# UK/US streamlined tax & FBAR filing - what is safe to leave out



## HTRTY

Hello, I would really appreciate some advice (and reassurance!) as like many before me, I am extremely anxious about my situation.

I was born in the UK to US parents so have been a dual citizen for my whole life, though only (except for a year when a toddler) ever residing and working in the UK. My husband is a UK citizen as our my children (neither being able to claim US citizenship).

Having discovered very late in the day that I should have been filing tax returns in the US, I am now about to do so under the streamlined programme and then plan to renounce when it is physically possible to do so.

My situation is generally straightforward -- I am a fairly low-earning self-employed and am hoping to resolve the whole process as quickly and painlessly as possible.

But in reading up on the FBAR forms, I have realised that I should be declaring my (recent) lasting power of attorney for my mother and for the two accounts of hers I hold credit cards too but have no financial interest in. But doing this will open up a whole can of financial worms and make my filing and renouncing much more expensive and complicated because of the background: 

My mother is in her late 70s and has been resident in the UK since her early 20s. She has never filed taxes in the US as far as I am aware. If I declare the two cards I have which are connected to her accounts (one credit, one debit though I don't have direct access to the accounts/statements etc. I am just an extra name on the account) or the POA, I assume I would have to list all of her accounts as well as my own. This would make the process hugely expensive and also potentially lead to her being discovered by the IRS. She is starting to be open to following the streamlined programme but is not quite there yet. I obviously don't want to inadvertently get her in trouble as well as add to the complexity of my own situation. 

Since my POA is not "active" (i.e. I am not accessing or using her accounts except for a few very recent purchases on one of the aforementioned credit cards), what are the chances of the POA coming to light and/or my connection to her two accounts? Could I conceivably leave them out, and argue that I did not consider myself a signatory to them if it did come to light in the future? Bear in mind that I hope to renounce next year at the very latest assuming embassies will re-open for renunciation interviews once we are closer to being post pandemic.

Also, is there a statute of limitations for liability to these declarations?

I also am worried that if my mother dies before sorting her US tax position out, we will become liable for any penalties, despite me hopefully at that point no longer being a US citizen. She does have dollar accounts in the US in addition to her assets in the UK, which are considerable (though not enormous!)

If anyone has any advice or info on ANY PART of the above, I would be so grateful to hear it. I am ridiculously anxious about it all as I am extremely law abiding in the normal way of things. 

Thank you in advance for any help.


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## HTRTY

HTRTY said:


> Hello, I would really appreciate some advice (and reassurance!) as like many before me, I am extremely anxious about my situation.
> 
> I was born in the UK to US parents so have been a dual citizen for my whole life, though only (except for a year when a toddler) ever residing and working in the UK. My husband is a UK citizen as our my children (neither being able to claim US citizenship).
> 
> Having discovered very late in the day that I should have been filing tax returns in the US, I am now about to do so under the streamlined programme and then plan to renounce when it is physically possible to do so.
> 
> My situation is generally straightforward -- I am a fairly low-earning self-employed and am hoping to resolve the whole process as quickly and painlessly as possible.
> 
> But in reading up on the FBAR forms, I have realised that I should be declaring my (recent) lasting power of attorney for my mother and for the two accounts of hers I hold credit cards too but have no financial interest in. But doing this will open up a whole can of financial worms and make my filing and renouncing much more expensive and complicated because of the background:
> 
> My mother is in her late 70s and has been resident in the UK since her early 20s. She has never filed taxes in the US as far as I am aware. If I declare the two cards I have which are connected to her accounts (one credit, one debit though I don't have direct access to the accounts/statements etc. I am just an extra name on the account) or the POA, I assume I would have to list all of her accounts as well as my own. This would make the process hugely expensive and also potentially lead to her being discovered by the IRS. She is starting to be open to following the streamlined programme but is not quite there yet. I obviously don't want to inadvertently get her in trouble as well as add to the complexity of my own situation.
> 
> Since my POA is not "active" (i.e. I am not accessing or using her accounts except for a few very recent purchases on one of the aforementioned credit cards), what are the chances of the POA coming to light and/or my connection to her two accounts? Could I conceivably leave them out, and argue that I did not consider myself a signatory to them if it did come to light in the future? Bear in mind that I hope to renounce next year at the very latest assuming embassies will re-open for renunciation interviews once we are closer to being post pandemic.
> 
> Also, is there a statute of limitations for liability to these declarations?
> 
> I also am worried that if my mother dies before sorting her US tax position out, we will become liable for any penalties, despite me hopefully at that point no longer being a US citizen. She does have dollar accounts in the US in addition to her assets in the UK, which are considerable (though not enormous!)
> 
> If anyone has any advice or info on ANY PART of the above, I would be so grateful to hear it. I am ridiculously anxious about it all as I am extremely law abiding in the normal way of things.
> 
> Thank you in advance for any help.


 Forgot to say that I don't have a SSN but assume I can apply for the ITN (not sure that's the correct acronym?) instead?


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## Nononymous

One thing you should be aware of, the IRS has a "special procedure" for anyone renouncing without an SSN, which also waives up to $25,000 in taxes owed:






Relief Procedures for Certain Former Citizens | Internal Revenue Service


An alternative means for certain former U.S. citizens to satisfy their tax compliance certification process upon expatriation from the U.S.




www.irs.gov





More to the point, why are you bothering with any of this? You were born in the UK, the IRS doesn't know that you exist, you won't have any problems with FATCA if you don't disclose US citizenship to any financial institutions. Just ignore it, spare yourself a lot of paperwork and the $2350 renunciation fee. (Though this year you would in theory receive $3200 in stimulus benefits, which would offset the cost of renouncing. But do you really want to deal with all this just to clear an $850 profit?)

Your mother should absolutely ignore all this too, both now and posthumously. Move what money she has out of the US and that's basically the end of it. If indeed she has considerable assets in the UK, bringing her into compliance now might be quite expensive and complicated. If her current instinct is to stay off the radar, you should absolutely respect that. Your only concern would be some idiot lawyer or accountant trying to convince you that her estate needs to be brought into US tax compliance before you can inherit. That being said, you should possibly discuss the situation with a professional and get a sense of the potential compliance costs and tax liabilities.


