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
Watcher:
“Form 8854 is where you do this.”
If you file Form 8854.
“the choice of ‘voluntarily’ waiving treaty rights on 401k withdrawals, or paying full US income tax on the 401k balance as if taken the day before renouncing. ”
There’s no need for the quote marks around the word “voluntarily.” Waiving treaty rights can only be voluntary. The US can’t treat you as having agreed to waive treaty rights as a punishment for not agreeing to waive treaty rights.
The USC owner of the pension has the choice, pre-renunciation, of
a) taking the one-time tax hit of moving the funds to the residence country, where they’ll thenceforward be taxable only by the residence country, or
b) leaving the funds in the US.
If they choose to leave the funds in the US, in order to avoid the one-time tax hit, the funds continue to be subject to US withholding, but the owner is entitled to claim treaty withholding rate. If they decide instead to sign a US tax form promising not to claim the treaty rate, they’re just not making a very sensible choice, IMO.
“not filing an 8854 make you a covered expat in the eyes of the US. And a lack of W-8CE means the 401k is fully taxable ”
The 401(k) is always fully taxable by the US; the rate of withholding, however, may be modified by treaty, right down to zero.
“the US … is in a position to enforce the exit tax against your 401k.”
Maybe. That’s the disadvantage of having US income. The US certainly isn’t in the position of being able to prevent a NRA from claiming tax treaty benefits, if the NRA is eligible for tax treaty benefits under the relevant treaty. (i.e., isn’t suspected of treaty-shopping, ML, tax evasion, etc)
“feel free to live in your own constructed reality”
I do indeed feel free to say what I think, as, apparently, do you. 🙂
Let us agree to differ.
@ Kabby; I would still describe myself as “of American background”, I am just not a •US citizen•. It is a legal distinction, and while renunciation relieves me of certain “privileges” such as unrestricted entry. it does not erase one bit of my personal and family history. I can still go there, if I wanted; no visa required. I could even buy property there (as a foreign owner). What has changed is my status re the US government. Many persons on this site relinquished or renounced with sadness mixed with relief, a swirl of emotions. It was essential to make a reasoned, logical decision and not be captive of my emotions.
@ Duchesse,
You describe my feelings very well too. I relinquished about 40 years ago, so there was no pressure to do so, as there is today, such as FATCA and I didn’t know back then that the US had citizen-based taxation, FBARs, etc. I just didn’t want/need the US citizenship and I saw relinquishment as terminating a contract, that’s all. It felt like a neutral experience, neither happy nor sad.
As you wrote, among other great observations, “it does not erase one bit on my personal and family history.” That’s how I felt at the time and continue to feel — I am who I am, one aspect of which is being a person who has very good memories of growing up in the US in the past, experiences which remain a part of me, but have no contractual relationship with it in the present and future.
heidi and plaxy. Why not exchange your email addresses and carry on in private? You are making it difficult for us to separate the wheat from the chaff.
@Portland
Watcher and TDott and I have merely tried to explain how if one has a US private pension 401K etc then one has to carefully consider avoiding covered status as pension will not qualify for any tax treaty with resident country. It will be taxed in the US and also would also be liable for taxation in ones country of residence. It affects us, not Plaxy.
Plaxy seems to dismiss this as unenforceable.. It is extremely important for those in this position to make up their own minds.
Anyone who is in this position can read the rules here from the Brock archive.
http://web.archive.org/web/20121023090722/http://renunciationguide.com:80/Exit-Tax-on-Renunciants.html
I will say no more on this subject
@Kabby and Duchesse
One piece of paper can never take away any part of your life, who you are, your history, your values, your American background, your life.
Be content with your decisions going forward but look back without remorse. Good luck.
“Plaxy seems to dismiss this as unenforceable.. ”
Here’s a link to my comment expressing my conclusion on the answer to the question I asked (whether there are circumstances which might make it advisable for a renunciant to file Form 8854 and comply with its requirements:
http://isaacbrocksociety.ca/renunciation/comment-page-393/#comment-8530806
“It is extremely important for those in this position to make up their own minds.”
Indeedy.
I agree with portland that the discussion has gone on too long and too chaffily. I’ve nothing further to add, so I’ll renew my 8854-silence vow and (aim to) say no more. 🙂
@Duchesse: Congratulations!
@Watcher: I agree with you completely!
@Portland: I love your last suggestion!
@plaxy: Did you read Portland’s last suggestion?
Lol
@ Heidi
I think you did exactly the right thing to prevent having an over-taxed retirement.
@ Duchesse
I add my congratulations, if they’re wanted. (I remember Stephen Kish didn’t want any when he renounced.) All exiting emotions are completely understandable but you didn’t shed your American identity, you simply dropped the burden of the USA’s control over your life. My husband felt pride and joy when he became a Canadian citizen (late 2013) and pure relief when his USC relinquishment appointment was over (early 2014). The arrival of his CLN was a celebration for both of us. Thankfully, I won’t have to face giving up my Canadian citizenship … unless an Ice Age comes extremely rapidly and we are forced to flee to someplace close to the equator. 😉
@ Kabby
“One thing I know is I cannot live with the perpetual cloud over my head …”
Just repeat that to yourself whenever those emotional wobbles occur and all the best to you in the journey ahead. 🙂
? Does this story involve an abuse in regards to embassy official attending to a renunciation?
