Ask your questions about Renunciation and Relinquishment of United States Citizenship and Certificates of Loss of Nationality.
Please note that the guidelines for this discussion are published here.
Ask your questions about Renunciation and Relinquishment of United States Citizenship and Certificates of Loss of Nationality.
Please note that the guidelines for this discussion are published here.
@Lisa – to answer question 1, no I don’t think you can relinquish, you’d have to renounce. Relinquishment is where you perform a voluntary act with the intention of giving up US citizenship, i.e. taking an oath of citizenship of another country and declaring that you intend to give up your US citizenship at the same time. Because you have both nationalities from birth, this isn’t a voluntary intentional act as defined by the law. I’m the same as I have both US/UK nationalities from birth as my parents registered my birth with the British Embassy in the US where I was born.
@got kids? If they were born outside the US you could argue the point, but you might run the risk of border control not allowing them in without a US passport. It seems they are tightening up on that sort of thing nowadays. Any chance you can/want to get rid of your US citizenship? That would probably be the easiest way to deal with it, otherwise you may need to get US passports for them.
@Lisa, I was born in the US, learned at the age of 10 that I was Swiss since birth, have lived in Switzerland about 20 years, the past 11 uninterupted, and they had me renounce rather than relinquish.
*
@Uncle Tell, @Medea, @SwissPinoy Thanks a lot. That answers my question. I was thinking that since I have to prove the blood tie to the country in question, that active solicitation of the passport might be grounds for relinquishment, especially if I decide that I am getting the passport with the purpose of committing an expatriating act. No, I will not have to swear allegiance to this country. So from what you said, if and when I choose to do expatriate, it will be via renunciation. Your information is much appreciated.
*For got kids? You should contact US Citizenship and Immigrations Services with your specific situation. I did this for my children a few months ago. They were born in Canada with one US mother (me) and a Canadian (non-US) father. My children have no claim to US citizenship per section 301(g) of the US Citizenship and Immigration Act. The one US parent needs to have been present in the US for at least two years after the age 15 for their children to have claim to citizenship. I left the US at age 13 and was not present there for any years after that. I e-mailed Citizenship and Immigration again and explained the tax situation and how the IRS may consider children born of a US parent to be US citizens. The gentleman I was dealing told me that the IRS cannot impose citizenship where a claim does not exist. Still, I am very reluctant to take my babies across the border. You’ll need to provide information like your age when you left the US, when your children were born, if the father is American, did you register them with a US consulate, etc, etc.
@Marie, you just need to memorize: My children have no claim to US citizenship per section 301(g) of the
US Citizenship and Immigration Act. The one US parent needs to have
been present in the US for at least two years after the age 15 for their
children to have claim to citizenship. I left the US at age 13 and was
not present there for any years after that.
Cross the border a time or two spouting that and it will end up on whatever record they keep on each of us for all the Border Guards to pull up on their screens.
The Immigration Officer you spoke to was correct. You can’t pass on your citizenship b/c you don’t meet the “feet on the ground” test. Just stand your ground and as my husband always says, if one border guard says no, you turn around wait a few hours and again at shift change. Border guards are like teenage girls. Their opinions on things vary from minute to minute.
Help with Form 8854 Part V Schedule A (7) Pension Outside US – Valuation
I have a Canadian Government defined benefit pension plan. Since there would be no payout or residual value to pass on to my estate on death can I enter “0” for this item, or do I need to make some calculation based on annual payout times estimated years left to live?
I have an RRSP which I would report the full value, but assume I do not need to report information for the Canada Pension Plan. Hope someone else has been through this, and can help me with some information or steer me to an appropriate web site.
Well, well, two of us seem to be working on the same issue at the same time.
My question is also on the same form 8854, Part V, Schedule A (7) pensions outside the US–valuation. I have a desperate need to know how to calculate the present accrued value of my Swiss
international organization defined benefit, which I assume is defined in Notice 2009-85 under section 5B(1)b.
Has anyone calculated this value using Proposed Treasury Reg 1.409A-4, as referenced in notice 2009-85? Can anyone advise? We calculated a value using revenue proc. 2004-37, but that is for pensions defined under section 5B(1)a, and I doubt that it is correct.
My wife and I have our renunciation appointment NEXT TUESDAY, and we need to know whether the pension amount will keep me under the USD 2 Million threshold or push me over. If I am going to be over the threshold when I file my 8854, or if we can’t find the answer in time, then neither of us will renounce next week.
Are there any pension experts who can help us?
Thanks to @Watcher for the tip in his 28 November post on “Are US renunciation figures being gamed” It frightened me into doing more research before our appointment.
“look at your exact pension balance on the day you expatriate, or get a valuation if it’s not a “transparent” plan; on form 8854 tick ‘yes’ for section B, question 7a; add your pension balance (or valuation) as “other income” to your 1040; calculate normal income tax; pay (or defer) it. Weep copiously.”
*@Lord Jim, I thought the IRS only charged income tax on the value of a personal pension fund if the person renouncing is a covered expat. If not, then very harsh indeed. Can anyone clarify?
