US expat tax and FBAR: Discussion thread (Ask your questions) Part Two
Please ask your questions here about US Expat tax and FBAR.
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NB: This discussion is a continuation of an older discussion that became to large for our software to handle well. See US expat tax and FBAR: Discussion thread (Ask your questions) Part One.
https://hodgen.com/filing-form-8854-by-fedex-a-success-story/
“I received a comment from a reader — she successfully used FedEx to file her Form 8854.
[…]
‘Dept of the Treasury
Internal Revenue Service
2970 Market Street
Philadelphia, PA 19104′”
Here are older instructions published by the IRS. Anyone want to try?
“Instructions for Form 8854 (Revised: 2/2002)
[…]
Former U.S. Citizens
File Form 8854 with the American Citizens Services Unit, Consular Section, of the nearest American Embassy or consulate. However, if you are filing Form 8854 because a U.S. Federal Court canceled your certificate of naturalization, file Form 8854 with that court.”
@Norman Diamond and @Portland
I’m slightly confused now. Portland says, “If I file 1040NR…” Why IF? I thought my renouncement year meant that a dual filing – 1040 & 1040NR – is a necessity. Can the 1040NR be ignored?
So my 8854 is going to a different location than the 1040’s? I thought it was attached to my 1040, like a schedule. If it really is mailed independently to a different address, then I’ll send it to my Mom in the States via priority mail so she can send it certified from within the US.
According to the link to Phil Hodgen’s blog, it looks like I’m not the only one without any IRS transcripts or confirmation. Judging by Norman’s experience, it doesn’t seem to matter what evidence I think I might have – even if it’s from the IRS – because they just deny it anyway. Don’t see the point in requesting transcripts at all then. No news is good news, right?
In 2015, I filed normally AND used the streamlined program to file delinquent returns and FBARs for 2012-14. I filed normally in 2016, too. So my records only go back a couple of years if the date of submittance is the criteria. Is there an extra procedure for obtaining streamlined confirmation (if I decide to pursue it)? What about using your social security number to obtain records AFTER exiting – is that a no-go?
I doubt the IRS would ever hassle me. From 2012-2017 I earned four figures a year, no assets/investments/pensions. What would they expect to find if they came after me? I was a stay-at-home-mom for years before my first deliquent return filing (2012). The whole point of renouncing was to plan for retirement and start investing without restrictions and extraneous obligations. I’m even smaller than a minnow – I’m krill!
@ Petlover
You might find the discussian last year on the Renunciation Part 2 thread interesting (or maybe confusing). UK Rose did her final filing different than most here.
Start with this comment …
http://isaacbrocksociety.ca/renunciation/comment-page-288/#comment-7864577
… and keep reading until you get some clarity … even though with all things IRS, clarity is never really possible.
There is a reasonable argument that IF your worldwide income for the period when you were a US person combined with your US only income for the balance of the year was less than the filing threshold, then there is no obligation to file 1040 NR or 1040.
That is what my friend did. It has the advantage that form 8938 is not required if 1040 is not required. She filed only 8854 for the expatriation year.
Unlike most countries, They can’t be bothered to confirm anything. Half their staff are temporarily laid off!! They will never bother you. Your income was always small enough. There is a process to request confirmation but I wouldn’t bother. ( Google. IRS welcome to get transcript.) Have a glass of your favorite bevy and relax.
P.S. In the years you earned 4 figures you might not have had to file! Hopefully you didn’t spend an excessive amount on accounting.
“There is a reasonable argument that IF your worldwide income for the period when you were a US person combined with your US only income for the balance of the year was less than the filing threshold, then there is no obligation to file 1040 NR or 1040.”
The 8854 instructions state (under “When to File”, p3):
@EmBee
Thanks! That is very helpful, although not crystal clear, but I’ll use it as a reference while I work through the forms. Hopefully I can manage to figure out what I’m supposed to do now. I desperately want to be done with it all asap.
@plaxy and @Portland
Unfortunately, I’m married filing seperately, so the threshold is so miserably low I have to file. By the time I take the deductions for myself and my child, however, I’m already so far down that the whole form-filling activity is purely for my own “enjoyment”. I’ve never needed the FEIE to reduce my taxable income. Plus, I don’t have any US source anything.
Petlover – “Unfortunately, I’m married filing seperately, so the threshold is so miserably low I have to file.”
Bizarre isn’t it? They make unnecessary work for themselves by insisting that people who clearly don’t owe any tax should nevertheless fill in their stupidly complicated forms – and then they moan about being under-resourced. Go figure. ;-/
“By the time I take the deductions for myself and my child”
If your spouse is a non-resident alien, and you don’t file a joint return, and your child is your dependant, I think you can file as head of household with your child being your dependant.
If the threshhold for head of household is high enough, I think you can omit filing.
(You can’t file as head of household with your non-resident alien spouse being your dependant even if your spouse really is your dependant.)
Well spotted, ND!
And here’s Phil Hodgen discussing it:
https://hodgen.com/married-person-claim-head-household-filing-status/
Oh wait a minute.
“Head of household filing status is not available for someone who was a nonresident alien at any time during the tax year.9”
Seems to rule out final filings. 🙁
@ Petlover
My husband (as married filing separately) did a 1040 up to his last day as a USC and a 1040NR from there to the end of the year. That was in 2014 and he hasn’t heard a peep except they actually acknowledged receiving his final 1040 (never happened before).