Scaremongering / incorrect information? ”callous and mean’ comment? What was offered was an initial phone interview, that was declined, so a single interview.
He asked me if I had any family in the USA, and I said yes my family of origin are all in the USA. He said so how would you feel about not being able to go to the USA anymore. I said, not even to visit? He said yes you would not necessarily have the right to visit anymore. I said, I could get an esta like any other British citizen. He said, not necessarily.
And he said it after I’d paid the fee! None of this was what I was brought up to believe America was all about.
@JC
Did you or the person concerned get his name?
If nothing else you should expect to be given the truth and some courtesy.
I would send a letter reporting this behavior to the State dept.
I
@JC
On further reflection, after renouncing we do give up our rights for unfettered access to the US. I have an Iranian/Swiss /American friend who would like to dump her American citizenship, but if so, under present circumstances she would lose access to the US and her family there. Who knows which group the US will ban next!
After I renounced (in London), I was told that there was no point applying for an ESTA, as this would be declined (I’m a British Citizen). The official told me that I’d have to apply for a visa instead. However, 36 hours after I’d renounced, I applied for and was granted an ESTA. I travelled to the USA without incident on my British passport in October (the border control asked if I’d ever had a US passport, and waived away my offer to show him a copy of my CLN).
@BirdPerson
That’s interesting, if he had to ask you then it sounds like he doesn’t have that infomation to hand on his computer, unless of course he was being confrontational. I have traveled multiple times on an ESTA and never been asked a single question except how long was I planning to stay, but I do have a British birthplace on my British passport.
Heidi
Actually what he said, when I confirmed that I’d possessed a US passport previously, was ‘I thought so, there couldn’t be two people with that surname.’ (My last name is quick unusual.) So I wonder if something the checked. Anyway, I have a US birthplace.
@BirdPerson
Curious…..
I would be interested to know what info they do have on renunciants, sounds like they do have some and of course if they have the ESTA info, it’s all there.
I thought you may have tipped him off with an American accent! 🙂
Actually after 31 years spent in the UK, I find that Americans think I sound British!
@BP
After spending 35 yrs in the US most Brits think I sound American!
@EmBee: Thanks! IMO saying “Congratulations” to a renunciant/relinquisher is appropriate because the experience takes a chunk out of most of us. Sorting out options, going through the emotional part, and putting one’s affairs in order is an achievement, even for persons who use lawyers and tax accountants (which, aside from one consultation with Max Reed, I did not.)
Now, two solely Canadian parents have adult children who are US citizens without ever having lived a day in the US— isn’t that odd?
Thank you for your support all along, EmBee.
“He asked me if I had any family in the USA, and I said yes my family of origin are all in the USA. He said so how would you feel about not being able to go to the USA anymore. I said, not even to visit? He said yes you would not necessarily have the right to visit anymore. I said, I could get an esta like any other British citizen. He said, not necessarily.”
I was warned that I wouldn’t have the right to enter the US after renouncing, which I already knew and didn’t care about. (Later it dawned on me that from my point of view, I hadn’t lost a benefit but gained one: the right to apply for a visa (or visa-waiver) on the same basis as any other UK citizen.
I was also warned several times by the anxious-looking official that if I wanted to visit the US before I received the CLN, I would need to contact the Consulate to make special arrangements, as I couldn’t be issued with a visa or visa-waiver until the CLN had been processed.
At that time, there was often a long delay between loss of citizenship and documentation of the loss. My guess: the State Department would probably be on dodgy diplomatic grounds if it barred an innocent citizen of a visa-waiver country for no good reason; and bureaucratic incompetence is not a good reason. I doubt if I would have had any trouble getting cleared to enter if I’d wanted to.
I was given different information.
I was told to keep my US passport which would be exchanged for my cln when I collected it from the Embassy.
When I asked which passport I should travel on should I need to visit the US (in case of an emergency), I was told I should continue to use my US passport.
I was told that this is the written State dept procedure that Embassies have been directed to use but it sounds like some still go their own way.
.
“I was told to keep my US passport which would be exchanged for my cln when I collected it from the Embassy.”
Mine was expired.
I said:
“I was warned that I wouldn’t have the right to enter the US after renouncing, which I already knew and didn’t care about. ”
To me, this sounded like being informed (again) of the consequences of renunciation. The State Department covering its back against any subsequent accusations of injustice.
To a reluctant renouncer – someone who wouldn’t be renouncing if it wasn’t for FATCA, for instance – it might sound like a threat.
I suspect this happens a lot: US laws and procedures and regulations aimed at catching wrongdoers, are written in such a way as to catch the innocent along with the non-innocent, but only pursue those who can be pursued.
Effectively shifting the burden of proof to the caught.
As with FATCA/IGA. Or denying a former citizen from a visa-waiver country access to ESTA clearance without any reasonable basis.
The result (it seems to me) is that very often nowadays expat US (dual) citizens feel like they’re more in danger than they actually are.
A very very confusing situation.
@Duchesse
Congratulations on renouncing and I know for some it’s not a day to party and celebrate and is full of mixed emotions before or after. Even saying congratulations may not be the right word but I congratulate you on making a decision. I will say that dealing with the facts logically is always the better option than being emotional about this decision. For most renouncing has become a practical solution. We are still the same people with the same history and heritage and a piece of paper does not erase that. Go forth and enjoy your life and don’t look back but only forward.