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
“And why is a New York attorney spending their time posting on Isaac Brock?”
Because he cared, though you might persuade him not to. Some of his past postings have been immensely helpful. 1% of anything can be atypical, and that includes 1% of lawyers.
“And why is a New York attorney spending their time posting on Isaac Brock?”
Also could be looking for business like the tax condors. The reference leads to a New York attorney website, Caplin and Drysdale. And if you press the menu button up comes a description of their business which provides the following:
“full range of tax, tax controversy, and related legal services to companies, organizations, and individuals throughout the United States and around the world. With offices in New York City and Washington, D.C.”
PatCanadian says
July 27, 2018 at 7:06 pm
“And why is a New York attorney spending their time posting on Isaac Brock?”
Also could be looking for business like the tax condors. The reference leads to a New York attorney website, Caplin and Drysdale. And if you press the menu button up comes a description of their business which provides the following:
“full range of tax, tax controversy, and related legal services to companies, organizations, and individuals throughout the United States and around the world. With offices in New York City and Washington, D.C.”
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@PatCanadian— This I believe is @andy05. I think he’s a bright, articulate individual who adds much to the discussions here at Brock. I’d like to thank him for elevating the discussions here and welcome him to keep posting. Thank you Andy!
Regards,
BC Doc
https://isaacbrocksociety.ca/2016/11/03/solving-u-s-citizenship-problems-with-special-guest-andrew-grossman-montreal-monday-december-5-2016/
@BC_Doc
I’m not saying he shouldn’t be allowed to post at Brock. And I do not follow Brock as much as I used to. Just raising some questions.
However his link did go to a tax attorney website and the menu led me to further questions: https://bit.ly/2AfQIeH
My US problems have already been solved. I did consult a US attorney on one issue and he clarified any questions I had on trust reporting and compliance. I do find the complexity and expense involved with US tax issues is out of this world.
@BC_Doc and @PatCanadian
As is well known (or could be, to anyone who puts my name into a search engine) I have been retired for more than twenty years and while I write articles on law such as:
https://works.bepress.com/andrew_grossman/1/
http://www.nyulawglobal.org/globalex/Fatca_Citizenship_Based_Taxation.html
http://www.uniset.ca/microstates/5IntlInsolvRev1_ocr.pdf
http://www.uniset.ca/microstates/3UCLAJINEL53.html
I have not practised law for money for many years, and (although you could not tell it by checking my registration at http://ww2.nycourts.gov/attorneys/registration/index.shtml I am registered as retired and before I could represent anybody I would have to pay the attorney registration fees.
In fact I did not practice law in the courts very long, and that was mostly bankruptcy law. NYU pays me $125 or $150 per article for writing pieces like the one linked above for their GlobaLex series. That about covers my PACER and telephone costs. I do a bit of tax work, including preparing complex tax forms, for my immediate family and for nobody else. I am a trustee (as I think I m mentioned) for relatives’ estates. PatCanadian’s problem was solved, no doubt about that, he said so in his first posting. But the advice he got was inexact and lurkers ought to know that there are questions they should ask.
I live in London and Montreux. If you do a search on IBS you should find YouTube links to two discussion sessions I had with John Richardson. I see that BC_Doc found one of them.
I have nothing to gain by posting, I was just trying to be helpful. if you don’t like my linking to sites that have nothing to do with me, but which I thought supported the point I was making, then the delete button is your friend. I am not on IBS very often but sometimes there is a matter that somebody I am trying to advise pro bono might be discussed here and there is no point in my reinventing the wheel.
My relationship to Canada, for what it is worth, has little or nothing to do with taxes. I pay tax on a small QPP pension I get to HMRC, not to IRS or to CRA or Revenu Québec even though I keep a Québec address and DL from when I was a “frontalier” and a US accommodation address for other purposes.
And for @Norman:
The person who won was Mollie. She got to spend her last months with her family, and got control back of her money and her N.Y. and D.C. apartments — less what was effectively stolen from her by the D.C. court system and its cronies. If you read her obituary you would know that she was one of the (few) great women economists, and whilst her Poverty Index is obsolete (she was the first to admit it after she retired) and Washington politics being what they are a new one may not be introduced, it was and is a contribution to making life bearable for the deprived in America. (I’m not reviewing the history of that, so forgive me if anything I just wrote is wrong — the gist is correct.)
For @PatCanadian: No good deed ever goes unpunished. Or, on the Internet, free of gratuitous attack.
@andy05
Not attacking just asking questions. I’m somewhat removed from Brock and don’t post here often anymore. Glad your intentions were good.
@andy05:
Thank you for the clarifications. Please do not be too harsh on readers who question your intentions. Your July 27 post starts with “I am a New York attorney”. This might sound cool at a cocktail party but here at Brock I would imagine that many readers are suspicious when they see such an introduction. I think “I am a retired New York attorney” would have been better. 🙂
Anyway, thank you for your contributions. I intend to read your article at
http://www.nyulawglobal.org/globalex/Fatca_Citizenship_Based_Taxation.html
– formerpatriot
Re the “totalization agreement”: I worked in the US as a USC (now a former USC) for about 2 years so have about 8 quarters.
