Tax Questions
Ask your questions about Tax and FBAR here.
This thread will be focused closely on tax questions and answers. If the conversation starts to ramble, those comments will be moved to another thread.
Related threads:
Tax Discussion Thread. Instead of focusing on specific questions and specific cases, broader ideas can be discussed on the Tax Discussion Thread.
Tax Compliance (or not) Discussion Thread
Sub-threads (more will be added as they occurs):
Previous Tax thread:
US Expat Tax and FBAR discussion thread, part 1
US Expat Tax and FBAR discussion thread, part 2
Portland, Thanks! I am very worried just want this over with and out of the way. I am doing the best I can.
@Kabby,
hi, you said that you renounced in 2019, did you get your CLN and how long after did you get it?
Thanks
Hi Forma
Yes renounced at the end of January 2019 last year in London. I posted a long message about the process I went through on the day on the renunciation thread and I think it was also posted on the consular report blog too. I got my CLN pretty quickly beginning of April so in 2 months maybe 2 1/2 months later. I m happy to help as others on here have helped me.
Doing my final 1040. 1040NR and 8854 now. I do have a question though on the FABAR if anyone can assist me? Do I put the balance down as the date of renunciation or the maximum balance at the start or end of the year?
Thank you Kabby, I wanted to know the time frame from renouncing to obtaining the CLN, this may vary by a week or two based on our location. We are not planning on filing any back taxes (even though we did start the process of getting 3 years done for the streamlined verson) or 8854 or FBAR, just not going to bother as we have no financial ties to the US, as per lots of advice on here to not bother.
Kabby. Re FBAR. Maximum balance from Jan 1 to renunciation date for each account. Easy to do on line. Don’t stress over fbars . No one looks at them unless they have independent information.
Roma. Good plan
Never been able to wrap my head around this maximum balance thing. People do move their money among their various accounts throughout the year. Do enough of this moving (it’s not illegal) and a total of maximum balances gives a false impression of a person’s finances. What’s the IRS goal here? Are they hoping to collect higher FBAR penalties? Are they aiming at a future asset tax?
I would assume there is no point to FBARs other than to pile up additional evidence that could be used to help investigate tax evasion. Certainly no evidence that they try to validate reported balances, which would be inconsistent with FATCA data anyway. People freak out about FBAR quite needlessly – particularly as the penalties are not collectible outside the US.
PS to above. I imagine the point of FBAR is more to pile on additional penalties in tax evasion cases, rather than to investigate them.
Arguably, for renunciants who are filing their final 1040 and 8854, there is no need to file a final FBAR because the obligation to file a FBAR falls under Title 31, not Title 26 (the tax code) and that Title 31 obligation ceases the day one is no longer a US citizen. The purpose of the final filings (1040/1040NR and 8854) is to officially log out of the US tax system (i.e. Title 26). There is no log out procedure for FBARs other than to simply stop filing them.
Bottom line: don’t bother and above all, don’t stress. No one cares.
Portland,Embee, Ron Henderson,Maz57 thanks for the comments. I m going to take Portlands advice and put max balance form Jan 1st to end of January when I renounced seeing as I have come this far with the log out forms will do this one last thing! Fingers crossed. Thanks for the help as ever.
I am wondering if a U.S. citizen moves to a foreign country and opens a bank account in that country but the only sources of the citizen’s income are in the US and these incomes are deposited in US bank accounts only. The citizen periodically transfers fund from the US bank accounts to the foreign bank account to pay for living expense only and not for investment. Does the citizen still have to file FBAR and FATCA forms as well as the 1040 forms?
Gary. You only have to file the FBAR if the TOTAL $ of all foreign accounts at anytime of the year is over $10,000 otherwise you just tick the box on the 1040 saying you have a foreign account and do not tick the box that you have to file a FBAR. The filing of FBAR is only required for the aggregate total amounts of all accounts (totaled together if you have more than one) over $10,000 in the year.
What would you do?
I have an American parent. I was born and lived entire life in Canada. No connection to USA and have never acted on American citizenship. Never realized the issues caused by an American parent and the trouble this now causes.
Have never filed US tax returns or any other forms with US. Do not have a Social security number for the US.
I own my own business and operate through a private corporation.
