Please note this thread is an archive and no longer current. The conversation is continued here:
Please ask your questions here about US Expat tax and FBAR.
Participants will need to provide their e-mail address (which will remain confidential) and an alias. The only written rule is that participants must use a same alias each time they post (and not “anonymous” or derivatives thereof).
Bear in mind that any responses that you get from participants is peer-to-peer help, and it is not intended as a replacement for professional advice. Also, the Isaac Brock Society provides this disclaimer: neither the Society nor any of its members are professionals. We offer our advice here only in friendship and we recommend that our readers seek professional advice if they need it.
PLEASE NOTE: If you wish to receive an e-mail notification of comments, check the box to that effect when making your first comment.
@Petros
Thanks again for your insights. I want to relinquish my citizenship more than anything. If you are not already aware you should read about the “EX PATRIOT” act which is another barbaric act that will hit all of us unnecessarily.
@ Petros and @Big Almond. If someone thinks that they have relinquished many years ago, then would filing taxes now just before you notify the DOS not be an admitting that you are a citizen? If you renounce this year, or if the year of your relinquishment is recent you still have until June 2013 before form 8854 is due. That give you lots of time to file five years of taxes after your renunciation or relinquishment appointment and still be able to say you are tax compliant on 8854.
@ True North, it could be used against you. But what is the reason for filing, if only to give room to their citizenship claims against you? On the other hand, it is not proof that you are a citizen. Many non-citizen non-resident aliens must file taxes. Also, it is not required to be up to date on taxes to relinquish. That is what some accountants are telling people, but it is not true. As you say, the 8854 is due when your final tax return is due. So for my April 7, 2011, informing of the Consulate of my relinquishment, the 8854 was not due until June 15, 2012 when my final tax filing was due (for Jan 1- April 7, 2011).
@ Big Almond, I wrote an article about the Ex Patriot Act at the American Thinker, which also appears here.
@Petros
Hate to beat a topic to death, so FBAR’s do not have to be up to date? That would be great news.
Phil Hodgen once mentioned this at the expat forum, but unfortunately in a censored thread, the one point remains in a comment by nobledreamer:
@Petros, I know some people are in a hurry and just want to “get this whole thing over”, but I think the perfect time to book an appointment would be January 2, 2013. Get a CLN by January 2014, and have 6 months to spare if you want to file taxes, and an 8854. Anyone unsure if the will get a backdated CLN can wait for it before they do anything with taxes. Anyone booking now for the remainder of 2012 may not have a CLN before taxes are due in June 2013.
@ True North, as nice as the extra time to file might be there are sound reasons for not delaying at all about booking an appointment and renouncing. If you plan to relinquish, however, you must wait until the expatriating act takes place, such as the citizenship ceremony in your new country.
The reasons not to delay are as follows:
@Petros, I booked when I did to avoid the rush. I thought that soon the Consulates would be overrun with a million dual citizens lined up to renounce. That day may still come :). I did not make any specific plans as to what date I would book, I just took the next available date after I made my decision. I missed January but should still have some time from the CLN to June of 2013. I don’t know if my CLN will say 1973 or 2012 on it. If it is 1973 then I will not file anything to the IRS, if it is 2012 then I will make a final decision then as to what to do.
Since each consulate is making up their own set of rules, or do not know or understand the rules, will the people that have been assured of a backdated CLN indeed get one. At least in my case I was told the final decision would be made in Washington. In my own opinion I think CLN’s should be back dated all the way back to the day you left the US.
Can one file to relinquish citizenship, ie. Jan 2013 and still be working in the US for a 6 more months?
@Petros If hyperinflation took place I could wait them out. The US dollar could drop faster than the fines and interest grew. I has a friend a few years ago that lived in Zimbabwe, he came to Canada with some 10 trillion dollar Zimbabwe banknotes. I could take a pocket full of change, buy a 10 trillion US dollar bill, send it to the IRS and say keep the change 🙂
Well, the problem for me was that the 2 million tax threshold, the FEIE, the Alternate Minimum Tax, all suddenly turn on you if you are, let’s say, a Canadian who makes 75K per year in the Canada and the US dollar drops not a factor of trillion to one as in Zimbabwe, but by a four to one. Suddenly you make 200K per year with a tax liability in the US; in addition, you become an covered expatriate instead of not covered. I’m out. Before the rush and before the hyperinflation. My assets at relinquishment are set against a fixed dollar amount on the day I expatriated. Hyperinflation could help me now, to be sure, as then any fines or taxes assessed against me are also fixed against the value of my assets on April 7, 2011. See what I mean?
@Petros
I have been reading through the 8854 with interest, and it has not been updated for the 2012 year which is odd. However, I note that they have a line about the “date of expatriation” on there… is this the day I go to the consulate and tell them I am done with the country? This date can have huge implications… what if someone wins the lottery 2 weeks later but is not completely out of the system at the point… but according to the form the person had a net worth of $50 000 on the day of expatriation.