So, my questions are:
1) Is there a minimum # of quarters one has to have to be able to benefit from totalization?
2) Does anyone have any idea how much benefit I could expect to see? Am I looking at a couple of dollars a month or something that could make an actual difference?
TIA
I found Andy05’s recent comments about the determination of the residence (and therefore the tax liability) of trusts extremely interesting because they bear directly on my personal situation. I’ve already experienced how one state can unfairly (in my opinion, anyway) claim tax jurisdiction over a trust merely because of the residence of a trustee even though the trust was created under the laws of different state.
That the IRS might consider a trust to be a foreign trust due to the residence of a trustee never occurred to me. My questions on this subject are as yet unanswered but at least now I know what questions I need to to ask the people that I DO pay to handle such matters. I don’t have a problem currently but its now obvious I’m only one family member’s death away from a potential nightmare.
Thank you, Andy05. Please keep posting whenever you think you may have something useful to add to the discussion.
Partial answer to tdott’s question:
From https://www.ssa.gov/international/Agreement_Pamphlets/canada.html
“Benefits from the U.S––If you do not have enough work credits under the U.S. system to qualify for regular benefits, you may be able to qualify for a partial benefit from the United States based on both U.S. and Canadian (CPP/ QPP) credits. However, to be eligible to have your Canadian credits counted, you must have earned at least six credits (generally one and one-half years of work) under the U.S. system. If you already have enough credits under the U.S. system to qualify for a benefit, the United States cannot count your Canadian credits”.
– formerpatriot
My previous post answers tdott’s first question.
His second question is more difficult to answer, for various reasons.
Among other things, there is the Windfall Elimination Provision (WEP).
I have read a few things about the WEP and I must confess that I do not understant how it works.
A concrete example: Mrs A worked in the USA form 1982 to 1993 and she accumulated more that 40 credits. Her 2015 US Social Security statement says that her projected SS benefits are about 970 dollars per month at full retirement age. It takes for granted that she has not paid Social Security taxes since 1993 and it assumes that this will continue to be the case until she retires. However, in 1993 she moved to Canada. She has been working in Canada (for a Canadian company) and she has been contributing to the Régime des Rentes du Québec since 1993. She will be retiring in a few years. What effect will the WEP have on her projected US Social Security benefits of 970 dollars per month? How much will it be reduced?
– formerpatriot
Totalisation benefits aren’t subject to WEP.
tdott (8 credits) and myself (28 credits) will be invoking the totalization agreement. But what about Mrs A? She has more than 40 credits. She qualifies for US Social Security benefits without invoking the totalization agreement. Won’t she be subject to the WEP?
Probably. I wasn’t affected by WEP so I know little about it, other than the fact that totalisation benefits are not affected.
I believe there’s a calculator on the SSA site that takes WEP into account when predicting benefits. I don’t have a link, but googling should find it.
Totalisation only determines whether or not one is eligible to receive SS benefits. The actual amount of SS benefits is determined by how much the individual paid into the US system. By definition, if its necessary to use totalisation to make the 40 credit qualifying minimum, the actual benefit will tend to be relatively small compared to what would be available if one had paid in to the US system for their entire working life.
In my case I had 36 credits but the monthly cheque is small because the amount that I paid into the US system was small. Chances are, Formerpatriot’s (at 28 credits) will also be small and tdott’s (at 8 credits) will be smaller still. I haven’t a clue what their formula for calculating benefits is. Compared to other branches of the US government, the SSA seems pretty user friendly.
For most of us, the time that we were paying into the US system was many years ago, we were still early in our careers and hadn’t reached our peak earning years, and our monthly contributions were relatively small. I now consider it to be free money because I long since forgot I had paid into the US system all those years ago.
Okay, my son and I are now doing some early planning.
The situation:
– He was a dual citizen (Canada + USA) since birth.
– He lived in the USA from birth until age 4.
– He hass lived in Canada since age 4.
– He renounced his US citizenship on July 25, 2018.
– He is up-to-date with his IRS filing obligations.
– His only source of income for 2018 (and all previous years) is his salary working for a Canadian company.
– He has no income from US source.
Next Spring he will file his final tax return with the IRS.
Question: Which one of the following statement is correct?
A. He files the 8854 and a 1040 in which he reports his income from January 1 to July 24.
B. He files the 8854 and a 1040 in which he reports his income from January 1 to July 24 and a 1040NR in which he reports 0 income from July 25 to December 31. (Can you file both 1040 and 1040NR???)
C. None of the above.
If C, please clarify.
Thanks.
Strangely enough, the correct answer is B. ( you can’t make this up)
The IRS conflates citizenship and residece. To them a citizen is a resident.
Google dual status return. remember to substitute non citizen for non resident.
