means we probably did it wrong, ha ha; however, unless I hear back from the IRS, I’m not going to worry about it).
@WestCoaster — Yes, my $2000 old car is going on line 19, too. I am nowhere close to that $2M.
@canoe
If you are using Line 19 for the RRSP and other things like the car. remember to attach a statement describing what’s included.
the instructions in the form 8854 also say “Line 19 -Attach a statement describing and listing the total value of any other assets you have that aren’t included on lines 1 through 18.
My Line 19 was used for personal property and had a statement attached saying as such.
Until something official is written in the instructions, I doubt there is a right or wrong way to enter the RRSP and like many things, it’s open to interpretation. And as others said, as long as everything is included somewhere.
@UK Rose, yes, thanks, I saw that about the statement and will be doing that.
Here’s some good reading from John Richardson I just found again and re-read on the 8854 balance sheet and non-covered expatriates:
http://www.citizenshipsolutions.ca/2016/10/22/the-internal-revenue-code-vs-the-irs-form-noncovered-expatriate-and-the-form-8854-balance-sheet/