@Big Almond: However, I note that they have a line about the “date of expatriation” on there… is this the day I go to the consulate and tell them I am done with the country?
Discussed here. Bottom line appears to be “nobody really knows”, so you pick a date and wait to see if they challenge it. Highly unsatisfactory, but that’s US tax law all over.
Thanks Watcher.
My daughter formally renounced her US citizenship in London on 13 June. She is now moving on to the final step, which is to complete the infamous IRS form 8854. She is not sure when she can do this, since the 2012 version is not yet available.
Could one of the IBS regulars or observers more expert than we confirm our interpretation of the 8854 dual citizen exception and our subsequent logic, as laid out below?
My daughter was a dual national at birth, born in France. We lived in the US for a total of 9 years between 1979 and 1991. We moved to Europe in 1991, when she was 13 years old. She has not lived in the US since that time, and has lived in Great Britain since 1999. Her spouse is English, and their children have English and French nationalities. She does not work.
1. We have looked at the convoluted question 3 of Part IV of the 8854 (2011 version): “Did you become at birth a US citizen and a citizen of another country, and do you continue to be a citizen of, and taxed as a resident of, that other country?” We believe that she can answer YES to this question, as Great Britain and France are part of the European Union, and are the same for the purposes of this question. My daughter thus falls under the exception for dual citizens and would not be a “covered expatriate.” Correct?
2. As a dual citizen exception, she would NOT have to complete the balance sheet in Part V of the 8854. Correct?
3. Even if she is a dual citizen exception, she must certify on question 6 of Part IV of the 8854 that she has complied with all of her US tax obligations for the 5 preceding tax years. She can answer YES to this question because she has been a mother to three children, has not worked and has had no reportable income above USD 9350 in any of the last five years. Correct?
Thanks for your help.
*Qui peut dire?
Doesn’t appear to me that she continues to be taxed as a resident of France.
On the other hand, who in their right mind at the international robbers society is going to make a fuss? If her net worth is less than 2 mill there would be no harm in completing the balance sheet. The goal is to avoid being a covered expatriate at all costs.
Hot off the press from the IRS -New Filing Compliance Procedures for Non-Resident U.S. Taxpayer – dated today. Basically they are going to let the minnows slide through. See link at:
http://www.irs.gov/businesses/small/international/article/0,,id=256772,00.html
Under this new procedure, the taxpayer will not receive protection from criminal prosecution if the IRS and Department of Justice determine that the taxpayer’s particular circumstances warrant such prosecution.
GOOD LUCK!
http://www.irs.gov/businesses/small/international/article/0,,id=256772,00.html
Expat’s link may not work so please try the above (copy and paste it in). Basically the IRS says submit 3 years of 1040s, 6 years of FBARs and a “reasonable cause” statement plus something called “any additional information regarding compliance risk factors required by future instructions”. The submissions will be judged according to low and high risk. Anyway the devil is in the details so please read this carefully if you desire the IRS stamp of approval regarding compliance.
@all…
Regarding the recent announcement by the IRS…
The devil is in the details, but it does appear that they are finally responding to non resident minnow complaints. (I am concerned that they are not providing any avenue for immigrant residents minnows in this new process, and I think they should.)
We now have a new unit of measure, called the MCU, Minnow Complaint Unit, and that represents 3 years of time for a bureaucracy to respond to OVDI complaints. When it comes to Citizenship taxation complaints, we are at 12 MCUs and still counting!
*Could anyone please help me with an urgent FBAR problem? I decided to e-file the FBAR this year instead of expensive paper filing from Germany via UPS. Plus, I was thinking that since it is mandatory as of next year, I might as well get used to it. I got everything together today, finally got the FBAR form off the extremely slow BSA efiling website, downloaded an older version of Adobe, and started filing in the blanks.
This is the problem I’m having:
For Part IV, accounts with signature authority only, I filled in the information for my non-resident alien spouse husband’s accounts. In field 35, Taxpayer ID number of account owner, I filled in what I had been advised to enter on previous FBARs: NRA in the TIN field (plus I added “none” in parentheses next to NRA just to make things clearer). This doesn’t work on the e-form.. Field 35 is a numeric field requiring 9 digits; it does not want me to enter NRA or KISS MY GRITS or anything alpha. I have scoured the IRS website and the BS efiling website…err, I mean the BSA efiling website… for the answer to this but to no avail. I wasted at least 4 hours of constant calling today to the BS(A) efiling help desk. Busy signal, non-stop. Just tried again, still busy. Or on a permanent lunch break.
My German husband is a non-resident alien spouse living happily in his home country of Germany, with no taxpayer ID number and no need or desire to apply for one due to no finances in the States. No green card, no nuthin’–except for a shared extremely intense dislike of all things IRS and Dept of Treasury related.
