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
@Calgary, you’re right that I am an excessive wordier, no doubt about that. At least my most prized possession is my beloved feather pillow, which I turn to for comfort and which the IRS could never take from me, as bedding is not deemed property of any value as such….
@Garm, I was in a similar position to yours almost two years ago, when I was preparing to document my relinquishment of US citizenship in the 1970s. Like you I wondered about some of the things on form 4081, but I went ahead and filled it out and signed it at the consulate. I received my CLN a year ago this January and have not contacted nor heard from the IRS since then. Like @pacifica777 I interpret the part in point 10 about contacting the IRS as advisory, not mandatory.
To: calgary411. I applaud your willingness (and all the people on this website) to help those of us struggling with renouncing our U.S. citizenship. I am in the same situation as your daughter. I was born in Calgary to U.S. parents. I have lived in Calgary all my life. I have already renounced my U.S. citizenship. I have received my CLN. I’m now trying to figure out the 8854. I was told by a tax lawyer in a “Renouncing your U.S. Citizenship” seminar that I did not have to complete Part V of the 8854. All I have to complete is Part I, and only question 1 of Part IV (“Enter your Income tax liability……..), sign the form and I’m done. Did your daughter do the same? I just want to complete the form correctly. Thanks for your help.
bodhi glover,
Thanks for your kind words and thanks for checking us out here.
Here is a comment from last year at about this time (from KalC) that should answer your question.
If anyone disagrees, can you chime in here with advice.
@bodhi, calgary411, I point out again that people who renounced/relinquished in 2013 must fill in Parts IV and V of the 8854 as clearly instructed to do so on both the form and by the instruction sheet. I also point out that if you are not US tax compliant you will still be a covered expat, even if you meet the other two conditions. As we well know, tax lawyers aren’t necessarily correct with their advice so always check on the IRS website to be sure.
http://www.irs.gov/instructions/i8854/ar01.html#d0e452
http://www.irs.gov/pub/irs-pdf/f8854.pdf
Like it or not bodhi, you must fill in Parts IV and V as instructed.
Bodhi We’re trying to help you here. Medea says you ‘must ” do this and that. You don’t HAVE to do anything if you don’t choose to. Earlier you said ” Of course, I would sign it and send it with my final U.S. tax return.” Tell me one thing- have you filed 5 years of returns up to the year you renounced your US citizenship? Then we can give you a better idea of what you are supposed to do.
@DukeofDevon, I didn’t mean he “must” in that sense. Of course he has a choice whether to fill in the forms or not. But if he does then he can’t leave out Part V and only fill in Part IV. The 8854 form and instructions are clear that when filing the form for 2013 both Parts have to be filled in, not just one.
I’ve received an interview from International Man called Peter Schiff Shares His Offshore Strategies. Not a political or economic point of view I espouse, but it’s interesting to us because it’s clear about the problems faced by Americans overseas (or trying to leave), and clear about FATCA. I can’t post the live link, but maybe one of you can, to make it easier. internationalman.com
In that case, for someone like bodhi who was born with dual nationality, the answers for Part V would, I think, logically be N/A, N/A, N/A, N/A. If everything else is complied with and one will not be considered a “covered expatriate” no matter what their “net worth” if born with a dual nationality of US and another country, the US should have no reason for that private financial information. It would not apply for bodhi — unless it is clear US gathering of private financial information that has no bearing.
(You’re right — it does say in the instructions for 2013 (http://www.irs.gov/instructions/i8854/ar01.html#d0e452)
@calgary411, you could certainly try that approach. Whether the IRS/whoever would accept it is another matter. I expect they would argue that without any figures they have no way of confirming that you’re not a covered expat.
I don’t understand how a person born dual (so net worth is not relevant) who is in full tax compliance needs to provide this extra information. But, what do I know? It is best, bodhi, for you to get better advice — as this is an important document you are submitting. (It just sends chills down my spine that you should have to provide your financial information that should not be relevant in your case — pure and simple data gathering. But then, I don’t understand a lot about the US exceptionality and having things anyway they want.)
I’m not convinced that a born-dual _must_ complete Part V of the 8854. I’ve written the following very matter-of-factly as if I know what I’m talking about. This is just for clarity and argument’s sake. I have no specific knowledge or experience with this form.
The determination of being a covered expat is in Part IV Section A. It asks the 3 relevant questions about tax bills, net worth (Line 2) and filing compliance. This precedes the “balance sheet” in Part V Section A. The instructions for the net worth question Part IV Section A Line 2 says:
Note the word, “can”. This is an option, not a command “must”. The balance sheet in Part V is not a worksheet that must be used to arrive at your net worth: it’s a worksheet for the IRS to determine how much of your life savings they are going to confiscate if you are a covered expat.
Search the 8854 instructions for all occurrences of the words “can” and “must”. There are many more “must”s than “can”s. Wherever the word “must occurs, there is absolutely no doubt that you have no choice. Wherever the word “can” occurs, the context is clear that there is an election (choice) you can make.
Here are the instructions for Part V:
These instructions for “Who Must File” are very clear that this section is for people who are subject to tax under Sections 877 and 877A. The first instruction for Section 877 refers to covered expats who first filed an 8854 form between 2004 and 2008. They must file 8854s for 10 years after renouncing, and this year 2013 is not their first year. The second instruction for Section 877A is for covered expats who renounced in 2013 such that this is the first year of their 10 years of filing 8854 forms. Therefore, the IRS needs your Balance Sheet for confiscation purposes in both cases.
If you are not a covered expat, due to your answers from the preceding Part IV Section A, you do not have to complete Part V unless for convenience you choose to use it to arrive at your net worth.
