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
@ Duchesse,
Re:
As far as I recall, you are the first renunciant to mention having this document pointed out to them at time of renunciation. That doc is a standard part of the CLN form (page 1 of 2), but it struck me as strange that he bothered to point it out to you at your meeting
@Pacifica: Thanks. I see that it is part of the CLN, and what does it imply? It seems to inform the renunciant of an appeal process. ( Not that I plan to do that.)
@ Duchesse,
I think that’s all it for, to inform the person that an appeal process exists, but I can’t think of anything it implies beyond that.
‘I renounced.’
Of course. So the letter doesn’t apply to you or me, but we got that letter because it applies to some recipients of CLNs. I tried to explain the purpose of the letter.
‘I did not “ participate in someone else’s decision ».’
Actually you did, you renounced and the consular officer decided to accept your renunciation. The purpose of the letter is to allow revocation for people who didn’t know what happened or didn’t intend to relinquish, i.e. not for you or me.
Last month I filed my wife’s 1040/1040NR, 8854 and FBAR.
Case closed.
This weekend I filed my older son’s 1040/1040NR, 8854 and FBAR.
Case closed.
Now on to my younger son. What should I do?
Unlike his mother and his brother, he was born in Canada (in 2001) and we foolishly got him his US citizenship. Now we must decide what to do.
Plan A: Do nothing. Stay under the radar. Never renew his US passport. Never file a tax return with the IRS. Open a brokerage account with an RRSP and a TFSA when he turns 18 later this year. The bank will never know that he has the US citizenship. His place of birth is in Canada.
Plan B: Renounce US citizenship in 2019. Be done with it.
Pros of Plan A:
Maybe in 30 years the USA will have become great again and Canada will have become a banana republic. Then my son can go live in the USA and enjoy his US citizenship. The likelihood of that happening? He might as well by a lottery ticket. Plus, if he were to go live in the USA, he would have to come clean with the IRS and that would be a mess.
Pros of Plan B:
Freedom.
@ Formerpatriot: My sons are older and unlike your youngest, in the system. One will renounce. The other will keep his US citizenship for now.
He has an accountant who is well-versed in dual filing and most importantly, financial planning. He is set up to avoid the pitfalls. He is in a field that offers significantly more advanced educational and career opportunities in the US, and does not want to close that door (or enter a green card lottery after renouncing.)
Eighteen is young. In the many years ahead, a lot could happen. Odious though putting him in the system is to you, there are ways to be a dual if you are young and have guidance.
It is easy for me to say “Plan A”! I reflexively hated Plan C when my son told me that’s what he was doing, but he does have a point.
@formerpatriot
What does your son think about his choice?
You can let him read this letter
https://renounceuscitizenship.wordpress.com/2012/08/21/letter-of-a-canadian-businessman-to-his-dual-u-s-canada-citizen-son-on-the-occasion-of-his-high-school-graduation/amp/
“What should I do?”
Heidi beat me to it. Anyway, you tell him what you know and he decides what he should do. Unfortunately now we see the reason why we’re having that other discussion about a vice consul who went overboard in trying to verify that an intended renunciant wasn’t being coerced by another person.
(If coerced by a government like most of us here, we can renounce. If coerced by another person, the intended renunciant should not be permitted to renounce.)
@Heidi
Thank you SO MUCH for the link to that letter!!!!!
@Duchesse
@Formerpatriot.
My vote would be for Plan A. Here’s why: I am assuming your son hasn’t ever filed a US tax return and has not entered the IRS system so “flying under the radar” presents no problem. Having a US passport once upon a time doesn’t count for much in the overall scenario but don’t renew it. He’s a Canadian living in Canada. His US citizenship can remain dormant for an indefinite period of time.
You are right, there is a chance things could be better in 30 years. Not very likely, but not impossible. If, miraculously, the unlikely came to pass, by that time the US will have joined the rest of the world and eliminated CBT, so there would be no problem entering the IRS system for the first time and no “mess” to worry about cleaning up.
The most likely scenario? Things continue to get worse in the US, your son has no interest in moving there, he lives his life in Canada, and his US citizenship stays dormant forever. This is one situation where there is no need to burn bridges. Save the US$2350. The children of many of my friends are in exactly the same situation with absolutely no problems.