@Lord Jim,
You may want to have a look at this: http://www.stepjournal.org/journal_archive/2011/tqr_september_2011/advising_us_citizens_and.aspx
Phil Hodgen’s is emailing chapters to a draft version of his Exit Tax book, and information related to it. His email address is phil@hodgen.com if you want to try to ask him that specific question. (I couldn’t find the answer to that specific question there.)
He also has a discussion on Exit Tax here: http://hodgen.com/exit-tax-is-a-one-time-tax/
@monalisa,
I believe Lord Jim is trying to guesstimate if he will be a deemed a Covered Expatriate by determining formula to get the PRESENT VALUE of his Defined Benefit Pension and then determine if that amount added to other assets puts him over the $US 2 million threshhold. There is very little useful information I’ve found to answer this question from what I’ve tried to find.
And here is a comment I posted a year ago on the usefulness of help from the IRS:
*Look up Dan’s approach to these issues. he has the answer.
@ Duke, could you elaborate ?
@ Calgary, you are exactly right.
My « European » retirement was always the missing piece of our renunciation and subsequent 8854 process to log out of the US. I had returned to it off and on since we made our renunciation appointment (back in June), and my wife and I were prepared to complete the 8854 by ourselves, as best we could, from the limited information available.
We had the actuarial amount of the retirement given to us by my organization, minus the monthly payments already received, and we were ready to use that for the 8854. We were ready to split that amount in half on each of our 8854s, 1) because we had always filed joint US returns, and 2) because my wife would receive half the pension amount if I were to die. When both of us die, the pension stops. In doing so, we would be well under the USD 2 million threshold and would be non-covered expatriates and not subject to and additional US tax. So we thought, with a little uneasiness….
@Watcher’s tip frightened me as our renunciation appointment approached, and I started my research again in greater earnest. I called the IRS hotline in Philadelphia and received excactly the same response as @Calgary. « The 8854 is a complex form, beyond the scope, blah, blah, we suggest that you seek professiional tax advice. » Phil Hodgen is busy until April 2013. On Monday I had a mini-consultation with one of the people on ACA’s PTAC, who told us that we could use the actuarial amount given by my organization, but that the total amount would have to be listed on my 8854. Yesterday we had a second mini-consultation with another person, international tax lawyer, who steered us to revenue proc 2004-37, as referenced in 877A. Of course he did not take us all the way to the end of the calculation. We were left with unanswered questions (I have already received retirement payments – how are they subtracted ?), and in any case the approach didn’t seem right to us. From 877A, it seemed that we should be using proposed treas. Reg. 1-490A-4 to make our calculation.
So here we are, exactly 6 days before our renunciation, Philadelphia down, two
international tax experts down, and we are no closer to having a clear answer. Treas reg. 1-409A-4 is so far incomprehensible to us and we can’t find its applicability to our situation (which is in our minds a simple retirement, the one which will provide our means of living in our country of residence – and where we pay taxes on it – for the rest of our lives – why should this be so difficult ?).
Does one of the lawyers who follow IBS know exactly what we have to do and would he/she be able to help us arrive at a conclusive answer before Friday @Myst needs help too.
If I follow one IRS thread, it seems to think that I will live to be 86 years old, allowing it to count accelerated payments for an additional 11 years beyond my accepted life expectancy age of 75. Is that is how a normal, non-covered expatriate can quickly become covered, facing substantial tax upon renunciation ? And this concerning a retirement derived entirely from work performed outside the US !
Conclusion : still looking, but resigning ourselves to the prospect that we cannot afford to take the risk of renouncing next week. Depressing. And if we can’t find an answer to the « simple » question of valuation of the present accrued value of a « foreign » pension, then maybe we will never be able to renounce. We will not even be in a position to do our cost-benefit analysis.
*
@Lord Jim, so sorry to hear of your woes.
To elaborate Duke’s comment… I haven’t noticed Dan around recently, but he regularly posted one-liners a few months ago that usually suggested simply not telling the US (for otherwise how would they know?). There is much to be said for that, but it only works if you’re on the left end of the “full ostrich”/”under the radar” to “full compliance” spectrum.
On pension valuations, I guess I had it simpler. I had only a couple of DC plans to consider, so nothing complex. I don’t know how I would have handled DB plans.
One thought that might help. It sounds like you are both currently US citizens, and that you can get under the wire if you split your DB plan with your wife, but not otherwise. All money is fungible, so if you have to include the whole DB value on your 8854, could you instead first gift your wife a sum of cash equal to half your DB pension valuation? Your half of the house? Some appreciated stock? Some unappreciated stock? That way your 8854’s will come out with the same end value for you both as if you had been able to split the DB value, but you have followed ACA PTAC advice to the letter.
It’s even better if you can keep the “gift” under US gift tax allowances — that should be easy if you are both current US citizens. This way the IRS doesn’t get any visibility that you’ve shuffled assets around before renouncing. Not that there’s anything illegal about that, but always best to keep them in the dark whenever possible.
