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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

 

10,433 thoughts on “Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part Two”

  1. Thanks, all you guys. I do believe I´m on the right track. I just got an email from my accountant concerning these questions and she tells me that I have to file an 8938 because of the amount of money in my accounts and that entails also submitting a 1040. That answer totally contradicts what the owner of the company told me last year; if you don´t have to file (under the threshold), then you don´t have to file 8938, as it´s an attachment to the 1040. To make matters worse, this accountant attaches the IRS 8938 instruction pdf file and BOOM, right on the first page, it explains that I DON´T have to file, just like the owner said last year.

    The accountant goes on to tell me that I also have to submit a 1040NR (with zeros) with the 8854 next year and then I find out that that is also false and found the answer on the 8854 IRS pdf file. I tell the accountant that my logic says that if I don´t have to file due to lack of any income (like in for normal years), then I certainly don´t see why I would have to file because I renounce. I consider myself compliant for 2018-19. Asking her to quote/show me the exact paragraph that says I have to file tax returns with all zeros.

    Will be interesting to see what she comes up with for an excuse.

    These accountants are either condors or incompetent… or a combination of both.

    Again, thanks. I love it when my logic aligns with others.

  2. I wonder which is easier, teaching accountants the IRS’s instructions on IRS forms or teaching IRS lawyers the IRS’s instructions on IRS forms.

  3. AKS – indeed. A lot of these tax schmoozers seem to rely on their clients being incapable of independent thought. 🙂

    Congratulations on your renunciation.

  4. Apropos this subject, a pair of comments from Anthony Ellis Parent (IRS Medic) on the Facebook group a few days ago:

    My office has spoken with 10,000+ potential tax clients over the last 10 years. Out of all those leads, exactly zero had a covered expat issue the IRS was confronting them on — we’ve done a lot of 8854 work for clients, but only prospective. Never a 8854 exam. I’m sure someone encountered a covered expat issue, but we haven’t seen a hint of one nor have we seen any indication from the IRS that they are creating an international practice unit on this issue so that examiners have a training guide. You can see all the international guides, which LB&I and even SB/SE most certainly use right here and its absence is an indication that covered expats are just not a priority of the IRS. https://www.irs.gov/businesses/corporations/practice-units

    Examining expats is very difficult for the IRS. Examining an expat who is a citizen of another country and who no longer claims to be subject to the jurisdiction of the IRS is even harder. Maybe someday the IRS will have find the perfect target – a famous or infamous taxpayers who did not renounce properly. But until then, I think we will see the same lack of interest.

    Under the category of purely theoretical exposure, note that Denmark is one of the countries with a collection agreement. If you had been terribly bad, Denmark would assist with collection of any debts incurred prior to your becoming a Danish citizen, presumably even after you renounced.

  5. AKS. Precisely. Not filing 1040/1040NR has the added benefit of not filing 8938. That’s what we did (or didn’t do ) Who needs an accountant anyway?

  6. I suppose its possible the accountant has confused 8938 with FBAR (which could still be required even if 8938 isn’t) but if he/she can’t distinguish between the two, he/she needs to go back to accountant school. Just not on your dime, AKS.

    My take? File a stand alone cursory 8854 if it will make you feel better. Or not. Don’t bother with FBAR. You’re not a US citizen anymore. Don’t waste your money on this or any other accountant.

  7. All I want is a clean break and have nothing to hide. I´ve come this far. My accountant is now scrambling to find an excuse for her contradictory advice. MAZ57, agreed. Even I know more about the difference between FBAR and 8938, just based on the fact that I can read.
    NONONYMOUS, would you have a link where I can read about the Danish-American collection agreement ? Nice to get more info, should anyone else living in DK run into the same questions.

  8. For those with any doubt . Source is IRS form 8938 FAQs.

    Reporting, filing and valuation requirements
    Q1. I am a U.S. taxpayer but am not required to file an income tax return. Do I need to file Form 8938?

