Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part Two
Ask your questions about Renunciation and Relinquishment of United States Citizenship and Certificates of Loss of Nationality.
Participants will need to provide their e-mail address (real or fake) 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.
If you wish to receive an e-mail notification of comments, check the box to that effect when making your first comment.
NB: This discussion is a continuation of an older discussion that became too large for our software to handle well. See Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part One
“But those idiots possess no logic.”
That’s true.
“I’m feeling so trapped and screwed here.”
That sums it up for many.
“I’d just go ahead cobble together 5 years back filing and renounce asap- but I suspect this would seriously damage my relationship with my parents.”
A very good reason not to renounce.
“Trying to keep my head down for the rest of my life is probably the best plan but it’s hard to boldly invest for retirement knowing that the most financially advantageous methods incur US tax mess and that my banks here are going to rat me out at some stage.”
They’re not. They may or may not eventually ask you about citizenship, and they may or may not report your accounts. It’s wrong, and discriminatory, and not fair, but the banks don’t rat you out. They don’t even know if you’ve been filing US tax returns, and believe me they don’t want to know.
Only about 10 – 15% of US expats file US tax returns. No worries.
Umm, reporting your accounts = ratting you out.
Japan T – no, reporting your accounts is just reporting your accounts. Ratting you out would be telling the IRS you were breaking one of their stupid laws. The banks in IGA Model 1 countries (such as the UK) don’t know whether you are or not, and don’t have access to that information, and don’t want to know it.
Ya can’t stay hid if you’ve been reported.
As by far most USVs abroad are not filing taxes, it more than just likely that those reported are breaking the law. Even if not, the US has made it clear that we are all assumed to be breaking the law and must prove we are not.
Thus, reporting ones accounts IS ratting one out.
“Ya can’t stay hid if you’ve been reported.”
You’re not hid. Nobody’s looking for you.
“the US has made it clear that we are all assumed to be breaking the law and must prove we are not”
Who cares what the US thinks? It’s what they can or cannot do to you that matters.
And for expats, the US can do little but the residence country can do plenty. An expat living in a country that’s run along oppressive lines similar to the US, is in a much more difficult situation than an expat living in a country with a less oppressive system of government.
“”Ya can’t stay hid if you’ve been reported.”
You’re not hid. Nobody’s looking for you.”
they don’t need to look, my banks are reporting me.
Not looking? perhaps you haven’t heard, but there is this somewhat new law called FATCA. Might want to look into that.
Who cares what the US thinks!? They issue my passport. Why should I care what they think?
Let me add a bit.
I one is not filing a tax return, then they DO owe taxes because they lose the FEIE. One must file a tax return to claim the FEIE. Thus, those whom are not in compliance automatically owe back taxes on all earnings abraod and the penalties for not filing and paying because they have not claimed the FEIE. How many millions of US tax payers are there abroad who are not filing? That is a gold mine. But sleep well, they ain’t lookin’.
I just overslept. Apparently they are not looking.
I don’t think they are looking for me. I don’t think they know I exist. But they will, if my banks tell them under FATCA. And then? Hopefully nothing. Certainly it’s low risk now. All my money is tied up in my house.
But I was about to be mortgage free and so finally for the first time in 10 years in a position to invest. That’s how I had my OMG moment, when I applied to open a PFIC and there were questions about my nationality on the application (which, incidentally, I did not proceed with as a result).
Will things still be low risk in 20 years time under FATCA when I have more savings and some juicy PFICs and the pension I’ve paid into for 40 years? This is what is keeping me up at night. I know it’s all what if what if and I have a reasonable appetite for some risk but it’s not a nice feeling structuring my financial life looking over my shoulder.
@ Alice
If you decide you want to get the monkey off your back so you can choose to invest for retirement as you see fit you could do as others have done and keep the 5 yrs back returns and 8854 ‘simple’, and what do your parents need to know re renunciation?
Ah… that’s bad luck. FATCA can indeed have the effect of locking USCs out of some types of investment.
It has to be said, quite a lot of USCs do comply and do the paperwork, and take advantage of the investing benefits of US citizenship, which are considerable as I understand.