@Formerpatriot
Plan A. Lie and lay low. This is what I’ve recommended to my daughter, who also recently turned 18. She can “reactivate” her dormant US citizenship if she decides it’s useful to her; I doubt very much that there would be problems filing US tax returns for the first time after moving south for grad school, for example. Otherwise she ignores it, unless there’s a case to be made for renouncing. US travel is currently not a problem for her; it’s possible that one day the database at the border will be good enough to match up a Canadian’s name, date and place of birth with that of a US passport issued to a baby decades in the past, but it hasn’t happened yet.
I gave that letter to my sons, when it was first posted. Herés the thing: 18. I think of myself at 18. I was not witless, but still. Not saying this as criticism. I guess I am one of the relatively few Brockers who benefitted significantly from dual citizenship for my career.
Zero as it is handled by a family member’s accountant and that person kindly pays for it. But what is important is that he knows how to handle his banking and investments, in whose name to put assets he might someday own, etc. It is a whole other deal when you do not get sideswiped by laws you never knew existed.
There is understandably much anger and bitterness aboutvthe USG here, but to cut off access to some opportunities may be shortsighted. The US is more than the IRS.
@ Maz57:
If FP and wife obtained a certifacte of foreign birth abroad, son is in system, has SSN. Mine do. He is not in system as tax payer. If ever enters tax system, may flag why has not been filing.
The only persons truly under radar are children born to US cit parent, and parent did not report birth to USG. I know plenty of cases like this, in past 5 or sobyears, where parents are deliberately not reportingvthe birth.
@Duchesse and Maz57…
To clarify:
Young son was born in Canada. Mother was US citizen at the time. Father (me) was never US citizen.
We did file a Consular Report of Birth Abroad with the US consulate and young son became a US citizen. He does have a US Social Security Number. His latest US passport expired last month and there is no plan to renew it right now.
Being young and naive, my young son seems to think that it is cool to be a dual citizen and his inclination at the moment is to stay under the radar and “resurrect” his US citizenship if and when it becomes the right thing to do.
My advice to him : Renounce your US citizenship now while it is easy and cheap. Heck, being a student with no income, he can check the “Yes” box on line 6 of Part IV Section A of From 8854 (where it asks “Do you certify under penalties of perjury that you have complied with all your tax obligations for the 5 preceding tax years?”)
@Duchesse
I think there are varying degrees of “in the system”. My daughter’s birth was registered, and she obtained a US passport, but I don’t think she has an SSN. We certainly don’t have a card, and we are fairly careful with documents. As I said earlier, she’s encountered no difficulties entering the US on her Canadian passport.
I would not be overly worried about moving to the US later in life and filing for the first time, with or without SSN. When I did it, several decades ago, I received a letter from the IRS asking about previous years. I wrote “Student, in Canada” on the letter and mailed it back. No response. I suspect it’s no more complicated today if we are talking about modest incomes and uncomplicated investments.
I just re-read the letter linked to above. A few points came to mind. First, the recipient was born in the US and is doing a commerce degree, which implies that they expect to earn money one day, or more critically, work in a profession where US person status could be problematic. Second, the letter was written in 2012, when people were actually scared that the IRS could actually somehow enforce compliance. We know now that it can’t, and that CBT a complete non-issue for anyone without US financial entanglements. The author assumes the son will attempt compliance, which is a silly and self-destructive thing for anyone to do if they have no plans of moving south – certainly not the advice I would give to my own child.
@FP
I agree with your son, despite his being 18. The important thing is that he knows to keep it a deep dark secret, and not boast to his friends that he can move to California whenever he wants.
I’ve advised my daughter to do nothing for 5-10 years until she is certain that she’ll never need or want the US citizenship, and to never speak a word of it to anyone, including banks. (“Pretend it’s incest,” I cheerfully suggested.) It was quite useful to me as a graduate student, and I wouldn’t want her throwing it away this early. With a non-US birthplace there’s no reason to believe that it would ever cause problems for her, even if she had a passport once and might possibly have a mystery SSN.
@Nonymous: I got sons (twins) US Citizenship when they were 15 and the Consular Record of Birth Abroad was sent from DOS along with their Social Security cards, perhaps because of their age by then.