Does anyone know how to solve this? I did enter “(non-resident alien)” next to his last name for each of his accounts on Part IV. I can pretty much give up on getting through to that BSA help desk. I sent them an email but am not holding my breath about a timely response.
If this is an unusual problem (I wouldn’t think it would be, NRA spouses are everywhere!), does anyone know if, as an alternative solution, I would be safe deleting the information on Part IV, efiling all the other information regarding my accounts (we have no joint accounts, thank God!) and then later on sending an amended FBAR via snail mail with a cover letter explaning the conundrum? BTW, I did download the so-called user manual, all 102 pages of it, but due to the older version of Adobe required for efiling, I can’t view the user manual until I’ve uninstalled the old Reader and re-installed the new one.
Hope someone out there can give me some sage advice….expatriation, perhaps? Thanks in advance!
Ms Deep South
@ Ms Deep South
Ah the problems of e-filing. Well first of all you have no choice now because you may not be able to get a paper FBAR into the Dept. of the Treasury’s clutches before the deadline of June 30th (that’s a received date, not a posted date — no extensions allowed). You may just have to leave a blank and believe me they will notice a blank and then they will send you a request for the missing information. (We got such a request for forgetting to fill in my husband’s date of birth on his FBAR one year). That will give you a chance to send a written explanation that your husband does not have a US ID number and should not need one since he is a non-US person (my opinion, his too no doubt). Also I don’t know why you would report your husband’s individual accounts unless you have some kind of signing authority over them. Joint accounts however would have to be reported but you say you don’t have any of those. Please anyone, if this information isn’t correct, let us both know.
Dear Ms Deep South..
Gosh, do I hate to hear about this, but I have heard elsewhere that the electronic filing is problematic and not user friendly. I long ago decided that I would always do the paper filing. If I am to be required to do this, I am not going to be their data input clerk too and do their work for them. They can spend the money and the hassle of inputting the data.
I am afraid, that you are down to the wire, and may just need to do the paper form (which does not have alpha restrictions) and express deliver it even at the cost in real $$ which you have now wasted in LCUs to figure their electronic form out. I have heard that since the 30th falls on a Saturday, they may extend the time until Monday. Here is the source of that information.
Sorry I am not much additional help.
*@EM: Thanks for your response. Let me clarify.
On the FBAR, I am reporting only my accounts and those of my non-resident alien husband’s accounts to which I have signatory authority. We have no joint accounts, so one less problem there. Due to signatory authority over 3 of hubby’s accounts, I am forced to add them to the FUBAR. I have to enter a taxpayer ID in field 35–numeric, 9 digit, nothing alpha. I tried entering a row of nine zeroes but that earned me a field highlighted in red.
If it were up to me, I’d revoke my signatory authority to his accounts, cash out all my accounts and put the money under my mattress, where it would accrue about as much interest and capital gains as it is at present. And I’d be sans the problem of reporting to the IRS and the Dept of Treasury and any one else attempting to invade my privacy and make my life expat life hell. 🙂
As it stands, I am starting to feel like more of an alien that my non-resident alien husband already is!
*@Just Me: Thanks for replying. The only reason I even tried my hand at the e-filing was due to the mistaken belief that as of 2012, e-filing of FBARs would be mandatory. Not so, according to
this article. It pays to stay abreast of things.
://www.journalofaccountancy.com/Web/20125219.htm
Your source of information was interesting and helpful, thank you. It would be a relief if they would inofficially extend the deadline to Monday. I hope they are aware that their efiling system is anything but effectual. One of the posters commenting on that article experienced the very same thing I did. The system either sent me immediately back to the previous window or gave me a “no file name found” error message. I persisted and after 1 1/2 hrs finally got the FUBAR downloaded. As for the 102-page (!!!) user manual, I had no intention of reading it, except maybe as a cure for insomnia. I doubt it contains the answer to my question.
About my alternative solution: Do you or anyone else think that I could get away with efiling the FBAR now for all accounts except those where I have signatory authority on my non-resident alien spouse’s 3 accounts, and then subsequently filing an amended one via snail mail where I would include his 3 accounts marked as NRA? I have read somewhere that if you don’t have complete information, file to the best of your ability and then send an amended FBAR afterwards. Don’ know if that’s true, though. I have no problem running down to Mail Boxes tomorrow with the paper form and paying the UPS bill but I wonder if the form would make it from Germany to Detroit by Monday? And then I wonder if the powers-that-be at the IRS or FinCEN would end up penalizing me after all?
As for being someone’s data clerk, I just realized that if I do send a hard copy by UPS tomorrow, I’ve got to download the FBAR from the IRS site and redo the blankety-blank thing, because the efiling site will not let you send a print out of their form as a hard copy. Unless I am misinformed again.. I need an adult beverage. NOW.