@WhatAmI, from the two links I provided. First page of the form itself:
January 1, 2013 – December 31, 2013. Complete Parts IV and V
From the instructions link:
Specific instructions
See Chart A to determine which Parts of Form 8854 you must complete.
Expatriation dates
2004 to 2008 – Parts I, II & V
2008 to before Jan 1st 2013 – Parts I & III
During 2013 – Parts I, IV & V
And further down the instructions under Part V – Balance Sheet and Income Statement
Who Must Complete
Section 877A. If you expatriated in 2013, you must complete Part V.
Further down again and you get:
Schedule B–Income Statement
Schedule B is required to satisfy the requirements of section 6039G(b)(5). You must complete Schedule B without regard to whether you have income subject to tax under section 877 or section 877A for the tax year.
Here’s a gem of a quote. Terry Gilliam was asked today on Reddit, “Why did you renounce your US citizenship to become a Brit?”
http://www.reddit.com/r/IAmA/comments/20bby9/im_terry_gilliam_i_dont_care_what_you_ask_me/cg1js6t
@MedeaFleecestealer
Still not convinced. 😉
See Chart A to determine which Parts of Form 8854 you must complete.
That teeny tiny little Chart A on page 4 only points you to the detailed specific instructions for Part V which has a section titled “Who Must Complete”, which in turn show that only covered expats under Sections 877 and 877A must complete part V.
Schedule B is required to satisfy the requirements of section 6039G(b)(5).
What is 6039G? This, again, simply refers to people who have already been deemed to be covered expats. If you’re not a covered expat, then 6039G does not apply, and therefore Schedule B does not apply.
http://www.law.cornell.edu/uscode/text/26/6039G
You must complete Schedule B without regard to whether you have income subject to tax under section 877 or section 877A for the tax year.
The above simply means, “If you are a covered expat and are bound by Sections 877 or 877A, you must complete Schedule B even if you have no income”.
I just noticed something.
Much is posted here at IBS about how the name and shame list is much shorter than we know it should be.
This document:
http://www.law.cornell.edu/uscode/text/26/6039G
ends with:
To me, this seems to single out covered expats for publication. I imagine that non-covered expats have appeared on the list, but could it be that at least some departments or employees have this interpretation, making the list shorter?
WhatAmI,
I’ll raise my hand: I should NOT be a covered expatriate, nor should my husband, nor should my daughter. We all appear on the “Name and Shame” list. Perhaps it is because I have made myself “notorious”?
Medea I’m afraid you are still incorrect. What Am I you’re right. We’ve been down this road.
Bodhi would fall under the so called ‘dual at birth’ exception.
He is only supposed to fill in Part I and Part IV section A questions 1-6
He can use the first column of section V as a worksheet to arrive at a net worth figure if he wants but doesn’t have to.
Notice I said “is supposed to” rather than “must”. Bodhi you can rely on this interpretation. Others have done so.
@DukeofDevon, WhatAmI, well I may be wrong, but I’m a born dual national too and I’ve filled in all relevant parts of Part V. Guess I’ll find out if I’m right or wrong if my tax preparer queries anything or tells me I didn’t need to do it.
@WhatAmI
The “Name & Shame” list seems to be as slow as getting one’s CLN, and then some.
Daughter renounced in August 2012 yet I found her name on the list for Fall of 2013.
Hubby renounced in the Fall of 2012 and his name still has not appeared.
Form nation seems to have a lot of good organizational policies but with belt-tightening they don’t arrange for enough staff to do the follow-through at a reasonable pace. So maybe we won’t be shamed for a while…
PS. I forgot to mention that neither daughter nor hubby were covered expats. The Name & Shame list is an equal-opportunity shaker…..
@WhatAmI
Nope, it definitely has nothing to do with covered vs. non-covered expats, since at the time of publication, most or many ex-USPs will not have yet submitted their 8854, so it’s not even known whether they will be classified as covered or not.
I just renounced by “US citizenship” yesterday. I have never done taxes for them so I have a lot of work to do, I guess 5 years and 6 years of FBARs (using the Streamline). I have been quoted 3000$ from a US accountant and about 1750$ for H and R (and that’s me doing my own FBARs, would be an extra 300$ for FBARs). It has also been suggested to use TurboTax. Any suggestions? I just want to put this behind me and I’d like to avoid any penalties so I can travel to and from US with ease. But at the same time, I don’t want to waste my money on an accountant. I have TFSAs, RRSP, mutual funds, GICs, made between 20,000$-70,000$ (was a student at the lower end).
Just a bit of background: I am an accidental american to two Canadian parents. Was only born there. I was told by a US customs guard to get a US passport in December 2013, which led to all of this….
@stressed, you may not have to do FBARs, but if you enter “streamlined” then you will have to do them. Better, with your current level of income, just to submit the 1040NRs five years. I used TaxAct which can do foreign filings without a surcharge (not so with TurboTax). It is free in the current year, and about $25 for earlier years. The program steps you through your taxes and is sufficiently user friendly. You can do FBARs but it is not necessary to certify 8854. You should be able to pay no tax. If you end up paying tax, there are ways to get the program to lower your taxes. See http://isaacbrocksociety.ca/2012/04/27/no-one-can-serve-two-tax-masters-how-i-zeroed-out-my-us-tax-return-using-taxact/
@Stressed
Did H&R quote you $1750 for all 5 years? That seems much too low. Were they aware that you had TFSAs and a RRSP (these require special forms)? Also, if you had mutual funds outside of your RRSP, then that’s another can costly can of worms (somewhat complicated calculations and confiscatory taxation if done “properly”, which they would want to do). Even $3000 for 5 years of returns would be on the low side.