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## Jca1

I'd agree that this whole process seems unlikely to leave you better off than just doing nothing.


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## Bevdeforges

HTRTY said:


> Forgot to say that I don't have a SSN but assume I can apply for the ITN (not sure that's the correct acronym?) instead?


Actually, no, if you are a de facto US citizen, you need to apply for a proper US SSN, which is a rather "intense" process where you have to prove your identity, US nationality and why you didn't get a SSN at birth. What's that about letting sleeping dogs lie?


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## HTRTY

Thanks so much for your replies. I understand what you are saying (and certainly won't be doing anything to force my mother to take action if she decides to go for another approach). 

For various reasons, I think I am unlikely to escape detection long term and want to renounce and be done with the citizenship to avoid any future nightmares. 

My father took a let-it-lie approach with similar situations and it backfired spectacularly -- his second family is still dealing with the ramifications. This also goes into my thinking -- basically, I do realise the whole thing is going to cost me a lot in both time and money but if it means I emerge on the other side without having to worry about hiding my citizenship long term, or during visits to family in the US, it will be worth it. 

I'm still interested to know whether anyone thinks it's likely that my having power of attorney and access to two of my mother's accounts would come to light if I don't declare them on the FBARs.

So more fresh hell awaits with the SSN then -- sigh. Imagine that's going to hold up the tax filing too. 

Thanks so much for all your thoughts -- I'll keep reading and reflecting.


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## HTRTY

I should have said that I think my mother has already run into some problems trying to move all her money out of the States because of FATCA so I'm not sure what will happen there.


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## HTRTY

Nononymous said:


> One thing you should be aware of, the IRS has a "special procedure" for anyone renouncing without an SSN, which also waives up to $25,000 in taxes owed:
> 
> 
> 
> 
> 
> 
> Relief Procedures for Certain Former Citizens | Internal Revenue Service
> 
> 
> An alternative means for certain former U.S. citizens to satisfy their tax compliance certification process upon expatriation from the U.S.
> 
> 
> 
> 
> www.irs.gov
> 
> 
> 
> 
> 
> More to the point, why are you bothering with any of this? You were born in the UK, the IRS doesn't know that you exist, you won't have any problems with FATCA if you don't disclose US citizenship to any financial institutions. Just ignore it, spare yourself a lot of paperwork and the $2350 renunciation fee. (Though this year you would in theory receive $3200 in stimulus benefits, which would offset the cost of renouncing. But do you really want to deal with all this just to clear an $850 profit?)
> 
> Your mother should absolutely ignore all this too, both now and posthumously. Move what money she has out of the US and that's basically the end of it. If indeed she has considerable assets in the UK, bringing her into compliance now might be quite expensive and complicated. If her current instinct is to stay off the radar, you should absolutely respect that. Your only concern would be some idiot lawyer or accountant trying to convince you that her estate needs to be brought into US tax compliance before you can inherit. That being said, you should possibly discuss the situation with a professional and get a sense of the potential compliance costs and tax liabilities.


I've just had a look at the special procedure link for people without an SSN -- thank you so much! Looks like there is an answer to the situation. That's a huge relief as I just read through what was necessary for the SSN and it was putting me in a completely Catch 22 situation as I only had one of the necessary docs!


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## Nononymous

You can renounce first and then use the "special procedure" to catch up on tax filings, or you can just renounce and ignore all the paperwork. If you want the stimulus money to fund the renunciation, file first if that's permitted under the program. (I don't see why they wouldn't send you the money even without an SSN. If you do this, set up a US bank account with Wise or similar so that you can have the funds deposited directly, rather than wait for and deal with a paper cheque.) I would still say ignore this completely given that you're a UK citizen born in the UK, but everyone has a different comfort level with telling untruths.

If you are able to share, how is FATCA making it difficult for your mother to move money out of the US, and what happened with your father?

I can't imagine any possible way that your power of attorney would become known to the people who administer FBARs. I assume that you yourself are not subject to FATCA, if banks are unaware of your US citizenship?

You are aware, I assume, that the IRS has no routine means to punish or enforce collection against anyone in the UK?


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## HTRTY

Nononymous said:


> You can renounce first and then use the "special procedure" to catch up on tax filings, or you can just renounce and ignore all the paperwork. If you want the stimulus money to fund the renunciation, file first if that's permitted under the program. (I don't see why they wouldn't send you the money even without an SSN. If you do this, set up a US bank account with Wise or similar so that you can have the funds deposited directly, rather than wait for and deal with a paper cheque.) I would still say ignore this completely given that you're a UK citizen born in the UK, but everyone has a different comfort level with telling untruths.
> 
> If you are able to share, how is FATCA making it difficult for your mother to move money out of the US, and what happened with your father?
> 
> I can't imagine any possible way that your power of attorney would become known to the people who administer FBARs. I assume that you yourself are not subject to FATCA, if banks are unaware of your US citizenship?
> 
> You are aware, I assume, that the IRS has no routine means to punish or enforce collection against anyone in the UK?


Thanks so much, Nononymous, I really appreciate your continued advice and thoughts. It's kind of you to take the time to discuss this, especially given I am aware you would take a very different approach. 

It's reassuring to hear that you don't think the people who administer the FBARs are likely to uncover my POA -- that's what my instinct says and I am relieved you agree. I am going to bank on it being unlikely that they uncover that I have a credit and debit card for two of my mother's accounts too as though I will be named as an additional user (for the cards), I am not a joint account holder so I don't see how they would have additional information on me -- or certainly none that would trigger the relevant department. Even my usually authority-fearing self feels this is a risk worth taking!

Re your question re my mother -- she hasn't explained it all to me but I know she was forced to get a SSN in the recent past as I guess her banks are aware of her dual citizenship (unlike me, she is US born). Maybe she could do it without issue but she gave me the impression there was a problem. I haven't asked because it's not my business what she decides to do with the money though I agree with you it would be a good idea to bring it over to the UK, particularly if she doesn't intend to become compliant.

My dad's story is novel length (and in more than one volume) but let's just say it's instilled in me a desire to be follow the rules for at least the majority of the time -- though as you see above, I am comfortable with omitting info if it feels like it's going to open a bigger can of worms to be completely open! 

