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
Fillinchen:
“I have past US income because I worked remotely for a customer in the US for a few years. I never went to the US for work. It was minimal and I have since stopped. Do you also mean past income when you say “US income”?”
No, you needn’t worry about your past US income. If you currently had US assets/income (say for instance a property in the US which you were renting out, or investments from which you were receiving dividends, you might have to consider whether to sell them before renouncing.
If you have no current US income or assets, you don’t need the dual-citizen exemption from the exit tax. You don’t need to file any US tax forms at all in order to renounce.
Renounce and celebrate. 🙂
You might feel reassured if you email your local US consulate to request an appointment to renounce. They’ll send you the pack that tells you what you need to do. You’ll be able to see from that, just how easy it is.
There are no traps. I thoroughly enjoyed my renunciation day. (Not everyone does, of course, as some have mixed feelings about losing US citizenship, but I left the US long ago and didn’t have any regrets about renouncing.)
@Fillienchen, I doubt you’d be classed as dual from birth. I was similar. Born in the US of British parents who registered my birth with the British consulate a few months later. I had a tax firm do my few bits of US tax stuff (FBARs only) since I’d never had anything to do with US tax and didn’t want to make mistakes. They didn’t put me down as dual from birth. But I guess it just depends on how the IRS interpret it. It didn’t affect me since I had no income from any source at the time and didn’t come near any of the other covered requirements. If the IRS want to be strict about it then I doubt anyone would qualify unless a parent rushed to the relevant embassy on the day of their child’s birth and registered them.
My suggestion of a decision chart for US citizens living outside the US who have no current US income/assets and want to renounce:
1. Add up net worth. If over exit tax thresholds, go to 4. If not over exit tax thresholds, go to 2.
2. Are you currently compliant with US tax laws? If yes, go to 4. If no, go to 3.
3. Renounce and do nothing more.
4. Do you want to file the exit tax form? If no, go to 3. If yes, go to 5.
5. Renounce; in the following year, file dual status 1040NR, and Form 8854. Do nothing more.
@fillinchen
You are dual from birth. My kids are classified as that, they were born in tje US to British parents. We registered their birth with the British consulate a few months later. They have a British birth certificate .I I believe as long as they are registered before the age of 18, they are dual from birth. Of course they are entitled to citizenship of their parent ( jus sanguis) anytime after 18.
You can email the embassy and ask them to be sure.
@medea
They wouldn’t need to put you down as dual from birth as it wouldn’t be relevant unless you were at ‘covered’ level of wealth/income.
@fillinchen
Canadian dual rules/history
http://www.citizenshipsolutions.ca/2016/02/16/why-the-s-877ag1b-dual-citizen-exemption-encourages-dual-citizens-from-birth-to-remain-us-citizens-and-others-to-renounce-us-citizenship/
Not unless the owner of the assets agrees to be assessed for the exit tax. (Form 8854)
Not unless (a) the assets acquired since leaving the US are US-source; or (b) the owner of the assets agrees to be assessed for the exit tax.
Renouncing from the h$ll hole usa empire–was THE best thing we ever it. Joy and pride came over us as we renounced and left that massively fortified us “embassy”.
The us was a complete fraud of endless hu$tling and huckstering ; it is so refreshing not to be a ‘part’ of that toxic, abusive “partner” anymore.
Adios, and good riddance usa.
I too enjoyed R Day, and shot a triumphant fist aloft as I departed.
I didn’t have any problems with the consular staff though. They were amiable and professional. And the FBU helped me apply for my SS totalisation benefit, and notified the SS of my change of citizenship, and set up the monthly payments into my bank account. Very helpful.
Fillinchen:
“I have past US income because I worked remotely for a customer in the US for a few years.”
Be aware that if you were paying US social security taxes, you may be entitled to claim a US Social Security benefit when you reach retirement age.
I said:
“Be aware that if you were paying US social security taxes, you may be entitled to claim a US Social Security benefit when you reach retirement age.”
I should clarify: entitlement to a US Social Security benefit is not a US asset that you have control over (you can’t sell it or give it away) and it doesn’t need to be taken into consideration when deciding whether to file Form 8858, and doesn’t need to be included in your net worth calculation.
@plaxy
Thanks for clarifying. The amount was not much, so I wouldn’t even bother. I don’t even know how to find out whether I was paying US social security taxes.
I’ve been completely in the dark about everything and it’s all overwhelming.
@medea @Heidi
So, could it be either way – I could be considered US only until the actual registration (therefore not dual at birth) or born in US to alien parents like Heidi’s kids, could be dual at birth. I wasn’t entitled to a Canadian birth certificate, just a registration card. Not sure if even the US embassy would know and not sure if I can trust their answer. IRS might have a different opinion about it.