He files 8854 with values up to the renunciation date.
He does not file 1040 as a tax return. Instead he fills it in with income up to the day of renouncing, writes ‘Statement’ and ‘Dual status return’. clearly across the top. He doesn’t sign it.
He transfers the info to a 1040NR. tax return. He is allowed 1 full personal exemption.
Write dual status return across the top and sign it.
A copy of the return and statement go to Austin.
A second copy of each and the 8854 go to Philadelphia.
It’s all nuts. My friend renounced early in the year and her world income befor R- day was below any conceivable threshold; so she didn’t bother filing the 1040 or 1040 NR- only the 8854.
They are so screwed up that if he did A in error, it probably wouldn’t matter 1 whit.
As I understand it, the last tax return will be a 1040NR reporting American income from July 25 until Dec 31 (zero in this case). A 1040 form will be attached as a schedule covering all income from Jan 1 until July 24. The 8854 form will be attached to the return as well as sent to another IRS address in Philadelphia.
Your status at the end of the tax year determines how you file. Since he is a non resident and no longer a citizen the filing is done with a 1040NR.
Hope that this helps.
@Formerpatriot
https://www.irs.gov/individuals/international-taxpayers/taxation-of-dual-status-aliens
“less what was effectively stolen from her by the D.C. court system and its cronies.”
Yes, which is exactly why she didn’t win, she only lost less than the criminals wanted her to lose.
“whilst her Poverty Index is obsolete […] it was and is a contribution to making life bearable for the deprived in America”
While in comparison, IBS exists because the US refuses to make life bearable for the deprived outside of America.
One more potential problem.
I was born in Canada. I am a Canadian. I have never held any other citizenship.
I worked in the USA (for a USA employer) on a Green Card for nearly 7 years. In 1993 I moved back to Canada for a new job (with a Canadian employer). We sold our house in the USA (modest capital gain) and we made a complete, definitive, final move to Canada. No income from the USA since I moved back to Canada. When I filed my 1040 for the year 1993,I attached a nice letter in which I explained my situation.I included a form 8822 (Change of address), a Schedule A (Itemized Deductions), a Schedule B (Interest and Dividend Income of about 600 dollars), two separate Forms 1116 (Foreign Tax Credit), a Form 2119 (Sale of Your Home) and a Form 3903-F (Foreign Moving Expenses). I reported the income from my US job for the first 6 months of the year and the income from my job here in Canada for the last 6 months of the year. I did not do the “official renunciation of my Permanent Resident status” and I did not do the 1040 + 1040NR + 8854 approach. Heck, I do not know if the 8854 existed back then. A few years ago when I became nervous about my situation, I called the US Consulate and I told them my story. They said something like “They took away your green card at the border in 1993? Don’t worry about a thing”.
It is in my nature to worry about things.
Should I worry about this green card thing?
In December 1993, while entering the USA, my Green Card was confiscated. I never filed with the IRS after that. I have not no income from US sources since I moved back to Canada.
Fast forward 25 years. It’s 2018. Now I read all these scary stories. I should have done this. I should have done that. The IRS could claim that I am still a permanent resident of the USA because I never told them that my green card was confiscated. Some cross-border lawyer has told me that they could fix my “problem”.
I’m thinking like this: I was honest with the IRS. I told them everything when I filed my 1993 tax return. They never wrote back to say “Wait a minute mister, we are not through with you!”
Goodness gracious, you are a worry wort.
Forget about it, enjoy your freedom. You did everything you possibly could.
Don’t trust the lawyer- you don’ have a problem.
“In December 1993, while entering the USA, my Green Card was confiscated.”
I think you did everything you had to do. Besides, Form 8854 didn’t exist then.
“I’m thinking like this: I was honest with the IRS.”
Lucky you did that in 1993. Since 2002 it has been illegal to be honest with the IRS. In 2005 they even made it official, IRB 2005-14, though they never told me about it and I found it accidentally. Returns have to be processable not accurate. If you’re honest with the IRS now, you get penalized.
“It is in my nature to worry about things. Should I worry about this green card thing?”
Do you not find that needless worry gets worse and worse the more you worry? It’s not nature but habit.
The IRS doesn’t have any power to enforce US tax law on a Canadian citizen who lives in Canada and has no US income or assets. No worries. 🙂
Back to my son. He is in the process of breaking all ties with the USA. He has files 1040 + 2555 for the last 5 or 6 years. No need for 8938 since he is well below the threshold of 200K. As I mentioned in a previous post, he renounced his US citizenship on July 25. He’ll be doing his final 1040NR + 1040 + 2555 + 8854 next Spring. However, he has never filed FBAR. Oups! He has been above the 10K threshold for the last few years (but well under 100K). I wonder if he should bother late-filing a few years of FBAR. I am leaning towards late-filing for 2014 to 2017 and give as reason for late filing the usual “I did not know I had to file FBAR”. I expect it won’t really matter one way or another but just to be safe…
Any thought?