And yes, I'm aware of the IRS finding me or enforcing collection in the UK is negligible but I think technology is and will continue to make this a possible future pain and I'd just rather deal with it once and for all and go to see family in the US as a UK citizen, not a US one, without any anxiety (and ditto for future work etc.). Partly because of family events, partly because of my own personality, and partly because I genuinely wish to be a British citizen only, I am willing to take on the expense and drag of it all to sort it out.

I realise you might think my decision is idiotic but if you knew my background, I suspect you'd understand!

In any case, it's impossible to book an appointment to renounce at the moment because of the pandemic so I just hope I don't get held up even more. The tax advisor seemed to think I could become compliant and still be able to renounce later this year or next so that I don't have to file more than the required five years (and don't have to apply for the SSN). Will hope so...

Thank you again for reassuring me re the FBARs -- you really have reduced the level of anxiety I was feeling enormously. I am so happy I came across this forum.


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## 255

HTRTY -- The FBAR is only an information return, it doesn't mean you'll owe tax or even that the information is distributed anywhere. Once you get your SSN, you can file your U.S. tax returns and utilize the "Streamlined Method" to come into compliance, you'll just file the current and the last three years (more than likely, you'll owe zero tax.) Ensure you file your 2020 & 2021 tax years to get your full "Stimulus" payments (You'll get a refund, in the amount of the recovery credits. You can then utilize your income tax refund to cover the expatriation fees, file IRS form 8854 2020 Form 8854 (irs.gov) and you'll be out of the U.S. system. Please help your future self, by helping your mother! She is of the age, that "private" should be less meaningful or might disappear forever. Estate and end of life planning is something that requires "children" to be "on board" to be effective. Cheers, 255


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## Nononymous

No worries. Saving people from needless compliance makes me happy.

If you're determined to renounce you can possibly turn a small profit doing it this year, if you can collect the full $3200 stimulus benefit. Might as well research that. It will be years before you get a renunciation appointment, I expect. In the meantime it's critically important that you do NOT disclose US citizenship to any financial institution, or you'll be in the same position as your mother - forced to obtain an SSN.

With regard to the POA, if it's not a joint account, your name should not appear on any FATCA reporting. Even if your name were there, no evidence that the IRS is currently capable of matching up FBAR and FATCA data so the chance of negative consequences would be vanishingly small.

What I expect is happening with your mother is that the bank put two and two together and asked about citizenship - presumably in addition to being born in the US, she does not speak British without a trace of an accent? - and once she confessed, they had no choice but to demand an SSN, per FATCA rules. Obtaining an SSN as an adult, particularly during the pandemic, can be a bit of a chore. In any case, your mother's bank is aware of her US person status and will subject her to FATCA reporting, but this does not meant she's on the IRS radar in any serious way. She can take the time to make an informed decision about the potential costs of compliance. If indeed her assets are "considerable" then it could be an arduous and expensive process. This being said, it should not be difficult for her to move any remaining money out of the US. At that point she's essentially untouchable as far as the IRS is concerned. Ultimately it's her affair but you might be well advised to consult a lawyer about possible estate ramifications. The danger is not the IRS finding out and demanding a cut of your inheritance, but rather anyone involved in administering the estate insisting on bringing it into US tax compliance - because of their own perceived liability as executors - at your expense.


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## Nononymous

255 said:


> HTRTY -- The FBAR is only an information return, it doesn't mean you'll owe tax or even that the information is distributed anywhere. Once you get your SSN, you can file your U.S. tax returns and utilize the "Streamlined Method" to come into compliance, you'll just file the current and the last three years (more than likely, you'll owe zero tax.) Ensure you file your 2020 & 2021 tax years to get your full "Stimulus" payments (You'll get a refund, in the amount of the recovery credits. You can then utilize your income tax refund to cover the expatriation fees, file IRS form 8854 2020 Form 8854 (irs.gov) and you'll be out of the U.S. system. Please help your future self, by helping your mother! She is of the age, that "private" should be less meaningful or might disappear forever. Estate and end of life planning is something that requires "children" to be "on board" to be effective. Cheers, 255


The IRS has a special "relief procedure" to file under streamlined without an SSN for anyone who is renouncing. The point of this escapes me - why bother if you've already renounced? - but the renunciation subsidy (a.k.a. stimulus benefit) does change the calculation somewhat.


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## HTRTY

Thank you, Nononymous and 255, these are such helpful posts. And again thank you for reducing my anxiety re the FBARs -- that really has made a big difference to my mindset to the whole thing. Starting to see it more pragmatically...

I hope it doesn't take more than a year to get a renunciation appointment because I am guessing that could mean an extra year of filing? (You submit five years' worth of back taxes with renunciation plus six years of FBARs, right?) And I really don't want to have to apply for an SSN unless I absolutely have to...I have to look more into the stimulus package though clearly.

Nononymous -- you're exactly right about my mother's SSN -- bank picked up she was a US as well as UK citizen and forced her to apply for one. I have no concern of that happening with me as all my accounts are longstanding and as far as I remember don't list my dual status, just my (UK) place of birth. And I'm honest and law abiding as a general rule but I'm not about to 'confess' my dual citizenship to our banks, especially when I'm working towards renouncing -- don't worry, I'm not that misguided...

My husband and I are the executers for my mother's estate. I think she would love to stay under the radar but is becoming less sure that will be possible because of her US holdings and her UK bank's awareness of her dual citizenship. I don't think she'd owe anything in past income tax if she decided to comply but not renounce. I doubt the US inheritance taxes are anywhere near as high as the UK ones either. But that's up to her -- I might suggest she puts her situation to this forum as she'll get good advice I now know! This forum is such a great resource.


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## Nononymous

With the US inheritance tax limits being so high the concern isn't the IRS taking a cut, it's rather that someone insists on bringing the estate into US tax compliance. If you are the executors, that will be your decision, which is a good thing in this case. (I am a fully non-compliant dual citizen, born in the US but living in Canada. My executor has agreed that they will "know nothing" about any potential US citizenship should I shuffle off this mortal coil prior to renouncing.) 