The problem is, assuming « no plans of moving south. » Don’t know about you, but at 18 I never thought I would spend my entire life after age 22 in Canada, among other surprises. I am not advocating compliance but at same time, I see how many youngbpersons in one son’s profession want tobwork there.
@Duchesse
Even if there were vague plans to move to the US, I would never advise “proactive” compliance. Perhaps if one had actual money it would be helpful to avoid certain types of investments that could cause problems down the road, but don’t start filing US returns before one arrives in the country. And if it’s not meant to be a permanent stay, remember that RRSP/TFSA/etc. accounts are not reported under FATCA.
My young son thinks it’s cool to be a dual citizen and he thinks that the best thing to do might be to stay under the radar either forever or until a great work opportunity occurs, at which time he could “re-activate” his US citizenship and become compliant.
My view on this is that he should renounce now while it is easy. Well, he will still be a student for many years to come (at least 5 years). I guess he could renounce at anytime during those 5 years and still have no tax return to file. Just the 8854.
But if he were to graduate, work for a few years in Canada, then move to the US, back-filing would be complicated.
I have a few years to convince him… 🙂
@FP
I think your son has the right idea. With no US birthplace he can hide forever, and there’s no reason to be compliant in anticipation of a possible move south relatively early in life. Unless he’d had a very well-paid job with a lot of money invested in problematic ways, he would just show up, start working, file a return, and deal with any questions the IRS might ask afterwards. Maybe he’d need to backfile some simple returns (with zero owing presumably), maybe not.
I personally would never advise a young dual citizen to renounce before completing university. Life can lead in many different directions. And the risks of non-compliance are basically nil.
@nononymous
I pretty much agree with what you just wrote.
There is however one annoying little detail: My son plans to open a TFSA and an RRSP at a brokerage account on the day he turns 18. He plans to invest $6K in the TFSA (the max contribution for 2019) and a few hundred dollars in his RRSP (based on contribution room from a part-time job he started last August). The plan was to invest everything in some ETF like VBAL or VGRO. Trying to be fully IRS compliant would be a pain in the neck. I suppose the IRS does not have to know everything. He can still renounce in 5 years and never mention the TFSA, never file a 1040 (income too low anyway) and never file an FBAR (little white lies are okay…)
FP. RRSPs, TFSAs and RESPs are nobody else’s business. The compliance condors would have us believe RESPs, RDSPs and TFSAs are trusts requiring all kinds of expensive extra paperwork. one or two agree they are not. Best to follow Dan’s advice. “don’t tell them anything they don’t already know”
@Portland
I agree with you.
I spent the last 2 years reading IRS documents, expat forums, books, etc. So much nonsense! A TFSA is a trust (and requires complicated filing of Form 3520) if you decide that it is a trust or if you let someone else decide for you that is is a trust. What a bunch of nonsense! It is IMPOSSIBLE to know the exact truth about how TFSA should be handled when you want to be compliant! My wife had a TFSA and we kept it ultra simple so that it could be considered a bank account! Gotta keep those $10K fines at bay. An RESP is a trust. GRRR. Can I strangle the bozos who wrote the USA tax laws? We kept my wife’s name out of the RESPs. Gotta keep those $10K fines at bay.
I hate the IRS. You heard me correctly. I hate the IRS. I truly, totally, absolutely hate the IRS!!! What kind of a stupid organization!!! I filed my wife’s tax returns and my older son’s tax returns for years. We never get an acknowledgement! Nothing.
I love Revenue Canada. A few weeks after filing you get a nice polite letter that says something like “We have received and we have processed your tax return. All is well. We are depositing your tax return in your bank account. By the way, for 2019 your RRSP contribution room is such and such”.
I love Revenue Quebec. A few weeks after filing, you get a nice letter that starts with “Nous vous remercions d’avoir produit votre déclarations de revenus”. Sweet!
Now the IRS website and various instructions documents: $10K fine if you do this. $10K fine if you do that. $10K fine if you don’t do this. $10K fine if you don’t do that. Surely you are a thief and someday we’ll get you!
Now the FBAR website. Unlike the IRS, they make it clear that they think of you as a criminal! FINCEN = FINancial Crime Enforcement Network. WTF!!!!
As you can see, I am getting a bit upset here. It’s time for a coffee break…
Sorry for my bad temper…