Sent 8854 original, 1040 and 1040NR to:
Department of the Treasury
Internal Revenue Service
Austin, TX 73301-0215
U.S.A.
Sent 8854 copy to:
Department of the Treasury
Internal Revenue Service
Philadelphia, PA 19255-0049
U.S.A.
Not sure if any addresses have changed since then but the Canada Post tracker showed both packages arrived at their destinations. We have screenshots.
I’m back with another question. I apologise for hijacking this thread with all my issues.
My soon-to-be-16 y.o. is a dual citizen. She will renounce when she’s 18.
Since her US parent, me, exited the tax system, does my daughter need to file information returns in order to be 5 years compliant? She would be well under the filing threshold for the 1040, BUT what about the 8965 form on “Health Coverage Exemptions”, which I’ve had to file every year (along with a Certificate of Insurance Coverage from the Austrian provider) which includes me and my daughter as a dependent?
Do I need to start filing blank 1040’s for my daughter for the next couple of years so I can attach a 8965 for her?
If so, that would have the consequence that my daughter needs to file for 2017 – at least for the part of the year after I renounced, no?
I would say absolutely no. “let sleeping dogs lie”. “don’t poke a bear in the eye with a sharp,stick” Honestly, that would be gross overrkill. Your daughter won’t be the first 18 yr old to renounve havinh had little or no income.
Can someone please confirm that the US tax for nonresident aliens will increase this year because the $4,050 personal exemption will be abolished and no standard deduction is available? I thought that the new tax act would lower US taxes, not increase them.
“I thought that the new tax act would lower US taxes, not increase them.”
Mostly it lowers taxes for the rich. But some companies (e.g. Intel and IBM) are reporting extraordinary losses for the fourth quarter of 2017 because of tax adjustments.
@ Joe Smith
Does this help?
https://www.fool.com/taxes/2017/12/29/your-complete-guide-to-the-2018-tax-changes.aspx
@Joe Smith – this will only affect NRAs with US source income other than income on which tax is withheld at source (mainly business income or short term employment that doesn’t trip the substantial presence test). The repeal of personal exemptions takes effect for 2018 income.
There are several groups of people with higher US taxes after tax reform. You’ve identified one. Another group that will pay more are those in states with high income taxes (now limited to a $10k deduction).
Last year I discovered that a colleague is an accidental American and had the sad task of explaining what that would mean for her. Since her initial OMG moment I have been trying to help her with the expatriation process. She has her renunciation appointment in February.
Her financial affairs are very simple – modest salary plus a bank account and no assets in or ties to the US.
I’m reasonably confident that I can guide her through the tax paperwork as she’s happy to go for a best effort at self-filing. What I want to work out is when she will need to file her US tax forms and FBARs and for how many years she will need to back file.
It’s been a few years since I renounced and I didn’t have to do any back filing as I was compliant, so I’d be grateful for any advice.
Does she have an SSN? If not and she’s never been in the US system at all, then she does have the option of not bothering to do anything about the citizenship unless her birthplace is a US one.
Otherwise, she needs 5 years of back filing including the final year which is this one – so 2014 to 2018 inclusive. She’ll also need to fill in the 8854 form so she doesn’t become a covered expat. 2014-2016 anytime before or after she renounces, 2017 will be some time this year and 2018 next year along with the 8854.
https://www.irs.gov/pub/irs-pdf/i8854.pdf
better to relinquish than renounce in this case NO PAPER WORK.
There is a difference between what she is supposed to do and what she could do.
She could do nothing.
Or she could do a quiet disclosure of 5 years back taxes plus the exit tax form 8854 for 2018 (due in early 2019)
Thirdly, she could do a streamlined submission.
My close friend was advised to do streamlined by a prominent firm but opted to do a quiet disclosure instead. She was advised to NOT include a letter with reasons for being late . It’s been about a year and so far not a dickey bird. In your friends case she would file 1040s for 2013-2017. This is certainly doable but difficult to be sure if you get it right. If the sums are small enough, it probably makes no difference if it is precisely correct or not
For 2018, she would file a 1040, 1040NR and 8854.
Then there are FBARS…….
On the FBAR drop down menu there is a list of reasons for not filing on time. pick either did not know I had to file or did not know my account was foreign.
She would file FBARS for 2013-17
@A O.
May not be an option if she is dual from birth and there is no expatriating act.
@ A O.,
Re:
I don’t see it mentioned in Verity’s comment that her friend performed any relinquishing act. Unless she has, her only option is to renounce (or stay under the radar*).
As for paperwork, if you’re referring to filing taxes, if Verity’s friend did perform a relinquishing act and it was after 4 June 2004, the tax paperwork is the same as for a renunciation. (Note, however, that being up to date on tax filing is not required (or even asked about) as part of the CLN application procedure. It is required by IRS that one complete IRS filing requirements by 15 June of the following year, though a person may opt not to file if they’re comfortable with that, as the CLN remains valid whether they do or not.)
*Staying under the radar is sometimes the best option for an Accidental American, depends on the circumstances of each individual, so Verity’s friend should consider it in light of his/hers before deciding on a course of action or non-action.