A few years ago I received some forms from my bank asking me to clarify whether I held citizenship of another country. I filled these forms out in the negative, as that is my belief.
The article from a few days ago talking about fines and closing of accounts by Canadian banks has spooked me.
What would you do?
Stunned, DO NOTHING! Have they asked for parents POB or other data? NO? Then do nothing, as far as the IRS are concerned, if you have never held a SS# or TIN#, you do not exist! I would assume that your father never registered your birth with the US consulate or Embassy? Do nothing! You are a Canadian, end of.
@Stunned
You do nothing, you do not have a US birthplace you have not been registered as a US citizen. The US government and the IRS and your banks know nothing more about you; keep it that way.
I’m most concerned about the forms my bank sent me a few years ago, and which I had to fill out. While I answered them in the negative, I suspect the fact that I received the forms suggests they think I have American ties or citizenship.
I have been with my bank since I was a child. My American parent also has accounts there.
My American parent files US tax returns.
@Stunned
You are not an American. You were never registered , you have never had a passport or SSN. Many people receive the ‘are you an American question ’, especially when they open any new accounts (even in their existing bank. The banks are just covering their arse.
Forget it, just say NO. You were not born in the US , America can’t claim you!
If it really worries you just change your bank.
What Heidi said, change your bank.
Another piece of information I just learned. After I was born, my mother went to the US embassy and as she tells it: met with some old guy in the basement who filled out a card with my information, which he then proceeded to throw into the top drawer of the desk he was sitting at which contained a pile of other cards that had been filed out. This would have been in early 70s.
@Stunned
Do nothing, or change your bank if it makes you feel better, but be aware that you’ll be filling out the same forms when you open new accounts.
Having an American parent does not automatically make you American – there are residence criteria that must be met before citizenship is passed on. A bank cannot simply say that you are American because of your father. If your birth was not registered with a consulate, the US government does not know of your existence.
Either the forms were sent to all customers, or they were sent to you because your father’s citizenship was known to them, and that counts as US indicia. Doesn’t matter – you answered correctly.
Go back to not worrying about this.
@Stunned
If your mother registered your birth, then yes, technically, you are an American. The US government was notified of your existence.
This changes absolutely nothing, however. Do not disclose US citizenship to any financial institution, ever. Go back to not worrying about this. Nothing bad will happen.
@stunned
Even if a registration card was filled in and filed in a drawer somewhere, this was before the internet . and digital registration. They won’t know you exist unless you tell them and claim your citizenship.
Ron is right there is also a US residence criteria to claim citizenship if you are not US born. Look at the State dept’s website .You are one of the lucky ones without a US birthplace.!
I was a naturalised citizen back in the 80’s. When I renounced they couldn’t locate my naturalisation records. I had to provide them with my certification!
And of course if you travel to the US, do so on a Canadian passport as a Canadian citizen.
You have literally nothing to worry about.
@Stunned.
Good advice from all the Brockers. You have the one thing many here on Brock wish they had and can’t get….a non-US birthplace. You can carry on with your 100% Canadian life without giving that hidden US connection a second thought. Even if a bank should become aware that you have a USC parent, they are not experts on the subtleties of US citizenship law and are in no position to make a determination. Its not the bank’s call, anyway. If you are asked (and its now just a standard question for everyone) just answer no.
As for the fact that your mother registered your birth decades ago, its virtually certain they have lost that record because that was before computers came into general use. (I’m betting the old guy down in the basement was using a typewriter, lol.) Besides, even if the record still exists, the IRS doesn’t know about it and without a SSN you don’t exist.
I immigrated to Canada back in the 70’s and once as I was returning to Canada after a trip to the US, I discovered that the Canadian government had absolutely no record of my ever having immigrated. It turns out that the sweaty, dog-eared cardboard landed immigrant card that I had tucked in my wallet was the only existing record of that long ago event. That’s just the way they did it back in the day. So at this point, its practically guaranteed that your birth registry is a non-event lost in the mists of time.
Stunned ‘What would you do?’ In your situation, Do NOTHING. Your life will not change with respect to this in any possible way. Any time you think about doing something, sit down, have a glass of your favourite bevy and wait for the feeling to pass. If you need to ponder further, changing anything will lead to a world of hurt.