# Renouncing U.S. Citizenship Soon And Old Tax



## Hudeus (Apr 22, 2021)

Hey guys,

Miraculously, I got an appointment to renounce my U.S citizenship which is coming up very soon. For the past 2 years, I didn't do my taxes 100% correctly. I haven't filed FBAR forms and I haven't filed Forms 5471 for my foreign company. 

Do you think it's worth to refile everything now and correct these mistakes before I renounce officially or just file my final tax form and be done with the USA system. Anyone aware of the risks and how diligently they'll check everything when people renounce? I'm not a millionaire or anything like that for reference. 

Thanks!


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## Bevdeforges (Nov 16, 2007)

If you're not in danger of actually owing huge amounts of back tax, just drop it. They don't ask (at least not in my experience and that of others I know who renounced elsewhere) but you can say with a clear conscience that you are compliant for the last 5 years (which is supposed to be the standard). The fact that you made a few mistakes is irrelevant, and should they ever actually bother to review your tax returns they will get back to you - because renunciation doesn't get you off the hook for filings back when you were actually still a citizen. 

But with all the stuff the IRS has on their plate at the moment (well past due pandemic checks, those child credit payments and forking over the last president's zillion page tax returns, etc.) you can rest assured that you are small potatoes and very quickly forgotten. Chances are they won't check anything at all.


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## Nononymous (Jul 12, 2011)

There is no requirement that you be in tax compliance before renouncing US citizenship. This is entirely between you and the State Department; the IRS is informed after the fact but has no say in the matter. You could owe the US government a million dollars in back taxes and it would not prevent you from renouncing.

The citizenship piece and the tax piece are totally separate. If you want to renounce, you renounce. Don't explain why, you are not required to give a reason. You won't be asked about your tax status, but don't volunteer information either. You pay the fee and receive your CLN several months later. Your future US tax obligations cease the moment you swear the oath to renounce. Your name will be added to a list and sent from the State Department to the IRS.

After you renounce you can choose to make a formal exit from the US tax system. This requires that you certify tax and FBAR compliance for the past five years, plus then completing Form 8854 to determine whether you meet the threshold ($2 million net worth) for possibly paying an exit tax. If you decide to ignore this, nothing bad will happen. The IRS has recently admitted that 40 percent of those who renounce never bother with the tax exit procedure. They have no resources to follow up, and no ability to impose penalties or to collect past debts if a person has no US assets. 

In your case you can renounce and walk away, or renounce and just leave the incorrect returns as is, then file whatever you want for your final year plus Form 8854. It will likely make no difference to your life either way.


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## Hudeus (Apr 22, 2021)

Thank you for the feedback to both of you. This does help me make my decision quite a bit. I think I'll leave my past taxes as they are and file one last return with form 8854. Only thing is I think I still won't file FBARs and 5471 for my last return either. I honestly didn't know I had to until very recently which made my decide to renounce in the end. Kindly appreciate any thoughts on this.


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## Bevdeforges (Nov 16, 2007)

Hudeus said:


> Only thing is I think I still won't file FBARs and 5471 for my last return either. I honestly didn't know I had to until very recently which made my decide to renounce in the end.


Excellent choice. Seriously, they aren't going to follow up on any of that tax stuff unless you "suddenly" come to their attention as owing huge amounts of back taxes and being worth enough to be considered subject to the exit tax. And even then, probably only if you start visiting back in the US in some manner as to be very "visible" to the IRS.

BTW congrats on getting your appointment. The actual procedure at the Embassy is amazingly simple - it may take a while, but you really don't have to do much of anything, just follow the process.


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## Hudeus (Apr 22, 2021)

Bevdeforges said:


> Excellent choice. Seriously, they aren't going to follow up on any of that tax stuff unless you "suddenly" come to their attention as owing huge amounts of back taxes and being worth enough to be considered subject to the exit tax. And even then, probably only if you start visiting back in the US in some manner as to be very "visible" to the IRS.
> 
> BTW congrats on getting your appointment. The actual procedure at the Embassy is amazingly simple - it may take a while, but you really don't have to do much of anything, just follow the process.


Thank you Bevdeforges, you've helped me a couple of times around this forum. This past year has been overwhelming with everything related to this.

Best,
Hudeus


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## Nononymous (Jul 12, 2011)

Hudeus said:


> Thank you Bevdeforges, you've helped me a couple of times around this forum. This past year has been overwhelming with everything related to this.


It's understandable that people freak out about this at first but honestly, unless you have money tied up in the US, the IRS can be completely ignored by dual citizens living abroad. They can't touch you.

The one advantage of filing over the past year or two was collecting the $3200 stimulus benefit, which nicely covers the $2350 renunciation fee.

I'll be renouncing myself early next year, and let's just say, it's probably not the case that the IRS has heard from me for several decades now. Nor are they likely to hear from me after I'm gone.


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## Zendo (Apr 25, 2013)

Nononymous said:


> It's understandable that people freak out about this at first but honestly, unless you have money tied up in the US, the IRS can be completely ignored by dual citizens living abroad. They can't touch you.


What about the W9 und US Waiver Forms forms required from the bank in order to keep an account? I am not really someone the IRS would be particularly interested in, however I sometimes wonder whether, based on FATCA reporting, and particularly the US Waiver Form, if the IRS could in fact garnish one's account, based on the data they receive from the bank, however big or small. 

Not that I think I should really be concerned. I have no assets in the USA, have never worked there and have never filed for taxes. I never even thought about it until the whole FATCA thing evolved.


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## Bevdeforges (Nov 16, 2007)

The W9 forms are NOT submitted to the IRS. Those stay filed away in the bank's files "just in case" the bank should get audited by the IRS to make sure that the lists they have submitted (usually through their own national bank) reasonably reflect what they are supposed to be reporting. 

Once you have renounced, you might want to send a copy of your CNL to your bank, possibly along with a W8-BEN form, which is the W9 for non-US persons. Gets your bank off the hook for including you on any lists of "US persons" they may submit in the future.


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## Nononymous (Jul 12, 2011)

Zendo said:


> I am not really someone the IRS would be particularly interested in, however I sometimes wonder whether, based on FATCA reporting, and particularly the US Waiver Form, if the IRS could in fact garnish one's account, based on the data they receive from the bank, however big or small.


The IRS cannot touch your foreign assets. Period, full stop.


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