    Taxpayers who are not required to file an income tax return are not required to file Form 8938.

  9. @AKS

    Fire up the Google and see if you can find the text of the Denmark-US tax treaty. It will be in there somewhere, mutual assistance in collection provision or words to that effect.

    All I know is the Canadian treaty, which states that Canada will not assist in collection of US tax debts from a Canadian citizen, except for any debts incurred prior to their naturalizing as a Canadian. (And vice-versa, the treaty is reciprocal.)

    I expect it’s the same for Denmark but you should check. Oddly enough the only case we know of where the US has reciprocated was to help collect a tax debt from a Danish national living in the US.

  13. Another thread loaded up the recent comments (again) so I almost missed today’s comments on this one.

    @ AKS
    I see you are getting lots of advice but most people just end up doing the best they can navigating US formaggedon and they never hear anything back. Despite having read up on the IRS exit process for 2 years my husband did not execute a perfect final filing but it would have been obvious by his numbers that there wouldn’t be many pennies falling out of his pockets if they decided to turn him upside down and shake him. It’s 5 years later (good grief time flies!) and there hasn’t been any word back from the IRS. Although, shortly his filing he did get a form letter acknowledging receipt of his 1040. That had never happened before so it was a surprise.

    Thank goodness Canada always sends you a Notice of Assessment when you file taxes here. You never have to guess or do a request to find out if everything arrived safe and sound or if you made an error.

    Anyway, good luck sorting through the details (don’t make it an endless quest) and I hope you don’t feed the condor too much. Some people think professional looking forms go over better with the IRS but my husband’s hand-written forms certainly didn’t look professional and I think it’s safe to say, at this point, that they passed muster.

  14. @Embee:
    “Thank goodness Canada always sends you a Notice of Assessment when you file taxes here. You never have to guess or do a request to find out if everything arrived safe and sound or if you made an error”.

    I send my wife’s last 1040NR/1040 + bunch of schedules + 8938 + 8854 via Canada Post XpressPost on Monday afternoon February 4. it was 27.75 CAD for the envelope to Austin and another 27.75 CAD for the envelope to Philadelphia. USELESS!!!! It’s now Friday afternoon February 8. I go online to check the tracking. The last bit of info is “JFK Airport Tuesday February 5”. USELESS!!!!

  15. @ Formerpatriot
    Just out of curiosity I took a look at my husband’s Xpresspost traces for his packages to PA and TX (we did screenshots). It almost looks like they both spent 2 days at US Customs but they did arrive at their destinations on the 5th day out. I hope yours will arrive soon.

  16. 1. Renounce. 2. Do not look in the rear-view rancid us mirror. 3. The us empire was a bad joke. Hustlers, hucksters, and war mongers. 4. Put this on your bathroom mirror.

  17. @Formerpatriat. Don’t despair. A few years back I ordered a motorcycle part from Spain. All went well until it got to the black hole of JFK. Then nothing. Week after week I checked with the vendor in Spain, checked with the Spanish postal service, checked with the US postal service; nobody had a clue as to what happened. I finally just wrote it off and moved on. Two months later, it suddenly arrived unannounced at my doorstep. There was only one problem; the package and its contents had been crushed. Its still a mystery what happened. There’s just something about that place…..

    So its still way too early for you to get worried. Worst case scenario? Your carefully considered Plan A to exit by the book might get inadvertently changed to Plan B, don’t file anything at all. But your package will probably arrive eventually and at least a stack of paper won’t be hurt by being squashed. You’ve done your part; now its beyond your control.

  18. I’ve had some registered letters spend 1 or 2 days to travel from Japan to the US, then spend 10 days in a single post office in the US before moving on.

    When the letter is addressed to the IRS, it can still fall into a black hole after entering the US. Recently I posted a link to the form I use in Japan to request investigation of registered mail, and a link to the closest thing I could find in Canada.