It might be worth doing a bit of exploration into what exactly it would take to bring your mother or her estate into compliance, just so you know what you're potentially dealing with. Maybe it's easy, maybe it's not. When you said she had "considerable" assets the concern would be situations where she can owe a US tax bill (e.g. selling her home with a capital gain in excess of $250k - this is what bit Boris in the derriere, back in the day) or if she held ISAs, or mutual funds that are considered PFICs, there can taxes owed or at very least some really horrible reporting requirements that may require expensive professional help.


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## HTRTY

HTRTY said:


> Thank you, Nononymous and 255, these are such helpful posts. And again thank you for reducing my anxiety re the FBARs -- that really has made a big difference to my mindset to the whole thing. Starting to see it more pragmatically...
> 
> I hope it doesn't take more than a year to get a renunciation appointment because I am guessing that could mean an extra year of filing? (You submit five years' worth of back taxes with renunciation plus six years of FBARs, right?) And I really don't want to have to apply for an SSN unless I absolutely have to...I have to look more into the stimulus package though clearly.
> 
> Nononymous -- you're exactly right about my mother's SSN -- bank picked up she was a US as well as UK citizen and forced her to apply for one. I have no concern of that happening with me as all my accounts are longstanding and as far as I remember don't list my dual status, just my (UK) place of birth. And I'm honest and law abiding as a general rule but I'm not about to 'confess' my dual citizenship to our banks, especially when I'm working towards renouncing -- don't worry, I'm not that misguided...
> 
> My husband and I are the executers for my mother's estate. I think she would love to stay under the radar but is becoming less sure that will be possible because of her US holdings and her UK bank's awareness of her dual citizenship. I don't think she'd owe anything in past income tax if she decided to comply but not renounce. I doubt the US inheritance taxes are anywhere near as high as the UK ones either. But that's up to her -- I might suggest she puts her situation to this forum as she'll get good advice I now know! This forum is such a great resource.


Sorry -- but if you're still around I do have one more question. If I can't make an appointment to renounce for the time being then can my streamlined tax returns still be submitted without an SSN using the relief procedure you alerted me to? (Relief Procedures for Certain Former Citizens | Internal Revenue Service) I'm a bit confused about how the timing of all this works although I'm assuming my tax advisor is across it since we're working on years 17 through 20 for now ... I just want to have it clearer in my mind. (If this question is clear!)


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## HTRTY

Nononymous said:


> With the US inheritance tax limits being so high the concern isn't the IRS taking a cut, it's rather that someone insists on bringing the estate into US tax compliance. If you are the executors, that will be your decision, which is a good thing in this case. (I am a fully non-compliant dual citizen, born in the US but living in Canada. My executor has agreed that they will "know nothing" about any potential US citizenship should I shuffle off this mortal coil prior to renouncing.)
> 
> It might be worth doing a bit of exploration into what exactly it would take to bring your mother or her estate into compliance, just so you know what you're potentially dealing with. Maybe it's easy, maybe it's not. When you said she had "considerable" assets the concern would be situations where she can owe a US tax bill (e.g. selling her home with a capital gain in excess of $250k - this is what bit Boris in the derriere, back in the day) or if she held ISAs, or mutual funds that are considered PFICs, there can taxes owed or at very least some really horrible reporting requirements that may require expensive professional help.


Yes, you're right -- we need to find out what we would need to do to bring her (or her estate) into compliance. The capital gain on her home could be an issue and she does have ISAs and shares etc. The US bank account might also be an issue if we tried to transfer the funds after her death (?) I think it would definitely enter nightmare territory, especially if she would be considered as automatically being liable to the penalties for non-filing if she had not become compliant at the time of death. Have no idea how it would work though so you're right, we need more research and advice on this.


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## HTRTY

And thanks again, Nononymous!


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## Nononymous

HTRTY said:


> Sorry -- but if you're still around I do have one more question. If I can't make an appointment to renounce for the time being then can my streamlined tax returns still be submitted without an SSN using the relief procedure you alerted me to? (Relief Procedures for Certain Former Citizens | Internal Revenue Service) I'm a bit confused about how the timing of all this works although I'm assuming my tax advisor is across it since we're working on years 17 through 20 for now ... I just want to have it clearer in my mind. (If this question is clear!)


I don't know but it should be in the detailed material on that program. I seem to recall it also applied to someone intending to renounce, so presumably no need to wait. But it should be in there somewhere.


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## Nononymous

HTRTY said:


> Yes, you're right -- we need to find out what we would need to do to bring her (or her estate) into compliance. The capital gain on her home could be an issue and she does have ISAs and shares etc. The US bank account might also be an issue if we tried to transfer the funds after her death (?) I think it would definitely enter nightmare territory, especially if she would be considered as automatically being liable to the penalties for non-filing if she had not become compliant at the time of death. Have no idea how it would work though so you're right, we need more research and advice on this.


I wouldn't assume the worst in terms of penalties etc. upon death but it might make everyone's life much easier to move that money out of the US while she's still alive. There is no reason why FATCA should make that difficult. If it's cash, that's easy, if it's other investments then you might have some interesting US tax ramifications when selling.


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## 255

HTRTY -- As a U.S. citizen, you'll need an SSN to file U.S. Federal Income Taxes. Of course, after you file your taxes, collect your stimulus money, and expatriate -- you'll probably never use it again. Application for Social Security Card (ssa.gov) The IRS requires all filers to have a Taxpayer Identification number and the SSN is what U.S. citizens use (there are also ITINs & ATINs for non-citizens to file.) Your current POA for your mother is not valid after death, but as executor, you'll have powers to "manage" her estate. You'll also have a "stepped-up basis" on any property held upon her passing.

I agree with Nononymous, it would be to your benefit to move all your mother's accounts to the UK now. It may be problematic in the future (I was the executor of my father's estate and it was a pain, and I lived in the same state.) As far as capital gains, the U.S. rates are minimal for long term gains and there's a $250K (2X, if she's married) exclusion on capital gains on a principal residence. Your mother' investment gains are more than likely less than the standard deduction, so no tax. Remember, if she comes into compliance, she'll also get the stimulus benefits. If she decides to come into compliance, filing her annual 1040s, until her passing, you'll just need to file an IRS form 706 to close out her estate Form 706 (Rev. August 2019) (irs.gov) Cheers, 255


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## Nononymous

255 said:


> As a U.S. citizen, you'll need an SSN to file U.S. Federal Income Taxes.