I don’t know how to properly calculate my assets. Also, I might inherit something sooner or later that puts me over the mark? I am very uncertain.
Fillinchen
I remember well all my own uncertainty in June this year…
But with all due respect, at some point you’ll just have to make a decision, namely do you file with the IRS or not?
If you decide to file, then it sounds like you need advice on how to do so.
If you decide not to send the IRS any paperwork, then you don’t need to worry about calculating assets etc.
Fillinchen:
“I don’t even know how to find out whether I was paying US social security taxes.”
You can ask your nearest Federal Benefits Unit to tell you whether you have enough credits to qualify for a benefit, if you decide you want to check it out.
My suggestion of a decision chart for US citizens living outside the US who have no current US income/assets and want to renounce – revised:
1. Are you currently compliant with US tax laws? If yes, go to 2. If no, go to 4.
2. Do you want to file the exit tax form? If yes, go to 3. If no. go to 4.
3. Renounce. In the following year, file dual status 1040NR, and Form 8854, seeking professional assistance if needed.
4. Renounce and do nothing more.
@Fillinchen
If you only worked for a US client for a few years, you won’t have accumulated enough to qualify for US social security, so don’t worry about that. I assume you were filling out some sort of US tax paperwork at that time? If so, it’s no big deal that you later stopped filing and dropped off the radar. For all the IRS cares, you dropped dead. Obviously they haven’t tried to find you.
Otherwise you likely don’t need to worry about exit tax or covered expatriate status or anything else. So no need to fuss about dual-at-birth status. Do a quick back-of-the-envelope calculation of your net worth. It’s not complicated. Generally you need to be fairly well-off for the exit tax to be a potential issue. If you are expecting a substantial inheritance in the near future, however, now is a good time to renounce, as it eliminates all future tax liabilities.
I don’t recall all the details of your case but basically the simple rules that have been laid out here can be trusted. If you don’t have any US financial exposure (no US assets or current/future US income sources) then it’s perfectly safe to simply renounce and ignore all the filing requirements to exit the US tax system. Follow the flow chart.
And relax. The IRS is almost entirely powerless outside US borders.
“If you only worked for a US client for a few years, you won’t have accumulated enough to qualify for US social security,”
If there’s a totalisation treaty, the years worked in both countries can be put together and used to qualify for a benefit under each scheme. I had very few US credits – wouldn’t have qualified without the totalisation treaty.
But it’s only a small benefit, and as you say, may not be worth the trouble.
@plaxy
Right, forgot about that. I have only three or four quarters of full-time work in the US; I can’t imagine that adds more than a few dollars per month to a Canadian government pension so I doubt I’d bother, when the time comes.
I had six, I think. The benefit doesn’t get added to your home-country pension; it gives you the extra credits you need to get a US SS pension.
@fillinchen
I do not think there would be any problem with you being considered dual at birth. If Canada considers you were entitled to Canadian citizenship , then it wouldn’t matter if you were registered on your birthday or 2 yrs later. You would always be considered Canadian when you were born. It is not an issue.
@plaxy
Ah, right. If I might ask, how much Social Security does one receive for 6 quarters of work in the US, topped up from outside with the agreement?
It depends on how much you actually paid in, I think. Never bothered to see how it was calculated. Plus your spouse gets a benefit equal to half what you get.
If you ring the FBU, they should be able to summon up your SS record and give you a prediction.
@fillinchen
I think what you have to acertain is if you decide to claim a dual from birth exemption from the exit tax, and file 5 yrs of back tax would there be any other taxable events in those back filings? If you are insure then you could consult a tax attorney, as you would have client privilege, not a tax accountant . Iay help in ypur decision making.
@fillinchen
If you are not ‘over the mark’ until you inherit something, then now is the time to leave. You don’t have to worry about an exit tax or even filing. They really won’t bother with you .
‘I was born in US to Canadian parents, registered as a birth abroad for Canada within a year or two of birth. Is there any argument here that this isn’t “dual at birth”, i.e. was I first US only, then Canadian upon registration of birth abroad and therefore not *simultaneously* dual at birth?’
I think there is no such argument. For comparison if a person is born to US parent(s) who transmit the infection and parents make a Consular Report of Birth Abroad, the US says the person acquired US citizenship at birth not at the time of registration.
‘I have past US income because I worked remotely for a customer in the US for a few years. I never went to the US for work.’
If you were in Canada when you performed the work, your income was Canadian sourced. “Unearned” income such as interest and dividends is sourced where the payer is, but “earned” income is sourced in the country where the worker is located. If your customer deducted US withholding then you should submit Form 1040NR to get a refund, though it’s probably too late now. The full amount of income was taxable in Canada.
This doesn’t affect the fact that moving to Canada can exempt you from the exit tax.