FWIW I “gifted” my spouse half of my home’s value before we did our 8854’s. Not for the exact same reason as you, but similar. Our accountant noted that many, many similar “gifts” between spouses happen in the US for tax reasons, and that there was no reason the IRS would question it. Who knows if he was right, but it’s been four years and so far, so good.
*Lord JIm Twenty ways the IRS can locate US expatriates Dec 10 9:11 PM
Dan is on the right path. Remember who the bad guys are.
I just corresponded with someone offline regarding upcoming Renunciation of US Citizenship by “Accidental American” son. I suggested the question be posed at Isaac Brock. Not done, so I will copy what I relayed so that 1) it may help others with the same question; and 2) others may step in to correct me if I have relayed bad information.
*Not sure the Dual Citizenship note about tax filing is correct. This is from the http://www.renunciationguide.com site:
“Income Tax Test
The expatriate’s average annual U.S. income tax liability over the 5 years prior to expatriation was over $145,000 (for renunciations as of 2010; the figure will be adjusted annually for subsequent years).
The expatriate’s net worth is at least $2 million.
If any one of these tests applies to you on the date of your expatriation, then you are considered a “covered expatriate” and the provisions of the exit tax, or “billionaires’ amendment” as Senator Kennedy named it, apply to you.
There is only one exception for adults. If you received citizenship of both the U.S. and some other country at birth, if you continue to hold the citizenship of that country, if you are taxed as a resident of that country, AND if you have been a resident of the U.S. for no more than 10 of the 15 years prior to renouncing U.S. citizenship, you’re exempted from the exit tax provision. (A minor who relinquishes U.S. citizenship before age 18.5 and did not reside in the U.S. for more than 10 years is also exempted).”
It doesn’t say anything there about have to certify that you’re up to date on the tax side of things. Now, the rules may have changed a bit since this info was posted on the site as it’s quoting 2010 figures, but it’s worth a further check.
@Medea Fleecestealer,
It
‘s allhazyseems hazy, but see below*. This is from a Forbes article…http://www.forbes.com/2010/03/23/expatriation-exit-tax-limbaugh-obamacare-personal-finance-robert-wood_4.html
The IRS Form 8854 certifies:
Or not so hazy:
* http://www.irs.gov/pub/irs-pdf/i8854.pdf
Thanks to all the well-wishers!!
I had my relinquishment appointment in Toronto on Monday. Despite showing up early, I still waited almost an hour and a half. Despite that, all seems to have gone well.
They were indeed very pleasant and did not in any way try to give me a hard time. I had the completed forms 4079 and 4081 in hand, in addition to a personal declaration, my Canadian passport, citizenship card, commemorative citizenship certificate, and drivers license; the latter was not required. After the long wait, the signing (by me) and countersigning (by the vice consul) took less than 10 minutes; everything now goes to Washington for processing.
According to the vice consul, the long waits (6 to 8 months this summer) have been “reduced significantly”; we’ll see how long it takes to get my CLN. I was also asked to fill out a personal contact form for when the CLN is granted; it appears they will email/phone me when it comes in and I can have it mailed to myself in London as opposed to making another trip to the consulate.
….on an otherwise gray day the sun came out briefly as I made my way across the cobbles in front of Osgoode Hall on my way back to my car.
*Thanks for that calgary411, it clears things up. I’m surprised the renunciation guide site hasn’t pointed that out though. It could be that the info has changed since they originally posted I guess, but an update would be nice.
A new Forbes article: “Renouncing One’s US Citizenship — Meaningful Trend Or Visceral Overreaction?”
From the article:
“Election outcome notwithstanding, I believe that the quite onerous US tax system (for years past as well as what may lie ahead) will remain the key driver of US expatriations.”
*Lost-In-London, Congratulations!! I am glad it went well for you. Thanks for sharing your experience.
Congratulations, Lost-in-London,
It is great to get an update from you that your Relinquishment appointment went without a hitch and you should expect to receive your CLN with a better turn-around than those past. I’ll post another update to the Renouce & Relinquish database we’re maintaining and Pacifica will update The Consulate Directory. Thanks for your part of those compilations.
Every positive report like this will buoy a lot of people to make their decision to make an appointment to claim their relinquishment of US citizenship (at least everywhere except Vancouver at present — we hope that will change!).
Super, Lost-in-London! Glad you’re all done.
That’s a good sign that both your Toronto VC and Mach73’s in Halifax yesterday said that CLN waiting times have been significantly reduced since last summer.
That was a long time in the waiting room (possibly the Brock record), but at least when they call you to the counter at Toronto they know what they’re doing and it goes quickly and, as you said, they’re very pleasant.
Thanks for the details you provided and I’ll add it to the directory this evening.
And also except atOttawa , as, amongst other problems there, we’ve had a couple of people, with impeccable uncontrovertable post-relinquishment conduct, report that Ottawa told them it was too late to claim their relinquishment. False — it is never too late to claim a relinquishment. (of course, we hope that consulate will change too!)
For the record, the only consulate inCanada from which we’ve heard no news of relinquishments is Montréal. However, they get high marks from everyone who’s renounced there, so I’d be quite comfortable doing a relinquishment there.