See here:






Relief Procedures for Certain Former Citizens | Internal Revenue Service


An alternative means for certain former U.S. citizens to satisfy their tax compliance certification process upon expatriation from the U.S.




www.irs.gov





There is a special IRS procedure for someone to become compliant without an SSN if they have renounced or intend to renounce, and have never filed in the past. This procedure also waives up to $25k in US taxes owing.

I would assume that this was all done as a political gesture in response to EU complaints about the difficulties Accidental Americans faced in obtaining SSNs, which their banks demanded under the FATCA rules. It's frankly pointless because one can simply renounce without an SSN and bring the Certificate of Loss of Nationality to the bank to stop any FATCA reporting. No need for tax compliance before or after doing the deed. However, for face-saving purposes this program exists.



255 said:


> Remember, if she comes into compliance, she'll also get the stimulus benefits.


If the OP's mother does indeed have "considerable" UK assets, the cost of compliance writ large may greatly exceed the $3200 on offer.


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## 255

Nononymous -- I do not understand this statement: "If the OP's mother does indeed have "considerable" UK assets, the cost of compliance writ large may greatly exceed the $3200 on offer." The U.S. currently does not have a wealth tax nor a personal property tax -- thus no tax on assets, foreign or domestic. If the OP's mother has high income -- bully to her, then yes, income taxes would possibly be high, if the income is not excluded or a tax credit taken. The cost of compliance is a little time to complete some fillable forms on-line, print them, and mail them to the IRS. What am I missing -- I would hate to give bad advice. From your earlier post: "...but the renunciation subsidy (a.k.a. stimulus benefit) does change the calculation somewhat," I am making an observation that for most (except possible high earners,) that the stimulus payment is a good thing. Of course, if either the OP or her mother are high earners, they wouldn't qualify for the credit anyway -- they'll have to do there own calculations. Cheers, 255


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## Nononymous

If the OP's mother has investments deemed PFICs or considered trusts then there's potentially a lot of ungodly complicated paperwork to deal with, for which the accounting fees could easily exceed $3200. If she sold a house during the reporting period with a capital gain over $250k, the US considers that taxable (but the UK does not, so no offsetting credit).

All I'm saying is, depending on the nature and complexity of her mother's financial affairs, compliance might be an expensive proposition. It's not necessarily just some fill in some easy online forms and presto, $3200 in the bank.


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## 255

Nononymous -- Thanks. Cheers, 255


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## Nononymous

255 said:


> Nononymous -- Thanks. Cheers, 255


There are other ways in which compliance can cost a person some serious money. Certain tax-preferred investment vehicles like ISAs in Britain or TFSAs in Canada are not recognized by the US. Any gains earned within such a vehcile would be considered taxable and could not be offset by local taxes paid, because there are none. This in addition to potentially gruesome reporting requirements (forms 3520 and/or 8621) with unpleasant penalties for being done incorrectly.


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## HTRTY

Thanks again Nononymous and 255 -- all your thoughts and advice have been so helpful. Feel much calmer going into it all and lots to think about with regard to my mother's situation.


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## Nononymous

No trouble at all. You and your mother would be fine completely ignoring this forever, but if renouncing will allow you sleep better at night, at least you can make a small profit now if you file your own tax returns. (I would at least check carefully to see whether the lack of an SSN would jeopardize receiving the stimulus benefit.) For your mother it's her decision now, your decision later, whether you'd want to subject yourself to the costs of bringer her or her estate into compliance. Certainly not something you'd need to do, particularly if she can just quietly move any remaining cash out of the US.


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## sueinwales

You are in good hands with the advisors here- they have been very helpful to me. Although a novice in these affairs myself, I got the heebie-jeebies when you mentioned that your mother had ISAs. So do I, and i learned to my cost what a pain they are in terms of US tax filing. In 2017 I hired someone to do streamlined filing for me (after having a heart attack at most of the prices being charged for this!) and have done it myself ever since. It makes me so mad when some people advise that reporting ISAs (eg PFICs) is straightforward- it is a horrendous process and for now has stymied me into thinking i shall never be able to dispose of my ISAs short of renouncing. I was doubly mad when, after completing the streamlined returns and all those FBARs, to learn that ISAs did not form part of the reporting process under the FACTA agreements. Had i known this i would have simply cashed in my ISA's, waited a few years, and then done the streamlined filing. My message it, DONT RUSH INTO ANYTHING. I panicked, filed and have regretted my haste ever since.
I also agree completely that you need to get your mother's assets out of the USA as soon as you can. You really don't want to be doing US estate returns later on. Whatever the cost to move the asset, just do it! I too am considering renunciation, as are my children- just waiting on some details of the implications for us due to some immovable American assets (family trusts) if we do so. Like your family, I am american born and raised, while my children are UK born (so not as visible as US persons).

I would be very interested in learning the obstacles to moving your mother's assets to the UK, if you can share, as our family will be facing the same problem in the future.


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## Jca1

sueinwales said:


> I also agree completely that you need to get your mother's assets out of the USA as soon as you can. You really don't want to be doing US estate returns later on.


I agree that this should be looked into. I don't know all the details, but I listened to an interview with a tax attorney recently and she mentioned that some US banks were requiring a copy of some IRS form showing evidence of tax compliance before releasing funds in an inherited account. It wasn't clear whether the banks were requiring the IRS' estate tax closing letter, a transcript of form 706, or something else. 

On the other hand, it might be worthwhile to look into how this interacts with UK inheritance tax, and whether having the assets in the US might lower the tax due enough to make the costs of compliance for her and possibly you worthwhile. My guess is it won't, but it's worth a look. Gifting options and other stuff that are part of regular estate planning are also probably worth considering, though not necessarily relevant to the original question.