    The one that takes the cake is a registered letter that my wife sent to the IRS. The A.R. card (return receipt) came back uncompleted, showing non-delivery. USPS’s web site showed delivery though. But a few days later, USPS’s web site showed that it wasn’t delivered any more. Japan Post’s web site still showed delivery but didn’t show what happened after that. My wife submitted a request for investigation. USPS replied to Japan Post that the registered letter was not delivered and not returned to sender. Japan Post compensated my wife. Stupid me, I contacted USPS’s postal inspector to ask what was going on, so they deleted both records from their database. I should have used archive.org to make backups of the USPS pages. All I have are printouts of the two pages.

  19. Thanks, you guys. Yeah, I confronted the tax firm´s owner and now her answer is, basically, that I would be technically compliant without filing 2018-19 due to zero income, but she RECOMMENDED filing. Big change from being, “have to file”. Recommended=$850 in their pocket. Told her I wasn´t falling for the scare-mongering.

  20. Update on Canada Post delivery.
    On Monday February 4, I mailed…
    – 8854 to IRS office in Philadelphia
    – 1040/1040NR + 2555 + 8938 + a few schedules + 8854 to IRS office in Austin
    using XpressPost with tracking, without signature.

    According the the Canada Post online tracking tool, the package to Philadelphia was delivered on Monday February 11 and the one to Austin was delivered on Tuesday February 12.

  21. @Formerpatriot, print copies of the tracking info as additional proof of delivery. Every little bit of paper confirmation helps. I printed both my Swiss Post and USPS tracking info.

  23. Hello Again Brockers and thanks agaiin for all your advice and help so far up to and when I renounced last month, but i need some more help please. I renounced just before the end of January this year. I am already thinking of my final tax return filings and form 8854 next year. A few questioons if I may:
    1. Do I file a 1040 for worldwide income from the 1st January to date of renunciaiton , which was before the end of January 2019 and then file a 1040NR for just US income, if any from date of renunciation to 31 December 2019 and file these in 2020? Basically as I renounced before the end of Janaury this year there is no income in those few days.
    2.What if if there is no income from the 1st January to date of renunciation before end of January apart from a small amount of bank interest (maybe $1 as its before the end of the month so no money has come in earnings or bank interest credited by that time?
    3. When you file the final FABAR for 2019 next year along with the returns, what happens if you have changed banks after you have renounced say switched checking accounts or banks? Do you just report the bank account and balance up to the date of renunciation or any bank account and balance after as well that you may have now opened or switched to?
    4. On form 8854 page 5 under assets what does fair market value and then US adjusted basis mean at the top of the column? If you have a home outside the US which you are living in what does US Adjusted mean? I see it also relates to all lines such as pensions too, down the page
    5. What exchange rate do you use to complete this form next year or where do you find it for instance when you bought your house? Do you value it at the exchage rate at the date of purchase or the date of exchabge next year when you file the final forms?
    6. What forms do I send where?
    I just want to be prepared so that next Jnauary I am ready to file and complete everything and be done with it. Thank you everyone. I do wonder when this will all end and I can start to lead a normal life without all this worry.

  24. Hi Kabby

    I decided not to file a single thing (never been in the system, and I have nothing in the USA), so I won’t be of great help to you. Just make sure you aren’t over the US$2M mark for the 8854.

    Good luck!

  25. @Kabby
    I might be able to answer your questions. But since I have not read (or I have read and forgotten) your previous posts, I will need some info:
    1- What country are you a citizen of?
    2- Have you been IRS compliant for the last 5 years?
    3- Have you been FBAR compliant for the last 5 years?
    4- What type of income do you have?
    5- What type of investments do you have?

    If you answer yes to 2 and 4 and if you have only salary and interest income, it will be very simple and I can answer your questions.
    But if you answer no to 2 and 3 and you own a large company and you have all sorts of sophisticated investments, I can’t be of any help.

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