While waiting around for the Cavaliers Hawks game to begin I came across this!
Summary of filing and reporting obligations required by US citizens residing in Canada
Interesting.. I have a CLN but never did my final filings so am now a “covered expatriate”. I simply do not have the finances to pay for tax help which I would need to be “compliant”. So unless I win lotto or come into money (so I can afford this nonsense) I will not venture to the US. With US approaching 40 trillion in debt that surpasses their GDP, I think I will just wait for the collapse.
The “current law” must be a reference to the Reed Amendment which has been demonstrated to be ridiculous in the extreme. See: If You Go, You Can’t Come Back. The Reed/Schumer Follies-Past And Proposed Anti-Expat Legislation: Interview With Bill Yates, Former IRS Attorney (International).
I don’t think anyone has ever heard of even one person denied entry due to the Reed Amendment. That was 19 years ago. This sort of statement is nothing more than fear-mongering, plain and simple.
It is quite interesting that a new amendment would contradict the AJCA in 2004 which did away with “renouncing for tax avoidance purposes.” And would only apply to “covered” expatriates. Why then, would it be okay for other expats to renounce for tax avoidance purposes? Think of adding that mess onto the one we already have with past relinquishments, 877A, etc.In addition, the IRS decided PLRs for tax avoidance were not practical from an administrative point of view. What sense would it make to throw the same responsibility on Homeland Security? What does Homeland Security know about tax? Are renunciates automatically such a threat to the Homeland that we now must be cleared by those who investigate terrorists? Tax-cheat, Terr-or-ists. Tax cheat, Terr- or-ists. Say it over and over so you know just what kind of person the US govt thinks you are.
Perhaps an intelligent observation would be that the first attempt to bar renunciants has failed and the 2nd attempt to pass a stricter law has not made it past the House. I hope everyone thinks about this before being scared out of their minds that they cannot renounce because they might never be allowed to see their family again.
Very practical comments on what a renunciant should expect
I love how Moodys adds the penalties and threats to their charts in the link in the OP. Moody’s never fails to amuse me with their fear mongering. Good job. Now go back to the US. Is there an “aiding and abetting” charge in Canada?
“accumulating wealth and benefitting from the US system” or something along those lines….
What if somebody accumulated their wealth elsewhere? What if they never had anything to do with America and did not benefit from them? What are these people supposed to do? According to them: pay up anyway.
Am I missing something?
What I understand from here is that if you were born in a foreign country as a foreign national and then later became nationalized as a US citizen through a mother but only lived in the US for about 5/6 years 35 years ago…. you are not subject to an exit tax?
I thought the exit tax applied to everyone…. can someone clear this up for me please. I can provide additional details if needed.
There are two main exceptions to the exit tax regime for US citizens looking to renounce and not be considered Covered Expatriates. The first exception is largely limited to dual citizens who live in the country of their other nationality. The second is even narrower and is limited to citizens who did not live in the US for more than ten years before the age of eighteen and a half. As minors are generally not allowed to renounce their US citizenship, it effectively allows only a six month window for such individuals to avoid the imposition of § 877A’s exit tax regime. The following are the two exceptions to § 877A’s exit tax regime:
1. An individual is exempt from the exit tax regime if he or she:
Files Form 8854;
Became a dual citizen at birth and continued to be a citizen and tax resident of the other country (Canada) at the time of renunciation of citizenship; and
Was a resident of the US for no more than ten of the fifteen tax years ending with the tax year during which the renunciation of citizenship occurred. 14
2. An individual is exempt from the exit tax regime if he or she:
Files Form 8854;
Renounces his or her US Citizenship before the age of 18 and a half; and
Was a resident of the US for no more than ten years before the age of 18 and a half. 15
In the practical application of these two exceptions, a renouncing individual who qualifies under either will not be subject to the Net Worth Test or the Tax Liability Test only.
You will find the info at the bottom of this blog.
Click on renunciation guide (shaded black)
Click on menu then click on exit tax.
I believe that as a dual citizen from birth if you have lived and been taxed in you non US country and have not lived in the US in the last 10 of 15 yrs then you will not have to pay an exit tax IF you have filed the last 5 yrs of tax returns and 6yrs of fbars.
If you haven’t you can back file via streamlined as long as you convince them that you had no knowledge of the filing requirements.
Please note , the exit tax is only charged on unrealized GAINS above 650,000 if you have a net worth of over 2,000,000. OR if you are not TAX compliant.