The original poster indicated that there was something unusual about his or her background. If your streamlined submission is likely to get extra attention for some reason, I'd be a little cautious about omitting anything that's required. Credit cards themselves aren't reportable, but accounts you have signing authority over would usually go on the FBAR. At least two people have been prosecuted for false streamlined submissions now, though both cases had lots of obvious bad facts: their noncompliance was obviously willful, they were living in the US, and their submissions omitted accounts that were being reported through FATCA IGAs and/or the Swiss Bank Program. However, what I've heard for the most part about streamlined submissions from attorneys is that the "IRS doesn't really even look at this stuff," and that if you are living out of the US they tend to presume nonwillfulness.

Edited to add some more detail.


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## HTRTY

Jca1 said:


> I agree that this should be looked into. I don't know all the details, but I listened to an interview with a tax attorney recently and she mentioned that some US banks were requiring a copy of some IRS form showing evidence of tax compliance before releasing funds in an inherited account. It wasn't clear whether the banks were requiring the IRS' estate tax closing letter, a transcript of form 706, or something else.
> 
> On the other hand, it might be worthwhile to look into how this interacts with UK inheritance tax, and whether having the assets in the US might lower the tax due enough to make the costs of compliance for her and possibly you worthwhile. My guess is it won't, but it's worth a look. Gifting options and other stuff that are part of regular estate planning are also probably worth considering, though not necessarily relevant to the original question.
> 
> The original poster indicated that there was something unusual about his or her background. If your streamlined submission is likely to get extra attention for some reason, I'd be a little cautious about omitting anything that's required. Credit cards themselves aren't reportable, but accounts you have signing authority over would usually go on the FBAR. At least two people have been prosecuted for false streamlined submissions now, though both cases had lots of obvious bad facts: their noncompliance was obviously willful, they were living in the US, and their submissions omitted accounts that were being reported through FATCA IGAs and/or the Swiss Bank Program. However, what I've heard for the most part about streamlined submissions from attorneys is that the "IRS doesn't really even look at this stuff," and that if you are living out of the US they tend to presume nonwillfulness.
> 
> Edited to add some more detail.


Thanks so much for this. I am definitely going ahead with becoming compliant and renouncing but having read some of these replies, I am less convinced it is worth it for my mother. 

I don't have any reason to believe my streamlined submission will get extra attention and my finances are fairly straightforward (it helps not to be a big earner for once!) The paperwork for the POA has not been put into practical effect in any way (it's only recent so doesn't even affect the back years I am currently filing). My name hasn't been added to any of my mother's accounts aside from the being an additional card holder for two of my mother's cards -- something that pre-dates the POA and wasn't connected to it (i.e. I am not registered as a joint holder of the accounts in question or any others). My mother and I also have different names so I don't see that the existence of the POA would come to light. So I am very much hoping that I can file and renounce without any issues. I do have a small amount of post office bonds and signatory power those over the post office bonds in my children's names, but that's about as complicated as my finances get. Crossed fingers anyway! I did briefly panic when I read about the cases you cited but as I've lived my entire life outside the US and was genuinely nonwillful in my lack of compliance until very recently (and everything else on my forms will be present and correct), I am hoping it is extraordinarily unlikely that I would become the focus of IRS ire...

My mother's situation is far more complicated. She is the beneficiary of a small family trust in the US in addition to having some cash in an account there (though I don't think it's a huge amount). Over here, I'm pretty sure she has an ISA, definitely has shares, post office bonds, a pension and other cash and savings accounts. She also owns two properties in the UK so I think there is no way compliance would be a straightforward thing! What I don't know is whether the estate could be heavily penalised after her death or whether I could inherit the problems of her non compliance. Presumably the IRS could seize her American assets (which aren't considerable) but could they take any of her UK assets? This is what I will need to research next -- but only after I'm over the headache of renouncing... Any thoughts welcome!


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## HTRTY

sueinwales said:


> You are in good hands with the advisors here- they have been very helpful to me. Although a novice in these affairs myself, I got the heebie-jeebies when you mentioned that your mother had ISAs. So do I, and i learned to my cost what a pain they are in terms of US tax filing. In 2017 I hired someone to do streamlined filing for me (after having a heart attack at most of the prices being charged for this!) and have done it myself ever since. It makes me so mad when some people advise that reporting ISAs (eg PFICs) is straightforward- it is a horrendous process and for now has stymied me into thinking i shall never be able to dispose of my ISAs short of renouncing. I was doubly mad when, after completing the streamlined returns and all those FBARs, to learn that ISAs did not form part of the reporting process under the FACTA agreements. Had i known this i would have simply cashed in my ISA's, waited a few years, and then done the streamlined filing. My message it, DONT RUSH INTO ANYTHING. I panicked, filed and have regretted my haste ever since.
> I also agree completely that you need to get your mother's assets out of the USA as soon as you can. You really don't want to be doing US estate returns later on. Whatever the cost to move the asset, just do it! I too am considering renunciation, as are my children- just waiting on some details of the implications for us due to some immovable American assets (family trusts) if we do so. Like your family, I am american born and raised, while my children are UK born (so not as visible as US persons).
> 
> I would be very interested in learning the obstacles to moving your mother's assets to the UK, if you can share, as our family will be facing the same problem in the future.


Thank you very much for your reply -- it's great to have someone who is in a similar position. I have already started the whole filing process (I know! But I really feel relieved and want to renounce sooner rather than later so it made sense to get it underway). I am hoping that it will be fairly straightforward. I do have a Cash ISA but it's been only two figures for nearly the whole FBAR back period and even at its highest wasn't considerable. I am hoping it won't be an issue (think cash ISAs are easier to report anyway?!) 

In answer to your question, I thought my mother had an issue bringing the cash over but it turns out she was talking about trying to do it when the exchange rate was right -- no actual obstacle. (Though if the bank asks for proof of tax compliance before making the transfer, as another poster has suggested can now happen, I can see that being a problem.) For now, I am encouraging my mother to bring her American cash over to the UK and passing on all the excellent advice I am receiving here. I have no idea what will happen about the trust though -- happy to be in contact with you about that as I find out more. As I said, it's great to have someone in such a similar position.


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## HTRTY

And just to say again how grateful I am to have this forum. It is a huge relief to have the benefit of other people's experience and opinions around a subject that has been steeped in anxiety for me. 