If you think you want to explore that option, there’s a “compliant-USC” UK forum where you could ask questions. Google uk-yankee.
if contacted by a three letter agency from a three letter country in the northern hemishpere…..
open envelope….place contents of said envelope on bottom of bird cage…..get on with you life……
if asked by anybody about citizenship reply ” that is a racist question, are xxx citizens born elsewhere any less xxx? i do not answer racist questions!”….. get on with your life
“if asked by anybody about citizenship reply ” that is a racist question, are xxx citizens born elsewhere any less xxx? i do not answer racist questions!”
No need to answer the question; only it tends to lead to being unable to open the account.
Less of a problem with the due diligence on pre-existing accounts.
Just a few real facts to throw into the mix:
They (the IRS) know who I am. They know my SS number and they also know my address and phone number. They know where I bank and what the balances were at least until I suddenly stopped filing US tax returns and FBARs a few years back. They still send me a small SS cheque every month via direct deposit. I regularly enter the US for short trips using my Canadian passport with US birthplace. When I stopped filing I gave no explanation and I never bothered to get a CLN or file a Form 8854.
I haven’t heard a single word from the IRS and I don’t expect to ever hear from them. The US border guys greet me more or less pleasantly every time I roll up to the booth and grant me the usual visa waiver entry given to most Canadians after a few routine questions. Occasionally one of them will mention my US birthplace but its more of a conversational comment than a confrontation about using the “wrong” passport.
To the best of my knowledge none of my banks have ever “ratted me out” but even if one of them did I’d have no way of knowing about it. I cheerfully lie without guilt whenever I’m asked the “question” when opening a new account. I’ve never been asked to fill out one of those IRS W-whatever forms and would refuse if asked to do so. I sleep well at night and don’t worry about any of this any more. I only comment on this forum to deflate the myth of IRS omnipotence and continue the fight against the US invasion of other countries sovereignty.
I forgot to mention that I continuously demonstrate the depth of my solely Canadian passion by refusing to give up my Blackberry…none of that Apple/Android made-in-the-US crap for me, lol!
@ Heidi My relationship with my parents is really complicated and difficult. Unfortunately it’s not as easy as saying just don’t tell them if I renounce. I wish it were.
@ plaxy ah, thanks for the pointer to the UK Yankee site. I did check it when I first realised the situation. The problem is that I want to take advantage of certain tax free investment vehicles available to me here as a resident of the UK and these are taxed punitively by the US. I don’t want any US investments, which are also taxed by HMRC in any event. I guess the point is that they only know what you tell them.
@maz57 This is really really helpful to hear. I’ve prevented from boarding an international flight for using the “wrong passport” so I don’t think I will try that one. Seems like the answer for me might be to stop seeing the IRS as the monster under the bed waiting to get me, relax and live my life.
“I guess the point is that they only know what you tell them.”
Unfortunately they (not the IRS but the banks) will probably want you to tell them where you were born, if you’re trying to open an account. FATCA’s the problem – not the IRS. (Canadians seem to have special dispensation – not European countries, or not that I’ve seen reported.)
“to stop seeing the IRS as the monster under the bed waiting to get me, relax and live my life.”
A good plan.
@Japan T
All who do not file do not automatically owe back taxes. Although the FEIE *might* not be available to late filers, there are still Foreign Tax Credits than can be used. FTCs may not be useful for someone living in a low income tax country, but such people are a minority, I would think. One can also not file and not owe by virtue of having an income below the filing threshold.
[I seem to recall reading that to be able to claim the FEIE, tax returns must be filed in a timely manner – otherwise you lose the right to claim the FEIE. Is that correct?]
@Alice
Putting IRS stress aside, in the end it all comes down to the ability to be able to function financially in the country in which you live, Some countries are much more restrictive than others for both banking and investing for US persons. That’s why one plan of action doesn’t suit all. Good luck in your choice.
Re: the FEIE
For retired people the threat of losing the FEIE is totally meaningless because all of their income is passive and therefore wouldn’t qualify for the exclusion anyway. Its entirely possible that the FTC would be insufficient to offset the US tax payable which is one more reason to not file.
“if asked by anybody about citizenship reply ” that is a racist question, are xxx citizens born elsewhere any less xxx? i do not answer racist questions!”….. get on with your life”
Damned difficult with out a bank account.
Damned difficult if they need not ask because they already know.
@tdott
As I understsnd it, if one does not file they lose tax credits too. The only way to get any exemptions or credits is to file. The only things automatically received when not filing are penalties.
@maz57
Yes FEIE is not a help to those receiving pensions, so no worries for them in these regard if not filing.