The best news is that it looks like I won't have to apply for a SSN as the tax attorney I'm using thinks it likely I'll fit the criteria for the special procedures link that Nononymous posted earlier in the thread. That will save me one Catch-22 situation I was not looking forward to...


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## sueinwales

I got the impression that cash ISAs weren't such a problem. sadly, i have stocks and shares isa's, so treated as a mutual fund (and PFIC reporting). Yes, get your mother's us account closed out if she will let you. I'm guessing that she is like me in this scenario- beneficiary of a trust, yes, but I don't own the asset, and it will be distributed to my children after my death under the terms of the Trust. I expect your family trust is a similar kind of thing. Thus it should not form part of my estate, so no one will need to do anything (as long I give up my american citizenship before i die!).

This has been a real learning curve for us as an expat family, and we are still grappling with it all. For example, my children are considering renouncing their US citizenship, but would this have a negative when the Trust is finally dissolved and a large amount of capital is transferred to them here in the UK? You may be in this position yourself (?)

Good Luck! And do keep us posted.


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## sueinwales

Who are you using as a tax attorney?
We may need one also.


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## HTRTY

sueinwales said:


> I got the impression that cash ISAs weren't such a problem. sadly, i have stocks and shares isa's, so treated as a mutual fund (and PFIC reporting). Yes, get your mother's us account closed out if she will let you. I'm guessing that she is like me in this scenario- beneficiary of a trust, yes, but I don't own the asset, and it will be distributed to my children after my death under the terms of the Trust. I expect your family trust is a similar kind of thing. Thus it should not form part of my estate, so no one will need to do anything (as long I give up my american citizenship before i die!).
> 
> This has been a real learning curve for us as an expat family, and we are still grappling with it all. For example, my children are considering renouncing their US citizenship, but would this have a negative when the Trust is finally dissolved and a large amount of capital is transferred to them here in the UK? You may be in this position yourself (?)
> 
> Good Luck! And do keep us posted.


Thank you! 

I won't inherit anything from the Trust -- it will be going directly to my mother (it was set up by her grandfather and she had one part of it when her father died and will receive another part when her stepmother dies). It won't be a large amount as she has lots of brothers and sisters. So I'm not too worried about that particular negative. I can understand it's a much bigger question for you and your children though...

That is a relief to hear that cash ISAs are less of a problem -- my mother has the kind you have so would be facing similar issues should she decide to go ahead. It's so complicated!

Let's keep in touch as we go forward...it's great to have an online team member for this whole process!


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## HTRTY

sueinwales said:


> Who are you using as a tax attorney?
> We may need one also.


Jaffe and Co Tax International, based in London. They have been excellent so far but I'm fairly early on in the process. Will report back as I go through it all...


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## 255

HTRTY -- It sounds like you have "a way ahead" for yourself; congratulations.

Your mother's "Small Family Trust" is probably not visible to the IRS. Trust's report income utilizing IRS form 1041. Unless your mother is the actual trustee, the IRS will only realize her beneficiary status, either when the trust is closed, or after she passes, when you file IRS form 706, as her executor, to "close the books" with the U.S.. The current Estate Tax Exemption, in the U.S. is $11,700,000.00 for 2021. Estate Tax | Internal Revenue Service (irs.gov) So, unless her total estate size is rather large, she shouldn't owe much (if any) to the U.S. Your mother's estate will have to settle with the IRS, but unless the IRS saw "big dollars" to gleam from her estate, it's probably not worth their effort. If they do "force compliance," your tax attorneys should be able to mitigate any issues, if you don't want to deal with it, but want it settled. I have personally used tax attorneys, on a few occasions, each time they've given me multiple options, which I executed myself -- but they were ready to complete the tasks, on my behalf (if I wasn't too cheap to pay their fees.) Cheers, 255


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## 255

sueinwales -- You are right, a "Cash" ISA is basically just a savings account, so no "wild" U.S. reporting requirements (just earnings.) Similarly, the Stock and Shares ISA (Investment ISA) is just a "wrapper." It is not a PFIC, in it's own right; it depends on the investments you own in the ISA! If the Stock and Shares ISA owns a "Money Market Fund," to hold the cash and buys mutual funds, then yes, it is a PFIC, with all the unholy reporting requirements. On the other hand, if the Stock and Shares ISA holds just regular cash (even in an interest bearing account,) and owns individual securities vice group investments (Mutual Funds, ETFs, MLPs, etc.,) then it is not a PFIC (you'd still need to report earrings, dividends interest and realized capital gains, on your U.S. return.) Cheers, 255


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## HTRTY

255 said:


> HTRTY -- It sounds like you have "a way ahead" for yourself; congratulations.
> 
> Your mother's "Small Family Trust" is probably not visible to the IRS. Trust's report income utilizing IRS form 1041. Unless your mother is the actual trustee, the IRS will only realize her beneficiary status, either when the trust is closed, or after she passes, when you file IRS form 706, as her executor, to "close the books" with the U.S.. The current Estate Tax Exemption, in the U.S. is $11,700,000.00 for 2021. Estate Tax | Internal Revenue Service (irs.gov) So, unless her total estate size is rather large, she shouldn't owe much (if any) to the U.S. Your mother's estate will have to settle with the IRS, but unless the IRS saw "big dollars" to gleam from her estate, it's probably not worth their effort. If they do "force compliance," your tax attorneys should be able to mitigate any issues, if you don't want to deal with it, but want it settled. I have personally used tax attorneys, on a few occasions, each time they've given me multiple options, which I executed myself -- but they were ready to complete the tasks, on my behalf (if I wasn't too cheap to pay their fees.) Cheers, 255


This is really reassuring, thank you so much, 255. Her estate is probably worth (at a guess) approximately 1.5 million UK pounds -- though possibly under that so hopefully not large enough to attract their interest? My main concern is whether the IRS can transfer her non-compliance onto me and fine me in her place. I'll look up the form you mention and look into it. I am learning with every post, thank you again.


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## 255

HTRTY -- When your mother passes, a "decedent's" estate is established that the executor is responsible for settling. Specifically, the executor is responsible to pay all debts owed (including any the IRS can "prove" it's owed,) before disbursing the remaining assets to her heirs. Assuming, she didn't have massive income, in her later years (and you've simplified her holdings,) the estate shouldn't be "in their sights" (although the new administration is intent on beefing up the IRS's enforcement arm,) she and her property are still overseas and shouldn't be a lucrative "target." There is absolutely no mechanism to transfer any debt to you personally! Once the estate is settled -- that's "the end of it." Publication 559 (2020), Survivors, Executors, and Administrators | Internal Revenue Service (irs.gov) Cheers, 255


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## HTRTY

That is all hugely reassuring, thank you so much! I will look forward to (not quite the right phrase!) reading through all the forms and getting to grips with it but I do feel much happier about the way forward. THANK YOU!


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## Nononymous

The IRS is much less powerful than you think. They can't touch you or your mother or her estate in the UK. (Okay, if she were a billionaire Russian oligarch with a criminal past, they might think it worth their while to attempt extradition.) This will never be on their radar unless someone foolishly puts it on their radar.

You are going into renunciation knowing that it is psychologically necessary, even if in practical terms it's not worth the expense or hassle. This is a reasonable decision.

Your mother should be able to move her cash out of the US without any proof of tax compliance. That earlier comment was a reference to estates. She can simply close the account and wire the money over, I would expect. There will be the usual anti-money laundering declaration for amounts over $10,000 I believe, but this has nothing to do with taxes or the IRS. 

I know nothing about trusts but this sounds fairly simple, and worst case she just walks away from that money.

You should all be fine. Your mother can ignore the IRS, you can renounce because you want to (not need to) and there should be zero estate issues when the time comes.


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## Nononymous

sueinwales said:


> Who are you using as a tax attorney?
> We may need one also.


If the tax attorney didn't know about the special procedure for compliance without an SSN, but I did, then it's not a great endorsement for tax attorneys...

In all but the most complex cases the lawyers are probably an expensive waste of time, particularly if they feel duty bound to recommend full compliance at great cost instead of cutting corners or skipping the process entirely.


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## Nononymous

255 said:


> Your mother's estate will have to settle with the IRS, but unless the IRS saw "big dollars" to gleam from her estate, it's probably not worth their effort.


Why would the UK estate need to settle with the IRS if the deceased were never tax compliant? The IRS would not know a thing about it. Volunteering that information would be foolish.


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## Nononymous

255 said:


> here is absolutely no mechanism to transfer any debt to you personally!


If the executor is also the beneficiary, and the executor settles the estate with the IRS and pays any taxes or penalties owing or even legal and accounting fees to bring everything into compliance, then there is less money left over in the estate for the beneficiary. The beneficiary has in effect paid some of their own (future) money to the US government and/or the compliance industry.

If the estate is in the UK, and particularly if the executor/beneficiary is not a US citizen, why would this be a sensible course of action?


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## HTRTY

Nononymous said:


> If the tax attorney didn't know about the special procedure for compliance without an SSN, but I did, then it's not a great endorsement for tax attorneys...
> 
> In all but the most complex cases the lawyers are probably an expensive waste of time, particularly if they feel duty bound to recommend full compliance at great cost instead of cutting corners or skipping the process entirely.


Ah, to be fair, he did know about it but didn't know my full situation at the time. But I do take your point on the rest!


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## HTRTY

Nononymous said:


> The IRS is much less powerful than you think. They can't touch you or your mother or her estate in the UK. (Okay, if she were a billionaire Russian oligarch with a criminal past, they might think it worth their while to attempt extradition.) This will never be on their radar unless someone foolishly puts it on their radar.
> 
> You are going into renunciation knowing that it is psychologically necessary, even if in practical terms it's not worth the expense or hassle. This is a reasonable decision.
> 
> Your mother should be able to move her cash out of the US without any proof of tax compliance. That earlier comment was a reference to estates. She can simply close the account and wire the money over, I would expect. There will be the usual anti-money laundering declaration for amounts over $10,000 I believe, but this has nothing to do with taxes or the IRS.
> 
> I know nothing about trusts but this sounds fairly simple, and worst case she just walks away from that money.
> 
> You should all be fine. Your mother can ignore the IRS, you can renounce because you want to (not need to) and there should be zero estate issues when the time comes.


I think this is the route my mother would want to take. She does not have the psychological need to comply and renounce that I do! 

I suppose the only remaining question is how likely she is to be discovered via FATCA.


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## Nononymous

HTRTY said:


> I think this is the route my mother would want to take. She does not have the psychological need to comply and renounce that I do!
> 
> I suppose the only remaining question is how likely she is to be discovered via FATCA.


She is currently subject to some FATCA reporting, in all likelihood. There is no evidence that the IRS has begun using FATCA data to find and contact non-compliant US persons abroad. And if they did, so what? They cannot touch her UK assets.


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## Nononymous

Nononymous said:


> The beneficiary has in effect paid some of their own (future) money to the US government and/or the compliance industry.


I don't know all the details and this happened a long, long time ago, but someone I knew was involved in an inheritance situation that illustrates this problem. Two US citizen parents living in Canada for most of their careers, with dual-citizen children. The parents passed away relatively early, leaving a not-tiny estate for their young-adult children. One of the children was in the process of moving to the US, and there may also have been a house or two down their owned (presumably inherited) by the deceased parents. This sibling needed or wanted the estate brought into US tax compliance, which cost a lot of money, which meant that the siblings remaining in Canada, with no interest in moving south, inherited considerably less than if they'd simply ignored the IRS (which would have carried no risk). There was apparently unhappiness all round.


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## HTRTY

Nononymous said:


> I don't know all the details and this happened a long, long time ago, but someone I knew was involved in an inheritance situation that illustrates this problem. Two US citizen parents living in Canada for most of their careers, with dual-citizen children. The parents passed away relatively early, leaving a not-tiny estate for their young-adult children. One of the children was in the process of moving to the US, and there may also have been a house or two down their owned (presumably inherited) by the deceased parents. This sibling needed or wanted the estate brought into US tax compliance, which cost a lot of money, which meant that the siblings remaining in Canada, with no interest in moving south, inherited considerably less than if they'd simply ignored the IRS (which would have carried no risk). There was apparently unhappiness all round.


I'll pass this all on to my mother -- thank you as ever...


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